6.4 South Asia: Building the Future Unevenly Technology, Labor, Cities, and Human Possibility

 

Section 4: Building the Future Unevenly

Technology, Labor, Cities, and Human Possibility

Learning Objectives

After reading this section, you should be able to:

1. Describe the scale of South Asia’s recent economic growth and poverty reduction.
2. Explain Amartya Sen’s capability approach and how it differs from measuring development through income alone.
3. Distinguish among outsourcing, offshoring, and global capability centers.
4. Analyze how artificial intelligence may both expand and restrict economic opportunity.
5. Explain the importance of manufacturing, informal employment, migration, and remittances to South Asian economies.
6. Analyze how caste, gender, education, and location influence access to economic opportunity.
7. Evaluate the achievements and environmental costs of the Green Revolution.
8. Compare gross domestic product, Gross National Happiness, and human development as measures of progress.

A Shirt, a Line of Code, and a Region in Motion

A shirt hanging in a Minneapolis store may begin as cotton grown in India or Pakistan. The fiber may be spun into thread, woven into cloth, dyed, transported to Bangladesh, and sewn by a worker outside Dhaka. Its inventory may be managed by software written in Hyderabad. Its shipment may be insured through an office in Mumbai, tracked through a port in Sri Lanka, advertised by a company in Europe, and purchased through a payment system maintained partly by engineers in Bengaluru.

The shirt appears in the store clean, folded, and nearly anonymous. The labor that made it does not.

The world economy is sometimes described as though it exists in a weightless realm of markets, finance, and data. In reality, it occupies fields, factories, ports, cables, warehouses, apartment towers, roadside workshops, and human bodies. A line of software may cross the planet in a fraction of a second, but the person who writes it still needs housing, electricity, education, food, and a way through traffic.

South Asia has become one of the central workshops, offices, markets, and laboratories of the modern economy. India is a major center of software, pharmaceuticals, engineering, finance, digital services, manufacturing, and artificial intelligence. Bangladesh is among the world’s most important exporters of clothing. Pakistan’s economy includes textiles, agriculture, manufacturing, and a large overseas workforce. Sri Lanka combines manufacturing and services with tourism and a highly educated population. Nepal depends heavily on migration and remittances. The Maldives built an economy around tourism scattered across small islands, while Bhutan has combined hydropower and controlled tourism with an unusual effort to measure national well-being. Afghanistan remains constrained by conflict, weak institutions, international isolation, and the exclusion of much of its female population from education and employment.

These economies are not following one common road toward development. Nor are they simply moving from “traditional” to “modern.” A woman may receive a factory wage through a digital account while living in a household organized around long-standing gender expectations. A farmer may consult an artificial-intelligence system before irrigating a field cultivated by the family for generations. A street vendor may lack a formal business license but accept payment through a nationally regulated financial network.

The old and the new are not separate historical periods. They often occupy the same street.

India’s Great Transformation

India’s economic rise is one of the great material transformations of the modern era.

The country entered independence in 1947 burdened by mass poverty, low literacy, poor health, fragile infrastructure, and the recent memory of famine. Its economy grew slowly during the first decades after independence. Since the 1990s, however, reforms, investment, urbanization, technological development, education, global trade, and domestic consumption have supported far faster growth.

India’s economy expanded by an estimated 7.6 percent during fiscal year 2025–2026. The World Bank expected growth to moderate but remain strong in the following year, despite pressures from energy prices and global instability. Growth at this rate is unusual for an economy of India’s immense size (World Bank, 2026a).

The reduction of poverty has been equally significant. Because the World Bank updated its international poverty lines and purchasing-power calculations in 2025, different publications produce different percentages. The direction of change, however, is unmistakable. Using the poverty line typical of lower-middle-income countries, the World Bank estimated that India’s poverty rate fell from about 58 percent in 2011 to 16 percent in 2023, lifting nearly 500 million people above that threshold. Extreme poverty also declined dramatically (World Bank, 2026a).

India’s own multidimensional measures tell a similar story. These measures examine overlapping deprivations involving nutrition, schooling, housing, sanitation, cooking fuel, electricity, bank access, and other conditions. National estimates indicate that multidimensional poverty fell sharply during the 2010s and early 2020s, with particularly large improvements in sanitation, cooking fuel, electricity, and household living standards (NITI Aayog, 2024).

