Coordinated Investment To End Poverty

The stride of our nation toward democracy and freedom puts on display its continuing resilience and dynamism. Its socio-political landscape changed tremendously since the post-democratic era, particularly after the 1990s, as manifested in democratic governance and development endeavours focused on economic growth. The newly independent Asian nations and rising economies adopted economic growth as their primary objective to overcome the colonial mentality. 

The Big Push Theory of development, proposed by Paul Rosenstein-Rodan in the 1940s, was instrumental in triggering economic growth in many Asian economies through investment policies. This theory posits the idea that the coordinated investment efforts are pertinent to overcoming the vicious circle of poverty to make a stride from underdevelopment to development. The basic philosophy of the “big push” is to undo the initial inertia of the stagnant economy. It is only then that a smooth journey of the economy towards higher levels of productivity and income can be ensured.

Socio-political shift 

This socio-political shift of many Asian countries has an impact on the reinstatement of democratic government in the 1990s in Nepal. In 1992, the newly established democratic government launched a privatisation model in the name of economic liberalisation to achieve development through the modernisation of communities and community participation. Nepal privatised several public enterprises primarily to address chronic inefficiencies, but failed to capture the impulse because of political instability and the corrupt mindset of leaders. Development NGOs were introduced but remained channels for external influence only. The open market policy completely failed.

The governments after the 1990s highlighted some progress in infrastructure development and economic reforms to meet the political agendas of the political parties. There has been an apathy to improve access to education and healthcare, which is supposed to support economic growth. The call for the quality of life and the well-being of the communities has largely fallen on the deaf ears of the leadership. There has been less concern about the concept that a well-educated population can harness better income opportunities. There has been a complete disorientation in building social capital. 

Successive governments failed to understand that communities with strong social bonds can develop resilience to foster cooperation and mutual benefit. According to the Australia Infrastructure Audit (2019), the social infrastructure sectors contributed 12.5 per cent to its GDP. In our context, no effort has been made to understand the quality of life and its impact on the development process.

The Big Push Theory of development addresses the challenges that underdeveloped economies face in transitioning from a subsistence to an industrial economy. It emphasises the need for large-scale, coordinated investments to overcome market failures and interdependencies that hinder economic development. One of the theory's central ideas is that individual firms cannot succeed in isolation due to the interconnected nature of industries. 

For example, a single factory producing goods would struggle to find customers if other complementary industries are absent. This lack of coordination creates a "chicken and egg" problem, where firms wait for others to act first, leading to stagnation. To overcome this, the Theory advocates for simultaneous investments across multiple sectors. This large-scale effort can create demand, stimulate production, and generate economic momentum.

The Theory suggests targeted investments in areas that create enabling conditions for industrial growth. Infrastructure development is a prerequisite to attain a big push, where investments in roads, railways, and energy reduce costs for industries and connect markets. Urbanisation, on the other hand, encourages urban growth that concentrates demand, creating markets for industrial goods. Education and training are essential to produce skilled human resources for industrial activities and innovation. Capital mobilisation is required for large-scale funding from the government or international agencies to initiate the big push.

The Theory has been validated through various development experiences worldwide. Several countries have successfully implemented coordinated investment strategies inspired by the theory: Countries like South Korea, Singapore and Taiwan pursued industrial policies emphasising coordinated investments in infrastructure, education, and export-oriented industries during their rapid industrialisation phases that started in the 1960s. This approach created a robust industrial base and accelerated economic growth. 

Deng Xiaoping in China mirrored this theory through massive infrastructure spending and export-oriented manufacturing that lifted China’s GDP by 10 per cent from 1980 to 2010. Xiaoping's Cat Theory, which states, "It doesn't matter whether a cat is black or white, as long as it catches mice," was heavily influenced by Big Push Theory. 

China undertook massive infrastructure projects, developed special economic zones, and encouraged foreign direct investment, creating an ecosystem where industries could thrive together. India's initial development endeavours were heavily influenced by the big push model, ushering state-led multi-sectoral investments and infrastructure development to initiate industrialisation.

State intervention 

The big push development strategy cannot survive in a weak institution, so comprehensive planning is required to consider sectoral interdependence. State intervention and centralised planning are the most optimal way to direct resources. A coordinated FDI mechanism is required to ensure external funding when local resources fall short. 

Infrastructure investment is crucial to reducing production costs and enabling the growth of industries. Avoidance of resource concentration in a few areas is anticipated to attain broader economic benefits. Inclusion of marginalised groups is essential to ensure equitable spill-overs that reduce social backlash and uneven growth of marginalised sections of society. 

In conclusion, successful development requires a big push in several key areas to overcome coordination failures and get the country out of a development trap. To do so, we have to put the guardrails up to rewrite our nation’s destiny. 

(The author is a PhD Scholar at the NIU, India.)