Raghuram Rajan in conversation with Ann Bernstein
- Raghuram Rajan, Professor of Finance at the University of Chicago’s Booth School of Business and former Reserve Bank of India governor, spoke to Ann Bernstein, CDE’s executive director, about economic growth and India’s prospects for increased prosperity and continued democracy.
- Economists should not assume that export-led manufacturing is the only way to achieve development, he claimed. Services embedded in manufacturing can enhance export opportunities while employing many moderately skilled people. The choice is not whether a country should have manufacturing or services. It is ideal to have both.
- Countries like India and South Africa must fix their education systems, and they cannot keep delaying and making excuses. Firms want to hire workers equipped with the necessary skills and education leads to an increase of entrepreneurs capable of starting new enterprises and innovating.
- Instead of protectionism and selective support for some firms, he argued in favour of a broader, more inclusive approach that sets out to build a better business environment, supports all firms that create jobs and makes the economy as competitive as possible.
- Raghuram Rajan argues in favour of strengthening local communities. He cited a situation in Uganda, where local communities could monitor funding allocated to local schools and push for better spending to improve education outcomes.
- Government and business must co-exist in an effective economic system, he believes, but it is vitally important to ensure they are not in bed with each other. For this reason, he wrote a book with Luigi Zingales called Saving capitalism from the capitalists.
