GROWTH PUZZLE:: An evaluation of Deepak Lal’s Hindu Equilibrium

Abstract: The aim of this degree project was to make a quantitative evaluation of Deepak Lal’s thesis, which claims that India’s economic prosperity has been limited by four parameters; uncertain labor supply, political instability, climatic uncertainty and a set of distinctive social attitudes and beliefs. By using the regression method of event studies, a quantitative analysis has been done where the process of reforms in 1991 in India has been set as the event date and Pakistan used as a control variable. The main result, thus, is that it is the process of reforms in 1991 rather than a decrease of Lal’s four parameters that has had an impact of economic growth in India.