These changes should not be buried beneath a discussion of everything that remains wrong. Hundreds of millions of people have gained longer lives, more schooling, electricity, roads, telecommunications, sanitation, bank accounts, consumer goods, and access to services that were once unavailable. Families that once lived at the edge of famine now make choices about education, housing, transportation, and work that their grandparents could scarcely have imagined.

Social expectations have also changed. Girls remain in school longer. Young people aspire to a wider range of occupations. Smaller families have become common across much of the region. Migration, television, film, and social media have exposed people to ways of living that were once geographically remote. Caste and gender restrictions are increasingly challenged, even where they remain powerful.

This should not be described as an entire culture becoming “advanced.” Cultures do not climb a single staircase from primitive to modern. What has occurred is a far-reaching social transformation in which people possess new resources, expectations, and points of comparison.

The transformation remains profoundly uneven. Poverty is concentrated in particular states, districts, social groups, and rural regions. Millions of workers remain in insecure or low-productivity employment. Education has expanded more quickly than the supply of jobs that match educated workers’ ambitions. Young people may acquire degrees only to discover that the promised professional world does not have enough places for them. The International Labour Organization has found that educated Indian youth often face higher unemployment because their qualifications and expectations do not align with the jobs available (International Labour Organization & Institute for Human Development, 2024).

India has therefore answered one development question spectacularly: can a vast and poor country become much richer within a generation?

It has not yet fully answered the next one: can that wealth be transformed into secure and meaningful opportunity for nearly everyone?

What Is Development For?

The Indian economist Amartya Sen proposed a way to think about this problem that has influenced development policy around the world.

Sen argued that development should not be judged only by income, production, or the amount of goods people possess. It should be judged by the real freedoms people have to live lives they value. He called these freedoms capabilities (Sen, 1985, 1999).

A capability is not simply an object or a legal right. It is the practical ability to do or become something.

A bicycle may expand the mobility of a healthy person but be useless to someone unable to ride it. A school may exist nearby, yet a girl may be unable to attend because her family needs her labor, fears for her safety, or refuses permission. A worker may have a legal right to seek employment but lack transportation, childcare, education, social connections, or freedom from discrimination.

Two people can therefore possess the same formal right while having very different capabilities.

Consider a smartphone. Its owner may have access to banking, government services, crop prices, employment listings, medical information, and artificial intelligence. Yet those possibilities depend on literacy, language, connectivity, privacy, money for data, and control over the device. A household may report owning a phone even when one member controls who is allowed to use it.

Information is not yet capability.

Sen’s approach does not dismiss economic growth. Poor societies need resources. Governments cannot build hospitals, schools, transit systems, or water networks without wealth. Families cannot easily escape hunger through philosophical insight. Income matters because it helps people acquire genuine choices.

The capability approach instead asks what income has been converted into. Has economic growth allowed people to live longer, avoid preventable disease, attend school, move through public space, participate in politics, obtain secure work, and make consequential decisions about their own lives?

The distinction between resources and capabilities also helps explain why identical public investments can produce unequal results. A new university may expand opportunity most for students who already attended good schools. A digital government program may be easier to use for people who possess identification, bank accounts, reliable internet access, and confidence dealing with official systems. A road may connect a village to employment while also allowing land speculators to purchase property from households with little bargaining power.

Development is not merely the arrival of a resource. It is the geography of who can use it, on what terms, and toward what end.

Sen’s work helped inspire the human development approach used by the United Nations Development Programme. Human-development measures examine health and education alongside income because the purpose of development is understood as enlarging human possibility rather than simply enlarging an economy (United Nations Development Programme, 2025).

This framework is especially useful in South Asia. The region contains extraordinary technological capacity alongside malnutrition, world-class universities alongside weak primary schools, advanced hospitals alongside communities with limited basic care, and immense wealth alongside fragile housing.

These contrasts do not mean that growth has failed. They reveal the work that growth has not yet completed.

Beyond the Call Center

India’s rise in global services was initially symbolized by the call center. A customer in the United States or Britain dialed a company number and spoke with an employee in Bengaluru, Hyderabad, Delhi, Mumbai, Pune, or another Indian city.

