Leapfrogging shouldn’t become an excuse for governments to stop solving nineteenth- and twentieth-century issues.
Every once in a while, we Indians go overboard with phenomena that depict our society in a good light. Take jugaad for example: a word that merely stands for hacks and workarounds. At some point in the last decade, India suddenly came to be celebrated as the champion of ‘frugal engineering’.
Soon, what was essentially a rationalising mechanism came to be feted to such an extent that we forgot to ask the question: why the hell are people having to find workarounds with meagre resources for problems which already have off-the-shelf solutions? “Necessity is the mother of invention” became such a cliché that not only did we start celebrating invention, we started accepting basic necessity as a precondition as well.
Cut to this decade, and you will see that leapfrogging is the new jugaad in many respects. Let me explain why and how.
‘Leapfrogging’ was first used in the Indian context by Robert Miller of the World Bank in 2001. In a paper titled Leapfrogging? India’s Information Technology Industry and the Internet, he wrote that “the internet as a set of technologies can enable developing countries to ‘leapfrog’ over the development path taken by industrial countries, enabling poorer countries to increase their rates of growth and ‘catch up’ sooner.”
Sure enough, we were soon leapfrogging our way out of our troubles. This word gave hope just like jugaad did: the future of millions of people could now be altered without having to be overly worried about the morass that currently limits our markets from functioning. Again, as with jugaad, we forgot to ask the question: why did we miss on the opportunities that the intermediate stage promised? And should we really be pinning hopes on our ability to leapfrog? Let’s explore these questions with two cases of leapfrogging most cited in the Indian context.
Where leapfrogging worked: the mobile phone revolution
The biggest leapfrog success is India is the adoption of voice and data connectivity through mobile phones, skipping the fixed-line telephony of the twentieth century. This is worth celebrating. But there are two necessary (not sufficient) conditions that made this happen. One, the spread of mobile telephony was made possible because of a proliferation of twentieth century infrastructure: reliable electricity supply in this case. Two, the adoption of a liberal policy regime — one that no longer saw access to telephony as a luxury — was critical. As this paper says, opening up of the national long-distance sector to private operators and allowing mobile operators to carry long-distance services resulted in increased competition and reduced tariff rates. Both the conditions discussed above illustrate that governments need to get their twentieth-century game perfected in order to set the stage for leapfrogging.
Where leapfrogging did not work: the service sector
With a fledgling software sector came the idea that India can potentially leapfrog manufacturing, and modernise directly from an agricultural economy to a services one. The implication was that we could live with a languishing manufacturing sector as long as we could get our services game right. This enthusiasm soon fell away due to two major reasons: one, modern services require skilled labour; and two, precisely because they are more productive, they require less hands on the job. So, now we’re back to limping after the supposed giant leap, discussing how manufacturing can contribute to job creation? Not surprisingly, efforts such as Make in India are targeted towards the manufacturing sector, which absorbs a meagre 11% of the labour force in India. The solution to our jobs problem still rests with liberalising land, labour and capital markets.
The lessons from these experiences
The leapfrog metaphor remains popular even today. Demonetisation was justified on the grounds that it can leapfrog us into a cashless economy. Because we have been tardy at fixing our footpaths and public transport infrastructure, a leapfrog to self-driving is being touted as the only hope. Since we are terrible at fixing our pathetic schooling system or healthcare monopolies, we are hoping that a leapfrog to distance learning or tele-medicine can solve our problems. At the larger level, as Alex Tabarrok once wrote, it is easy to mistake discussions on inequality in India for the ones that take place in Berkeley. We want to directly transition from an unequal poor society to an equal rich one, leapfrogging the rich-and-unequal stage that other successful states have gone through.
Don’t get me wrong: it is great that many people in India are thinking about leapfrogging to enable prosperity for all Indians. But this metaphor shouldn’t become an excuse for governments to go slow on solving nineteenth- and twentieth-century problems. We need to keep holding the government accountable for the opportunities missed. As Manish Sabharwal wrote recently, India needs three ten-year plans for formalisation, urbanisation, and industrialisation, all twentieth-century problems. Our ability to leapfrog depends on that.