India in the 1820s…
I first came across this graph on Greg Mankiw’s blog. Greg is a Professor of Economics at Harvard and he was referring an article written by Michael Milken (the former junk-bond king who fell into disgrace) in a recent issue of the Wall Street Journal.
Milken is quoted as writing:
China and India combined to produce nearly half the world’s economic output in 1820 compared to just 1.8% for the U.S.
Our remarkable growth since 1820 has benefited from democratic institutions, a belief in capitalism, private property rights, an entrepreneurial culture, abundant resources, openness to foreign investment, the best universities, immigration and relatively transparent markets.
I would add that were it not for two centuries of colonial rule (and the ruthless economic exploitation tha accompanied it), the picture for India would have been somewhat different. I have talked about this previously, in this article: “Economic Exploitation & Drain of Wealth During British Raj” and in these excerpts from Nick Robin’s essay: “Loot: In Search of East India Company“.
The source of the graph is Prof Angus Maddison who has also done a lot of research on the economic aspect of India’s colonial past. I have quoted from his research in my essay on Drain of Wealth.
British were able to take control of India because of political anarchy. There is no reason to assume India would have maintained it share of the world’s economic output after the decline of Moghul power. The economic success India enjoys today is a product of sixty years of relative Indian political stability.