The arrangement depended on geography. India possessed a large English-speaking professional workforce, relatively low wages, improving telecommunications, and a time zone that allowed work to continue while North America slept. Companies discovered that data processing, accounting, technical support, medical transcription, and software work could be moved across oceans.

Several related terms are frequently confused.

Outsourcing occurs when an organization hires an outside company to perform work.

Offshoring occurs when work is moved to another country, whether or not an outside company performs it.

A global capability center is typically an office owned by the multinational company itself. Rather than contracting out a task, the company establishes part of its internal operation in another country.

India now performs work far beyond routine customer service. Its professionals conduct software engineering, financial analysis, product design, cybersecurity, medical research, legal support, data science, supply-chain planning, and artificial-intelligence development. By fiscal year 2024, India hosted more than 1,700 global capability centers employing approximately 1.9 million professionals and generating an estimated $64.6 billion in annual revenue (National Association of Software and Service Companies, 2024).

This is no longer simply a story of companies seeking the least expensive person to answer a telephone. India has become part of the intellectual and technical core of multinational corporations. A pharmaceutical company may conduct data analysis in Hyderabad. A bank may develop risk models in Mumbai. An automobile company may design components in Bengaluru. The office is geographically distant from corporate headquarters but institutionally inside the company.

India has also developed extensive digital public infrastructure. Digital identity, bank-account access, mobile connectivity, and payment systems have allowed governments and businesses to deliver services at enormous scale. Small merchants can accept electronic payments through printed codes taped beside fruit, tea, auto parts, or household goods.

The reach of the digital economy is impressive, but its employment remains selective. India’s Ministry of Electronics and Information Technology estimated that the digital economy employed 14.67 million workers in 2022–2023, about 2.55 percent of the workforce. Agriculture, by comparison, employed about 45.8 percent. The digital economy produced much more output per worker and was projected to approach one-fifth of national income by the end of the decade (Ministry of Electronics and Information Technology, 2025).

This creates a central development problem. A highly productive sector can transform national income without directly employing most of the population.

Artificial Intelligence and the Next Shift

Artificial intelligence may accelerate India’s movement into high-value work. Indian engineers, researchers, companies, universities, and public agencies are developing systems for translation, agriculture, education, health, logistics, coding, and government services.

AI could help a farmer recognize crop disease from a photograph. It could translate educational materials into languages neglected by commercial publishing. It could help a small business prepare documents, allow a physician to review medical images, or give a student access to individual tutoring.

The value of these systems will depend on the human conditions surrounding them. A farmer needs a reliable diagnosis and access to the treatment recommended. A student needs enough background knowledge to recognize an incorrect answer. A medical system needs doctors, nurses, electricity, data protection, and institutions capable of acting on the information produced.

The most important question is not whether a machine appears intelligent. It is whether people become more capable.

AI will also disrupt some of the work that helped build India’s service economy. Routine customer support, transcription, basic coding, document review, and administrative processing are increasingly exposed to automation. The World Bank estimates that AI strongly complements labor in jobs held by roughly 15 percent of South Asian workers. Many other workers occupy jobs that may receive fewer immediate benefits or face greater competition from automation (World Bank, 2025a).

The result may not be a simple disappearance of employment. Tasks within jobs will change. A software developer may produce more code, a translator may revise machine output, and a customer-service worker may handle only the disputes too difficult for an automated system. Productivity may rise while the number of entry-level positions falls.

That last possibility matters. Entry-level work is how inexperienced people become experienced. If AI removes the bottom rungs of a professional ladder, companies may eventually discover that they have not trained enough people to stand at the top.

Education will therefore need to provide more than memorized information or routine technical procedures. Workers will need judgment, communication, specialized knowledge, adaptability, and the ability to recognize when an apparently confident machine is wrong.

A country does not gain the full value of AI merely by having talented engineers. It gains that value when teachers, farmers, nurses, small businesses, public agencies, and ordinary citizens possess the skills and power to use it.

Factories and Global Supply Chains

South Asia’s economic transformation is not confined to computer screens.

Bangladesh’s garment industry offers one of the clearest examples of globalization taking physical form. During fiscal year 2024–2025, Bangladesh exported approximately $39.3 billion in ready-made garments. Clothing accounted for more than 81 percent of the country’s merchandise exports (Bangladesh Garment Manufacturers and Exporters Association, 2026).

