This study is the outcome of my researches conducted at Harvard University when I returned

there in June 1985 and spent one and a half years as a Visiting Professor ofEconomics, and
subsequently for a short period in the Peoples Republic ofChina in NovemberDecember, 1986.
My primary debt is to Professor Roderick Macfarquhar who made it possible for me to be at
Harvard and was a source of cons¬ tant encouragement. I was also a part of his China-India
seminar held atthe FairbankCenterforEast China ofthe university in which seminar I was able to
present an earlier draft of this book in three presentations. Many scholars participated in these
seminars and had givenme valuable suggestions. It is not possible here to thank them all
individually. My gratitude goes to Professor Dwight Perkins who read the earlier drafts and gave
me detailed written comments which helped improve the subsequent draft. While I have been
considerably influenced by ProfessorPerkins, he is not responsible forthe errors in the revised
draft, or for its conclusions. The library facilities and the friendly academic atmosphereofthe
Fairbank Center contributed very greatly to the speed with which I was able to complete my
research. I wish to particularly thank Professors Merle Goldman, James Manor, Robert Lucas,
David Lelyveld, Philip Kuhn and Benjamin Schwartz for incisive comments on various issues
concerning this study made in the pleasant setting ofthe Coolidge Hall cafetariaon an earlier draft
ofthe manuscript. My sister-in-law, Mrs. Mary Kapadia and Mrs. Line Boudreault ofLes Services
de Secretariat ML Inc., Montreal, Canada gave me timeless and valuable assistance in typing the
drafts in manuscript. No words can be adequate to thank them enough. Financial assistance
fortravel to China in November-December 1986 received from the Ford Foundation is gratefully
acknow¬ ledged. The author is also indebted to Kanchi Kamakoti Fund and Dr. S.K. Singh for a
grant to meet other travel expenses in 1987. March 31, 1989 AB/16, Mathura Road New Delhi -
110 001, INDIAChina and India are two ancient countries with over 4,000 years of recorded
history. Together, the population of the two countries comprises forty percent of the world
population. Today the two countries are economically in an underdeveloped stage, with low per
capita income, but with several impressive scientific and tech¬ nological achievements Many of
the facts and issues about these two countries are gigantic - population, size, history, and even
the problems and complexities. Though today China and India are underdeveloped countries, it is
significant that about two centuries ago, they were considered by the then contemporary
standards, to be developed countries ofthe world. Dwight Perkins[l] has listed seven criteria for
considering a country as a “pre-modem” developed country. He concludes that China of the
eighteenth century was indeed such a developed country. By the same criteria India too is a “pre-
modem” developed country. But China and India did not respond to the industrial revolution that
in Europe transformed nations from poor peasant societies to modem developed ones. During the
course of this period they failed to exploit the epochal innovations of modem economic growth.
These two then-advanced nations failed to meet the challenge ofmodem economic growth. Why
is itthat China andIndia, which apparently had access to Western technology were unable to seize
the opportunity, the “access,” and transform their economies along modem lines? Was it that the
access was more apparent than real? Were there constraints and obstacles that stood in the way
of such economic modernization? If so, what was the extent of such blocks to economic growth
in the two countries? These are some ofthe questions that we shall attempt to answerin this
chapter. The fact that China and India are so different from other developing countries in
experience and endowments makes tradi¬ tional economic historians’ explanations of
“backwardness” of nations in part incomplete and in part inapplicable. The basic cha¬
racteristics that historians have listed as preconditions for entering modem economic growth -
such as commercialization of agricul¬ ture, a monetary system with pre-modem banks, existed in
these two countries in the nineteenth century. Thus, there has to be a special explanation for
these two countries. Besides, the usual explanation of the Weberian lack of motivation, or the
left-wing thesis of imperialist drain of resources, do not mesh with the rich complexities in the
evidence ofthe Chinese and Indian nineteenth century realities. The “drain” theory fails to
grapple with a number of important issues. In the first place, it is not quite clear whether the
drain of resources was the cause or effect ofthe lack ofdevelopment in the two countries. Second,
it does not allow for, or fails to explain, the inner contradictions of the imperialist interest
groups. The drain theory has good explanatory power only when the “exploiters” can be
portrayed as representing homogenous interests, but in the Chinese and Indian cases, the Western
imperialists are clearly an amalgam of inter-regional and intra-regional heterogenous interests.
Finally, the drain theory assumes that the subjugated country could, in the historical
circumstances, have entered into modem economic growth prior to or independent of contact
with the foreigners. This may well be true, butitis notsomething one can assume. Even ifit is true,
drain theory is not the only explanation consistent with this assumption