Path Dependence and Path Creation in India’s Industrial Upgrading:A Discussion based on New Institutional Economics

　　ABSTRACT: Industrial upgrading is a critical means whereby which a state advances its level of economic growth, and might also be thought of as a process of institutional evolution. According to the views of scholars of New Institutional Economics, the particular pattern of resource extraction, technology, and institutions that India has followed have locked in a path towards “reverse industrialization.” If India desires to break out of this path and realize industrial advancement, it must carefully consider the aspects of its industrial structure which cause this path dependence, including rising wages, interest groups, costs of entry, effectiveness of learning and coordination, adaptability of expectations, and the general theories and concepts underlying its economy. Through such analysis, India can achieve path creation, enhance internal drivers for economic growth and development, and realize the objective of sustainable, long term GDP growth. This conceptual exercise will also likely prove useful for advancing China’s own respective industrial upgrading.