The industry connected Bangladesh to retailers and consumers across Europe, North America, and Asia. It drew millions of workers into cities, created paid employment for large numbers of women, and helped support improvements in household income, schooling, and health.

Factory employment could expand a woman’s choices while exposing her to long hours, strict supervision, low wages, and unsafe conditions. A wage may increase bargaining power within a household, but this does not make the workplace liberating in every respect.

The contradiction became brutally visible in 2013, when the Rana Plaza building collapsed near Dhaka, killing more than 1,100 workers and injuring thousands. Cracks had appeared in the structure before the collapse, yet garment employees were ordered back inside.

International outrage produced inspections, structural repairs, safety training, and legally binding agreements among some brands and labor organizations. Workplace safety improved in many export factories, although enforcement, subcontracting, union rights, compensation, and working conditions remain contested (International Labour Organization, 2023; International Accord, 2023).

The lesson is not that global manufacturing is either wholly beneficial or wholly exploitative. It can be both productive and unjust. Factory jobs may offer an alternative to poorly paid agricultural labor while still distributing a small share of the final product’s value to workers.

The customer sees a price tag. The factory sees a deadline. The worker feels the hours.

Pakistan is also deeply connected to global textile and clothing markets. Sri Lanka developed an important apparel industry, often emphasizing higher-value and specialized products. India manufactures textiles, automobiles, pharmaceuticals, electronics, machinery, and many other goods while attempting to capture more of the production now being reorganized across Asia.

Global supply chains give South Asian countries opportunities to industrialize, but they also create vulnerability. A change in fashion, trade policy, shipping costs, automation, or consumer demand in distant countries can affect employment in Dhaka, Karachi, Colombo, or Tiruppur.

The factory may be local. The decision to close it may be made elsewhere.

The Economy Most People Actually Work In

The gleaming office tower and the export factory are only parts of South Asia’s economy. Much of the region’s work takes place in farms, small shops, homes, markets, construction sites, workshops, vehicles, and streets.

Informal employment generally refers to work without full legal registration, written contracts, labor protections, or employer-provided social security. It includes street vendors, day laborers, domestic workers, home-based producers, waste collectors, drivers, repair workers, small farmers, construction workers, and unpaid members of family enterprises.

Informal does not mean imaginary, unproductive, or necessarily illegal.

A registered company may purchase goods from an unregistered workshop. A formal middle-class household may employ a domestic worker without a contract. A food-delivery platform may be a sophisticated corporation while the person carrying the food remains an independent worker without health insurance, paid leave, or job security.

Formal and informal economies are braided together.

The International Labour Organization distinguishes employment by whether workers possess contracts and social-security benefits, not simply by whether they work for a large company. An employee in a formally registered business may still be informally employed if the job provides no meaningful legal or social protection (International Labour Organization & Institute for Human Development, 2024).

India has expanded regular employment, but job quality remains uneven. In 2022, only about 9.5 percent of total employment was classified as regular formal employment in the ILO’s analysis. Even among young regular workers, written contracts, long-term security, and social benefits were uncommon (International Labour Organization & Institute for Human Development, 2024).

Informality allows people to create work when formal jobs are unavailable. A person can begin repairing phones, preparing food, driving passengers, selling vegetables, or producing clothing without waiting for a large employer. These activities provide flexibility and economic survival.

The cost is insecurity. Earnings may vary by the day. Illness can eliminate income. Workers may lack pensions, insurance, legal protection, bargaining power, or a safe workplace. A city depends upon their labor while often treating their presence as temporary or undesirable.

Platform companies have introduced another layer. Ride-hailing, delivery, and online marketplaces can connect workers with customers and provide digital records of transactions. Yet the worker may remain formally independent even when an algorithm determines prices, routes, ratings, and access to future work.

A machine does not need to shout at a worker to exercise control. It can simply stop offering assignments.

Microcredit: Neither Miracle nor Fraud

South Asia was central to the global rise of microcredit, the practice of providing small loans to people excluded from conventional banking. Bangladesh’s Grameen Bank and economist Muhammad Yunus became internationally famous for lending primarily to poor women who lacked traditional collateral.

The idea challenged a widespread assumption that poor people were unworthy of credit. Borrowers could use small loans to purchase livestock, equipment, inventory, or materials for home-based businesses. Group lending and repeated repayment created alternatives to conventional collateral.

