Institutions, Institutional Change and Economic Performance in Emerging Markets

The following sections are included:

• About the Author
• Contents

The following sections are included:

• Introduction
• Key insights
• Overview of sessions
• Conclusion
• Appendix: Session Details
• Case synopsis
• Endnotes

On March 14, 2007, police opened fire on villagers protesting against a Special Economic Zone (SEZ) being built in Nandigram, a quiet farming community in India's eastern state of West Bengal. Following the enactment of the SEZ Act in 2005, many private-sector investors and state governments in India had been acquiring land to set up these duty-free enclaves that were deemed foreign territory for the purposes of trade operations. Firms were given many regulatory, infrastructure and tax benefits for locating in these zones. The Nandigram SEZ project was a joint venture between the state-owned West Bengal Industrial Development Corporation and Indonesia's Salim Group, which planned to build a major chemical hub. The SEZ required acquisition of more than 14,000 acres of land, mostly under agricultural use. The project, though approved by the government in 2005, encountered significant resistance from local villagers and opposition political parties, which argued that the land had been forcibly acquired by the government at below-market rates. They contended that the SEZ's ambitious plans could displace thousands of farmers…

On October 3, 2008, Tata Motors announced the closing of its car manufacturing plant at Singur, in the state of West Bengal, India. The decision came in the face of widespread protests from local farmers, who claimed that their land had been acquired by the state government under questionable circumstances. Similar problems over land-acquisition issues affected many other industrial projects in India, posing a significant threat to the government's initiatives to spur employment in the manufacturing and services sectors…

On September 27, 2013, India enacted the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act 2013 (New Land Act), replacing the Land Acquisition Act of 1894 (Old Land Act). Enacting this legislation had been onerous: it had taken two governments six years to design a bill that satisfied all stakeholders. The new law included major changes to the government's power of “ eminent domain” in land acquisitions, compensation guidelines and resettlement and rehabilitation (R&R) procedures. The government lauded the New Land Act as a key policy measure for solving India's land acquisition issues that were impeding industrial growth. Despite the government's optimism, industries were worried that the new regulations would make land acquisition more expensive and time consuming, while civil-society advocates felt it did not adequately protect farmers' interests. This opposition from an unlikely alliance of industrialists and activists raised the question of how effective the act would be in resolving India's land acquisition battles.

In 2012, China attained a historic development milestone: for the first time, more Chinese citizens lived in cities than in the countryside. Government figures reported that 691 million people, or over 51 percent of China's population, lived in urban areas at the beginning of the year. While this milestone had been attained by the UK in 1851 and the US in 1920, China's urbanization had been extremely rapid compared to other emerging markets such as India and Thailand. Only about 20 percent of China's population lived in urban areas when market reforms were first introduced in 1979. By 2030, more than 70 percent are expected to live in cities (see Figs. 1 and 2)…

Rance Hollen turned away from his screen in frustration. The Bombay Stock Exchange (BSE) Realty Index had just dropped another 200 points. As Hollen gazed out the window of Warwick Capital's 28th floor offices in London's Canary Wharf, he wondered if this was really the time for his fund to make its foray into India. Warwick Capital had a consortium of development partners counting on them to make the right call and, of course, the fund had its own equity on the line. Now Hollen had only a few days left to submit a final bid to the Government of Maharashtra to win the right to redevelop Mumbai's storied Dhārāvi slum…

In July 2009, several real estate consortia were gearing up to submit financial bids for the $3 billion Dhārāvi Redevelopment Project (DRP). The project involved redeveloping Mumbai's largest slum through a public–private partnership. With property prices in Mumbai among the highest in the world, the scheme was claimed to be profitable even after the current residents of Dhārāvi were provided free housing with better amenities and upgraded infrastructure in the same area. In March 2009, 14 proposals for developing Dhārāvi had undergone technical evaluations…

