How did other countries get rich?

In 1945, Japan lay in ruins. Allied bombing had flattened most of its cities. Per capita income had fallen by more than 40% from pre-war levels. Twenty-five years later, Japan was the second largest economy in the world.

What happened in between has been repeated, with variations, by South Korea, China, and Vietnam. Every country that escaped poverty in the last eighty years did so by opening itself to trade, integrating into global markets, and competing with the world’s best producers.

Japan rebuilt around exports — textiles first, then steel, then electronics and cars. Each step forced Japanese companies to meet the standards of the world’s most demanding buyers. That discipline made Japan rich.

South Korea followed a decade later. In 1960, it had a per capita income roughly comparable to India’s — a small, resource-poor country still recovering from a devastating war. Over the next three decades, it built a globally competitive manufacturing sector around exports: ships, steel, electronics, semiconductors. By the 1990s, South Korea had crossed into high-income status.

China’s turn came with Deng Xiaoping’s reforms in 1978. He opened special economic zones — starting with Shenzhen, then a fishing village on the border with Hong Kong — where foreign companies could invest and trade freely. When China joined the WTO in 2001, growth accelerated further. Over the following two decades, it lifted 800 million people out of poverty. The average Chinese person today earns five times as much as the average Indian.

Vietnam is the most direct comparison for India. In the early 2000s, Vietnam had a per capita income comparable to India’s. The Doi Moi reforms opened trade, welcomed foreign investment, and plugged Vietnam into global supply chains for electronics, textiles, and footwear. Today, the average Vietnamese earns nearly twice as much as we do.

Now one may argue that Japan and South Korea did not simply open up and step back. Their governments actively directed investment, protected early industries, and provided cheap credit to favoured firms. But if we look carefully, we realise that companies that received state support were required to export — to win in international markets or lose their backing. The state pushed them into the most demanding competition available, not away from it. Compare this with India, and we realise that we have protected our industries from global competition with no requirement to ever prove themselves against the world. The difference is between being open to global competition and refusing to compete.

Every country that got rich did so by selling to the world. But if that’s the lesson, India faces an uncomfortable question: what happens to our farmers and manufacturers who have spent decades behind tariff walls?