Early advocates sometimes presented microcredit as a near-universal solution to poverty. Later research produced a more modest conclusion. Studies across several countries found that access to microcredit could increase business activity for some borrowers, but the average effects on poverty, household income, and women’s empowerment were generally positive but not transformative (Banerjee et al., 2015).

Credit provides money that must be repaid. It does not create customers, skills, transportation, childcare, land, health, or a profitable market. A loan can help someone take advantage of an opportunity. It cannot guarantee that the opportunity exists.

Microcredit was neither a miracle nor a fraud. It was a financial instrument asked to perform the work of an entire development system.

Savings accounts, insurance, mobile banking, self-help groups, reliable public services, and social protection may be as important as loans. For a household facing illness or crop failure, the ability to avoid taking a high-interest emergency loan may matter more than the ability to borrow for a business.

When Social Hierarchy Becomes Economic Friction

Caste also shapes economic opportunity.

Caste networks can provide trust, credit, apprenticeships, customers, marriage connections, and assistance during hardship. The same networks can restrict occupations, exclude outsiders, limit migration, and direct opportunity toward people born into the correct community.

When talent is prevented from moving toward opportunity, hierarchy becomes an economic cost as well as a moral injustice.

A student from a historically advantaged family may inherit good schooling, English proficiency, professional relatives, a quiet place to study, and knowledge of how to apply for desirable positions. Another student may possess equal intelligence and legal rights but lack the surrounding conditions needed to convert education into employment.

Their formal freedom is similar. Their capabilities are not.

Research on intergenerational mobility shows persistent differences among caste groups and substantial variation among Indian states. Economic growth alone has not automatically produced equal mobility, although education, political organization, reservations, financial inclusion, and movement into nonfarm employment have reduced some gaps (Sinha, 2018; World Bank, 2024a).

Urbanization can weaken caste restrictions by placing strangers together in workplaces and neighborhoods. It can also reproduce them through hiring networks, housing discrimination, workplace segregation, and marriage. A person may write software for a global company and still be expected to marry within a narrowly defined caste.

Modernization does not erase history. Sometimes it gives history a database.

Migration and the Economy Beyond the Map

South Asia’s economy extends far beyond the region’s borders.

Millions of Indians, Pakistanis, Bangladeshis, Nepalis, Sri Lankans, and Afghans work in the Persian Gulf, Europe, North America, Southeast Asia, and elsewhere. They build towers, staff hospitals, drive vehicles, clean homes, operate businesses, teach students, write software, and care for children and older adults.

Part of their income returns home as remittances.

India received an estimated $129 billion in remittances in 2024, more than any other country. Pakistan received approximately $33 billion. In smaller economies, including Nepal, remittances represent a much larger share of national income and household survival (World Bank, 2024b).

Remittances can finance housing, food, medical care, education, land purchases, and small businesses. They can help households survive crop failures, recessions, or political crises. Because the money goes directly to families, it may reach communities more quickly than government development programs.

But remittances are not money from nowhere. They are wages earned somewhere else.

The migrant may work long hours under restrictive labor rules, live apart from family, pay recruitment debts, or surrender a passport to an employer. Children may grow up with one or both parents abroad. Communities may gain income while losing skilled workers.

Migration can be an expansion of capability when people choose it among several meaningful options. It is something different when departure is the only reliable path to a decent income.

Cities Under Construction

South Asia’s cities are growing upward, outward, and beyond the administrative boundaries drawn around them.

Mumbai, Delhi, Bengaluru, Dhaka, Karachi, Colombo, Kathmandu, Hyderabad, Chennai, and other cities concentrate jobs, universities, hospitals, finance, manufacturing, entertainment, political power, and technological innovation. They also concentrate congestion, expensive housing, pollution, heat, flooding, and inequality.

The visible landscape can seem almost improvised. A glass office tower rises behind a row of roadside workshops. A metro line passes above homes assembled from brick, sheet metal, concrete, and blue plastic. An air-conditioned shopping center stands beside an open drainage channel. Apartment buildings appear before the roads and sewers required to serve them.

This is not simply chaos. It is the physical result of economic growth moving faster than housing, planning, and local government.

The term slum is widely used in statistics, but it can reduce very different neighborhoods to one image of misery. Informal settlement is often more precise. It generally refers to housing built outside formal land, planning, or regulatory systems, often with insecure tenure or incomplete public services (World Bank, 2025b).