It was a warm afternoon in January 2010 and Vijay Singh, Chief Executive Officer of Fox Star Studios, had just finished a meeting with his senior management team at the company's headquarters in Mumbai, India. During the meeting, discussions centered around the upcoming release of My Name is Khan, scheduled for February 12, 2010. Fox Star Studios was a joint venture between Hollywood's 20th Century Fox and Asia's STAR Television. Published reports indicated that the studio had paid in excess of $22 million to purchase the global distribution rights for the movie, which had an estimated production cost of $12 million. Starring one of Indian cinema's leading actors, Shah Rukh Khan, and directed by one of the industry's most successful directors, Karan Johar, the film was one of the most highly anticipated releases of the year. Fox planned an aggressive distribution campaign involving an international release of 500 prints across 65 countries. Success in the Indian movie market had eluded Hollywood studios thus far: despite investing over $100 million on producing films in India between 2007 and 2009, Hollywood studios had not released any major hits…

“It's going to be released in a way no Hindi film has been released internationally before …” remarked Shah Rukh Khan, one of the Indian cinema's most popular stars, as he described the upcoming release of his film, My Name is Khan. After assessing the costs and benefits of adopting stringent anti-piracy measures, Vijay Singh, CEO of Fox Star Studios, had taken considerable steps to protect My Name is Khan from the dangers of piracy.

Between 2000 and 2004, India's economy grew by 6.4 percent, and the fraction of the population living below the poverty line declined from 36 percent in 1993 to an estimated 22 percent in 2004–2005. This growth was facilitated by the economic reforms implemented after the government faced a balance of payments crisis in 1991. These reforms included reductions in tariffs, substantial reductions in regulations and license restrictions on business and inviting foreign direct investment (FDI) into most sectors of the economy. India developed a vibrant services sector, with the share of services in overall GDP growing from 42 percent in 1991 to 53 percent in 2004. The country became internationally known for the quality of its information technology (IT) firms and engineers. Analysts expected IT and other business process outsourcing (BPO) firms to employ 1.2 million people and contribute nearly 5 percent of GDP in 2006–2007…

In October 2011, Indonesia's parliament passed a law creating Otoritas Jasa Keuangan (OJK), a new organization designed to bring under one roof the regulation and supervision of Indonesia's banks, capital markets, and non-bank financial institutions (NBFIs). At the start of 2013, OJK would take responsibility for capital markets and NBFI supervision from the Ministry of Finance (MOF) and Bapepam-LK, the capital markets regulator. At the start of 2014, OJK would take responsibility for bank regulation and supervision from the central bank, Bank Indonesia…

In March 2012, U.S. President Barack Obama nominated Jim Yong Kim for the position of the World Bank's 12th president. Kim was president of Dartmouth College and founder of the NGO Partners in Health (PIH). Obama highlighted Kim's long experience working in the field of development, “Jim has truly global experience. He has worked from Asia to Africa to the Americas, from capitals to small villages. It's time for a development professional to lead the world's largest development agency.”…

January 1, 2004 marked the 10th anniversary of the North American Free Trade Agreement (NAFTA). A decade after this landmark trade agreement was signed by the United States, Canada and Mexico, there was considerable debate whether it had been good for the countries that signed it. U.S. President George W. Bush said that NAFTA had “created jobs and lifted lives,” but Democratic Presidential candidate John Kerry insisted that the treaty needed to be “fixed and adjusted.” Critics of NAFTA in the United States claimed that it had caused a loss of 750,000 manufacturing jobs to Mexico, lowered U.S. wage levels, undercut American environmental laws and caused a “tremendous collapse” in Canada's social welfare infrastructure. Neither were all Mexicans in agreement with President Vicente Fox, who claimed that NAFTA “has been successful for Mexico.” A poll conducted in Mexico City found that 44 percent of adults disapproved of NAFTA and that 83 percent felt that the United States had benefited the most from it. Tens of thousands of Mexican farmers thronged the streets of the capital in early 2003 to demand a review of the agricultural provisions in NAFTA…

The following sections are included:

• Introduction
• Country background
• Political history
• Economic history
• Challenges facing India
• India 2014: A difficult road ahead
• Endnotes

In a referendum on the country's economy and on over a decade of democratizing reforms, Indonesian voters elected new national and provincial legislators in April 2014, and a new president in July. Many important issues faced the country — uncertainties about macroeconomic growth and competitiveness, concerns about high levels of corruption, inadequate infrastructure investment and continued dependence on resource exports, from oil and gas to illicit hardwood…

The following sections is included:

• Index