Towards a Worldwide Index of Human Freedom

218 • Towards a Worldwide Index of Human Freedom
another source of growth, i.e., conditional convergence or the potential
advantages of backwardness.32 Since China remains poor compared to
the West or Japan, this potential source of growth will last for some more
decades. Thus, the future economic development of China seems to be
at the mercy of two factors: whether a global depression and a wave of
protectionism can be avoided, and whether the government of China
will continue market-enhancing reforms instead of relapsing into socialist
dead ends. The more China restricts economic freedom, the poorer its
prospects will become. In this context, it may be important to note that
about one-third of Chinese entrepreneurs have become members of the
ruling party (Bardhan, 2010: 80). On the one hand, this may reinforce
corruption and crony capitalism. On the other hand, this reconciliation
of economic and political elites in China may help to improve Chinese
economic policy-making.
For the sake of growth, government concessions of freedom to the
people should not be restricted to a narrowly defined economic sphere.
Freedom of technological and scientific research is obviously important
for innovation and progress. Moreover, tolerance for severe criticism
of the economic order or political institutions might be important for
overcoming institutional obstacles to growth and the correction of policy
errors. One might argue that generalized liberty instead of narrowly
defined economic freedom becomes more important once the advantages
of backwardness have been exploited.33
India’s demographic future looks much more benign than China’s
(Eberstadt, 2010). Although India will not suffer from a scarcity of young
people and an abundance of older ones in the near future like China or the
West, the Indian problem is that the economically more successful regions
already suffer from below replacement fertility, whereas the less successful
regions are still above replacement level fertility. Therefore, human capital
development remains a challenge in India. If one adds poor infrastructure,
the remnants of the caste system, still overregulated labor markets,
and corruption undermining administrative efficiency and the rule of law,
then it becomes hard to be optimistic about India’s prospects. If, however,
India could overcome the legacy of permit-license-quota raj, which
32 A superficial comparison of provincial growth rates in China seems to be incompatible
with advantages of backwardness. By and large, the more prosperous coastal provinces
benefit from better growth rates than the interior provinces. According to Lin and Liu
(2008), this results from the interior suffering more than the coast from comparativeadvantage-denying
development strategies. If this factor is controlled, then advantages of
backwardness can be demonstrated within China.
33 It is sometimes argued that Chinese tradition is hostile to criticism. As de Bary (1983)
elaborates for Neo-Confucianism and the Sung dynasty, this is an exaggeration.
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