Informal settlements are not economically empty spaces. Residents operate workshops, stores, food businesses, transportation services, recycling systems, repair shops, and home-based industries. They cook restaurant food, clean offices, construct buildings, sew clothing, care for children, deliver packages, and operate the machinery of the wider city.

The informal settlement is not outside the formal city. It houses many of the people who make the formal city function.

These communities also change over time. Families may replace temporary materials with brick or concrete, add upper floors, connect to electricity, organize water access, and campaign for roads, drainage, schools, or legal recognition. Children may attend universities or enter professional employment while their parents remain in the same neighborhood.

A household can acquire a television, refrigerator, smartphone, and digital bank account while still lacking secure title to the land beneath the house. Rising incomes do not automatically provide sanitation, clean air, safe streets, or protection from eviction.

This is another example of the difference between possessions and capabilities.

A family may own more goods than it did twenty years earlier but remain unable to invest safely in its home because demolition is always possible. A student may study online while sharing one room with several relatives. A worker may live only a few miles from a prosperous business district but spend hours reaching it through traffic.

The settlement seen in an old photograph should never be mistaken for a place frozen in time. Residents improve homes, build institutions, create businesses, and produce new generations with different ambitions. Yet the value of the land may rise faster than their legal security. A neighborhood can become more desirable to developers precisely after its residents have made it livable.

Government responses often emphasize relocation into apartment developments far from the original settlement. A new building may provide stronger walls and legal recognition, but it can also separate residents from employment, customers, schools, and social networks. A house is not only a structure. It is a position within a web of relationships.

Improving communities where they already exist may preserve those connections, but upgrading requires land rights, infrastructure, local participation, and political willingness to recognize residents as citizens rather than obstacles.

Climate change raises the stakes. Informal neighborhoods are frequently located on floodplains, steep slopes, industrial land, or other places avoided by wealthier households. Buildings may trap heat and provide little ventilation. Residents often have fewer trees, less reliable water, and less access to cooling. Research in South Asian cities has found that people living in informal housing can experience substantially higher indoor temperatures than residents of nearby formal neighborhoods (World Bank, 2023a).

Urban inequality is therefore not merely the distance between rich and poor people. It is the difference in how much heat, pollution, flooding, travel time, and uncertainty their bodies must absorb.

The decisions producing expensive housing and inadequate transit are rarely made in the loudest or poorest neighborhoods. They are often made quietly, in planning offices, banks, investment firms, and government departments.

The Green Revolution and Its Bill

South Asia’s economic development cannot be understood without agriculture.

During the 1960s, India and Pakistan faced rapid population growth and serious fears about food security. Agricultural scientists and governments introduced high-yielding varieties of wheat and rice, expanded irrigation, increased fertilizer and pesticide use, provided credit, improved research and extension services, and created systems for purchasing grain.

This package became known as the Green Revolution.

The results were remarkable. Wheat and rice production rose dramatically, particularly in Punjab, Haryana, western Uttar Pradesh, and irrigated parts of Pakistan. India reduced its dependence on imported grain and escaped the expectation that population growth would inevitably produce recurring famine.

This achievement should be understood before its costs are examined. Science, public investment, farmers, irrigation engineers, agricultural workers, and government institutions helped feed hundreds of millions of people.

The Green Revolution was not simply the invention of a miraculous seed. Seeds performed well because they were embedded in a larger system of water, fertilizer, roads, credit, research, electricity, price supports, storage, and government purchasing.

Farmers who possessed irrigated land and access to capital could adopt the package more easily than farmers in dry regions or those cultivating very small plots. The benefits therefore concentrated in particular districts and among households able to manage the financial risk.

The ecological costs accumulated gradually. Intensive irrigation lowered groundwater tables. Fertilizer and pesticide use polluted soils and water. Poor drainage contributed to salinization and waterlogging. Government purchasing policies encouraged farmers to concentrate on rice and wheat, sometimes in places where those crops placed severe pressure on water supplies.

Groundwater was so important that the Green Revolution might also be called a tubewell revolution. Water pumped from beneath the land allowed crops to grow when rainfall was absent and gave farmers greater control over timing. That same flexibility encouraged extraction faster than many aquifers could recharge (World Bank, 2023b).

