December 23, 2004

First Photo: Prof. James Mirrlees, Professor of Political Economy, Cambridge University, and Fellow of Trinity College delivering lecture. Seated are Mr. Montek Singh Ahluwalia, Deputy Chairman, Planning Commission and Dr Arvind Virmani, Director & Chief Executive, ICRIER.

Second Photo: Audience at the Public Lecture.

Nobel Laureate Prof. James Mirrlees, Professor of Political Economy and Fellow of Trinity College at the University of Cambridge, delivered an engaging talk on 'Growth and Inequality in Dual Economies' at a Public Lecture organised by ICRIER. Looking at the growth rate of high growth economies, he explained that if we were to look at their growth figures in some detail, it would be hard to understand how growth at the rates observed in China, India, Korea, etc. is technologically possible. According to him, the movement of resources from low productivity to high could help to solve this puzzle.

Drawing a brilliant analysis of growth rate and inequality in dual economies, Professor Mirrlees suggested modifications of the conventional sources of growth accounting equation. He demonstrated how the standard equation of growth (capital contribution + labour contribution + technological advances) cannot explain the true growth rates because it tends to underestimate the growth rate as in the case of China (5.75%) and India (4.75%). The solution according to him lay in modifying the growth equation to take account of the migration of labour from low productivity/wage sectors to high productivity/wage sectors wherein the shift of labour between these two sectors would then get represented by another term in a growth accounting equation.

The Lecture was very well attended by academicians, policy makers and analysts, thinkers and researchers. Mr. Montek Singh Ahluwalia, Deputy Chairman, Planning Commission chaired the lecture.