Violence, Rents and Investment: Explaining Growth Divergence in South Asia

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Abstract

Why have growth rates have dramatically diverged between India and Pakistan since the 1990s? This article argues that differences in perceptions of instability among the Indian and Pakistani bourgeoisie, through the salience of political violence, has led to significant differences in economic growth since the 1990s. In Pakistan, kidnapping and terrorist violence in major cities has led to the domination of rent-implicated investment as a form of managing risk, thus limiting growth. In India, by contrast, political violence – in the form of remote urgencies or the targeting of minorities – remains socially distant to the perspectives of investors, leading to a balance between rent-implicated and more productive investment, and thus higher overall growth. The article thus provides a new set of explanations for differences in growth among middle income countries by highlighting political instability and the salience of violence, the demand for rent-implicated investments and the limits of institutional explanations for growth outcomes.
Original languageEnglish
Pages (from-to)581-601
Number of pages21
JournalCOMPARATIVE POLITICS
Volume51
Issue number4
Early online date1 Jul 2019
DOIs
Publication statusPublished - Jul 2019

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