Punjab provides a striking example. The region became a symbol of agricultural abundance, yet rice cultivation expanded in an environment not naturally suited to such water-intensive production. Subsidized electricity reduced the immediate cost of pumping groundwater, while government procurement made rice financially attractive. A rational decision for an individual farmer could therefore produce an irrational result for the aquifer shared by everyone.

This is one of geography’s recurring dilemmas. The action that makes sense at one scale may become destructive at another.

The dominance of rice and wheat also reduced crop diversity in some areas. Millets, pulses, and other grains often require less water and can provide valuable nutrients. Research suggests that shifting portions of cereal production toward alternative grains could reduce irrigation demand while increasing the production of iron, zinc, and other nutrients (Davis et al., 2018).

The discussion of seeds requires care. Not every improved seed must be purchased again each year. Farmers can save seed from many varieties. Hybrid seeds may not reproduce their most desirable characteristics reliably in the next generation, while patented or commercially controlled varieties can create other forms of dependence.

The larger dependence is often not on one seed but on the entire production system: seed, fertilizer, pesticide, electricity, credit, irrigation, government procurement, and market prices. Once a household is committed to that system, changing crops can become financially risky even when the existing crop is exhausting the land.

The next agricultural transformation will probably not arrive as one universally triumphant package. It is more likely to involve many adjustments:

• crop varieties suited to heat, drought, flood, or salinity
• renewed use of millets, pulses, and locally adapted crops
• more precise irrigation
• improved weather forecasting
• soil restoration and crop rotation
• solar pumps combined with rules preventing unlimited extraction
• artificial-intelligence systems that identify pests or optimize fertilizer
• storage and transportation that reduce food loss
• policies rewarding water conservation rather than only grain volume

Technology remains essential. The lesson of the Green Revolution is not that science should retreat. It is that every technological success enters an ecological and social system larger than the problem it was designed to solve.

Knowledge answered the immediate question: how can more grain be grown?

History returned with the more difficult questions: for how long, with how much water, and who would bear the cost?

Gross National Happiness

Economic growth is normally measured through gross domestic product, or GDP, the market value of final goods and services produced within a country.

GDP is indispensable. It reveals whether an economy is expanding or contracting and gives governments some idea of the resources available for public and private use. Yet it does not directly measure health, education, environmental quality, unpaid care work, political freedom, leisure, inequality, or whether economic activity improves people’s lives.

Bhutan made this limitation famous through the idea of Gross National Happiness, or GNH.

GNH is sometimes misunderstood as a national opinion poll asking whether people feel cheerful. Bhutan’s actual index is more complicated. It considers nine domains: psychological well-being, health, education, time use, cultural diversity and resilience, good governance, community vitality, ecological diversity and resilience, and living standards.

The 2022 survey found that Bhutan’s overall GNH Index had increased since 2010. The system combines subjective responses with indicators involving health, education, material conditions, time, community, culture, government, and the environment (Centre for Bhutan & GNH Studies, 2023).

The value of GNH is not that it provides one perfect number to replace GDP. No single number can contain a society. Its value is that it forces governments to ask what economic growth is intended to accomplish.

A hydroelectric dam can increase GDP while displacing a community. A mine can produce exports while degrading water. Longer working hours can raise output while reducing family life and rest. A forest protected from development may contribute little to measured production while preserving water, biodiversity, culture, and security.

GDP records market activity. It does not decide whether that activity is wise.

Gross National Happiness has limitations of its own. Governments must choose which values and indicators to include. A state devoted to preserving cultural identity may define that identity too narrowly. People may disagree about happiness, tradition, spirituality, and the proper balance between community obligations and personal freedom.

Bhutan also needs jobs, investment, housing, infrastructure, and opportunities for young people. Well-being cannot be preserved by asking a generation with limited employment to admire the scenery more deeply.

GDP and GNH should therefore not be placed in a simple contest in which one is materialistic and the other enlightened. Economic production matters. So do the ways in which production is distributed, sustained, and converted into human lives.

Growth, AI, and Human Freedom

Amartya Sen’s capability approach connects the subjects of this section.

India’s rise matters because greater wealth can expand what people are able to do. Bangladesh’s garment industry matters because paid employment can alter household power and national opportunity. Remittances matter because they allow families to educate children, build homes, and survive emergencies. The Green Revolution matters because people cannot exercise much freedom while starving.

