Hasan and Jandoc Strike Again
Thursday's post was about a lovely little essay by Kartik Tadepalli, about why the only way to grow is by "killing small businesses". If you find that title provocative, I encourage you to go and read both my post, and the entire essay by Karthik. And it would be awesome if you choose to disagree with both me and Karthik, because what is better than a passionate discussion about the best way to help a country grow, eh?
And regular readers of this blog just know what's coming up next. "Here we go", they're probably muttering to themselves. "5...4...3..."
And far be it from me to disappoint expectations! Here you go:
https://twitter.com/pseudoerasmus/status/1845062295027691831
Background: Hasan and Jandoc authored a paper titled "The distribution of firm size in India: What can survey data tell us?" in a working paper series published by the World Bank. I first came across the chart in that tweet up above when I read "India's Tryst with Destiny", by Bhagwati and Panagariya.
And ever since, there is a part of me that simply cannot stop thinking about that chart. Every now and then, I write a blogpost that references that chart (and today's post is an obvious addition to that series).
But to go back to what we started with today (and discussed on Thursday), this chart really does explain why killing small firms is important:
If you agree with the fairly pervasive notion in microeconomics that scaling up firms is more efficient on average than not, then this chart should worry you. We're clearly missing a trick in India's developmental story, and at the margin, this remains an under-appreciated problem that we have not done enough to solve.
What policy mix is most appropriate to get us out of this rut, with what consequences across economic, political and geopolitical factors is a ridiculously huge question, and I am not going to pretend to be able to answer it in a single blogpost. But that more of us need to be thinking about it, and doing something about it is very much a given.
With good tweets on Twitter, it is worth foraging through the replies as well, because friendly knowledgeable folks discussing important things is Twitter at its very best.
Here are two that caught my eye:
https://twitter.com/GlennLuk/status/1845065821296406774
https://twitter.com/abhishekecon/status/1845112335070863660
That second tweet is about a lovely little paper written by Abhishek Anand and Arvind Subramanian about multi-plant performance in India. More information about that paper can be found here:
https://twitter.com/arvindsubraman/status/1843990693888569425
It won't be the last time that Messrs. Hasan and Jandoc appear on EFE. The topic is simply too important, and far too neglected (in terms of action, if not on paper) for me to not want to talk about it.
Consider yourselves warned! :)