Case Study: Development in an Emerging Country (India)
An Emerging Powerhouse
In 1991, India faced a financial crisis with only enough foreign currency to pay for two weeks of imports. The government chose to open the economy: cutting tariffs, welcoming foreign investment, dismantling old controls. Three decades on, India is the world’s fifth-largest economy, with over 1.4 billion people. It is a classic emerging country — but the growth has been uneven. This case study explains how India got here and what comes next.
Site, Situation and Context
India’s site — what is found at the location — covers 3.3 million km² of South Asia, with the Himalayas in the north, the Thar Desert in the west, and a vast tropical and subtropical interior. Its situation — how it relates to other places — is favourable for trade: long coastlines on the Indian Ocean, ports at Mumbai, Kolkata and Chennai, and proximity to the Persian Gulf, Southeast Asia and East Africa. Connectivity has improved with new airports, mobile networks reaching 95% of the country, and a fibre-optic backbone supporting the IT industry.
Politically, India is the world’s largest democracy, with a federal structure of 28 states. Its formal Independence from Britain in 1947 left it with English-speaking elites, a robust legal system, and an inherited rail network — all useful for trade and global business. Culturally, the country has 22 official languages and immense diversity. Hinduism is the majority religion, but India is also home to large Muslim, Christian, Sikh, Buddhist and Jain populations.
India: population 1.4 billion (2024); 5th-largest economy by GDP, 3rd by purchasing power; over 22 official languages; economic liberalisation began in 1991; megacities include Mumbai (financial), Delhi (political), Bengaluru (IT) and Kolkata (cultural-historical).
Globalisation Drives Growth
Since 1991, India’s economy has been transformed by globalisation. Average GDP growth between 2003 and 2018 was around 7% per year — second only to China among major economies. The composition of the economy has shifted dramatically. In 1990, agriculture employed about 60% of workers and produced 30% of GDP. Today agriculture is around 18% of GDP, services 50%, and industry 25%. The IT and business-services sector centred on Bengaluru exports software and back-office work to the world — Wipro, Infosys and TCS rival US tech companies.
India received around $84 bn of foreign direct investment in 2022 — up from less than $1 bn in 1990. The largest sources are Singapore, the USA, Mauritius and Japan. Investment flows into IT services, telecommunications, manufacturing (Apple now assembles iPhones in Tamil Nadu), pharmaceuticals and renewable energy. The government’s ‘Make in India’ programme since 2014 has actively courted manufacturing FDI to reduce dependence on imports and create jobs for the 12 million young Indians entering the workforce each year.
Demographic and Social Change
Rapid economic change has reshaped Indian society. The fertility rate has fallen from 5.4 in 1960 to 2.0 today, just below replacement. Life expectancy has risen from 41 years (1960) to 70. Around 35% of Indians now live in urban areas, up from 17% in 1950. Tens of millions are leaving farms for cities — the rural-urban migration typical of emerging economies. New regions have emerged: Bengaluru’s IT corridor, Mumbai’s financial district, Gujarat’s industrial belt — the country’s ‘core’. Other regions, especially in Bihar and Uttar Pradesh, lag behind — the ‘periphery’.
Around 415 million Indians escaped poverty between 2005 and 2021 (UN figures). But around 230 million people are still poor on the same UN measure, and Delhi’s air pollution is among the worst in the world — a sign that growth has come at significant environmental cost.
Costs and Benefits
Benefits include rising living standards, falling extreme poverty, expansion of the middle class to around 350 million people, world-class IT companies, and improving infrastructure. Costs are real too: environmental damage — air and water pollution, especially in Delhi (PM2.5 levels routinely 10× WHO guidelines); inequality — women earn around 35% less than men, and the wealthiest 10% take more than 57% of national income; rising land and property prices; loss of farmland to urban sprawl. Globalisation has not benefited everyone equally.
India’s rapid growth, and the core-periphery inequality it has created, have changed its position in the world. It is part of BRICS (alongside Brazil, Russia, China, South Africa) and the G20. It now leads the Quad security partnership with the USA, Japan and Australia. Its space programme reached the moon in 2023. India is no longer just a recipient of foreign aid — it now provides aid to smaller neighbours like Sri Lanka and Bhutan. But strained relations with neighbouring China (over disputed Himalayan borders) and Pakistan still shape regional politics.