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Kerala and Tamil Nadu; Differing Pathways to Development
Kerala and Tamil Nadu, neighbouring states in South India, have each in its own way attracted much attention from development economists in India and abroad. Kerala is known for its development record illustrated by the high levels of literacy of its citizens and health related development indict...
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| Format: | Printed Book |
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Lancaster
Department of Economics Lancaster University Management School
2015
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| Online Access: | http://10.26.1.76/ks/005055pdf |
| Summary: | Kerala and Tamil Nadu, neighbouring states in South India, have each in its own way
attracted much attention from development economists in India and abroad. Kerala is
known for its development record illustrated by the high levels of literacy of its citizens
and health related development indictors. Kerala’s record of development has
generated debate on the primacy of growth as opposed to investments in health and
education as propagators of development. Kerala is supposed to have achieved
development with little growth. The other striking feature of Kerala’s economy is the
relatively low contribution of manufacturing to its growth and the preponderance of the
services sector in both growth and employment. Tamil Nadu, in contrast to Kerala,
possesses a manufacturing sector led by high tech automobiles and low tech textiles
sectors amongst others. There is evidence to support the thesis that whilst Tamil
Nadus’s growth path over the years conforms to the Kuznets inverted U curve
paradigm, Kerala’s growth path is far from it. This paper argues that it would be
erroneous to claim that Kerala development record is based on low levels and illustrates
the returns to be had from emphasising investments in health and education. That
which is important for development is a flow of investible resources. Kerala in the earlier
years of its development relied on public borrowing for such resources and in recent
years it has had heavy inflows of remittances from its diaspora in the Gulf states. Tamil
Nadu’s record is largely based on growth and foreign direct investments in its
manufacturing sector. This paper argues that the differing growth paths of the two
states and their development record is to be traces to history and the institutions,
especially the education and political institutions in place in the two states. Kerala
possesses a comparative advantage in tourism and health services and should promote
these sectors if it were to sustain its development record with a sustainable growth path
that is not dependent on uncertain and fluctuating remittances from abroad. Tamil Nadu
that has entered the services phase of the Kuznets cycle is likely to grow with services
sustained manufactures. |
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| Item Description: | Economics Working Paper Series 2015/005 |