## Competing for the Future

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**Canonical URL:** [Competing for the Future](https://www.imf.org/-/media/files/publications/fandd/article/2024/09/books-srinivasan.pdf)

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### Summary of the book's argument
- Raghuram G. Rajan and Rohit Lamba argue in Breaking the Mold: India’s Untraveled Path to Prosperity that India’s future economic well‑being lies in a development strategy different from the export‑led manufacturing paths followed by Japan, Korea, Taiwan Province of China, and China.
- The authors contend that the labor cost advantage that underpinned past manufacturing-led growth has diminished, and that moving up manufacturing supply chains is not assured because logistics and competitiveness across manufacturing segments have become extremely strong globally.
- They emphasize that the greatest value in global supply chains is added in early and late segments—R&D, design, branding, marketing—while the middle manufacturing segment adds only a modest amount.
- Consequently, Rajan and Lamba recommend that India “break the mold” and leverage technology to boost exports of services (examples given: chip design and financial modeling) and expand services catering to a growing domestic market (examples given: education and health care).
- The strategy requires greater reform of, and investment in, India’s education system to generate a highly skilled, idea‑generating, and entrepreneurial labor force. In their words, India must pivot from brawn to brain.

### Strengths and policy recommendations highlighted
- Revamp and revitalize India’s education and health care systems.
- Improve data, governance, and transparency.
- Decentralize power to bring it closer to citizens.
- Avoid throwing costly subsidies at manufacturing; focus on services and technology-enabled activities aligned with India’s comparative advantage.
- Leverage technology to expand service exports and deepen domestic‑market services.

### Critiques and open questions raised by the reviewer
- The review questions whether Rajan and Lamba present a false binary between manufacturing and services.
- Concern that India does not currently have a sufficiently large skilled labor force to expand services at the scale the authors advocate, and that building such a workforce will take a long time.
- The authors do not quantify the number of jobs their proposed strategy would generate—an important omission given demographic pressures.
- With India projected to add 15 million people to the labor force every year, the reviewer suggests India likely needs job creation across “all possible activities and in every sector of the economy.”
- The reviewer proposes a broader reform agenda as an alternative: improving the business environment, scaling up investment in education and health care, bridging infrastructure gaps, trade liberalization, and labor and land reforms—leaving sectoral investment decisions to India’s entrepreneurial private sector.

### Key facts and publication details
- Book title: Breaking the Mold: India’s Untraveled Path to Prosperity
- Authors: Raghuram G. Rajan and Rohit Lamba
- Publisher: Princeton University Press
- Location and year: Princeton, NJ, 2024
- Length and price: 336 pp., $35
- Reviewer: Krishna Srinivasan, director of the IMF’s Asia and Pacific Department
- Highlighted quote: “The authors argue that India should leverage technology to boost exports of services.”

*F&D, Book Reviews, SEPTEMBER 2024*

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_Source: https://www.imf.org/-/media/files/publications/fandd/article/2024/09/books-srinivasan.pdf_