But none of these achievements guarantees capability by itself.

A factory job may provide wages without safety. A digital account may exist without money in it. A school may enroll children without teaching them effectively. A city may offer employment while consuming four hours of a worker’s day in travel. A new technology may produce information without giving its user the authority or resources to act.

Artificial intelligence sharpens the question. It can increase the amount of knowledge available to a person at extraordinary speed. It can translate, summarize, calculate, diagnose, recommend, and generate. But a society becomes more developed only when people gain the power to use those functions toward lives they value.

The United Nations Development Programme’s 2025 Human Development Report framed AI in precisely these terms. The central issue is not what the machine can accomplish in isolation. It is what choices people gain, who controls the technology, and whether its benefits enlarge human freedom (United Nations Development Programme, 2025).

An AI tutor may help a child in a village, but only if the system works in the child’s language and the household has electricity and connectivity. An agricultural assistant may help diagnose a crop disease, but only if the recommended treatment is affordable and available nearby. An automated workplace may increase productivity while concentrating income among owners and reducing the worker’s bargaining power.

Technology can enlarge capability. It can also make inequality more efficient.

South Asia enters this new technological era with enormous advantages: a young population, large markets, strong technical institutions, multilingual societies, extensive diasporas, and deep experience adapting technologies to limited resources.

It also enters with familiar divisions involving caste, class, gender, region, education, and access to public services. AI will not float above these divisions. It will enter them.

The crucial question is not whether South Asia will become modern. It already produces much of the modern world. Its engineers write code, its workers stitch clothing, its farmers feed immense populations, its migrants build cities abroad, and its filmmakers, writers, scientists, entrepreneurs, and political movements influence global culture.

The challenge is how broadly the rewards will be shared.

A Future Already Here

South Asia is not waiting outside modernity for permission to enter.

The future is already being assembled in a software office in Bengaluru, a garment factory near Dhaka, a pharmaceutical laboratory in Hyderabad, a textile mill in Pakistan, a migrant household in Nepal, and a small shop whose owner accepts digital payment beneath a corrugated roof.

This future is brilliant, improvised, productive, and unequal.

Economic growth has lifted hundreds of millions of people from severe poverty. Agricultural science has prevented hunger on a scale that earlier generations feared was impossible. Digital systems have connected households, businesses, and governments across extraordinary distances. Education has expanded the ambitions of a generation.

Yet growth alone cannot tell us whether a worker is safe, whether a woman can choose employment, whether a child is learning, whether a family can remain in its home, or whether a farmer’s well will still contain water twenty years from now.

Development is not simply the multiplication of wealth. It is the enlargement of human possibility.

The deepest measure of South Asia’s progress will not be whether its economy becomes larger, its computers become faster, or its cities become taller. It will be whether people gain the durable power to shape their own lives and to do so without destroying the foundations on which other lives depend.

That is a far more difficult task than producing growth.

It is also the reason growth matters.

Key Terms

Capability: A person’s genuine opportunity to do or become something they have reason to value.

Digital public infrastructure: Shared digital systems, such as identification, payment, and data-exchange networks, that support public and private services.

Formal employment: Work accompanied by legal recognition and employment protections such as contracts or social-security benefits.

Global capability center: An overseas operation owned by a multinational company that performs internal technical, research, financial, or administrative functions.

Gross domestic product: The market value of final goods and services produced within a country during a specified period.

Gross National Happiness: Bhutan’s multidimensional approach to measuring well-being through economic, social, cultural, environmental, and psychological indicators.

Green Revolution: The expansion of agricultural production through high-yielding crops, irrigation, fertilizers, pesticides, research, credit, and government support.

Human development: An approach that evaluates progress through people’s health, knowledge, living conditions, freedoms, and capabilities rather than income alone.

Informal employment: Work lacking full legal registration, contractual protection, or employer-provided social security.

Microcredit: The provision of small loans to borrowers who have limited access to conventional banking.

Multidimensional poverty: Poverty measured through several overlapping deprivations, such as poor health, inadequate education, housing, sanitation, nutrition, and limited access to services.

Offshoring: Moving work or production to another country.

Outsourcing: Hiring an outside company to perform work previously or potentially performed within an organization.

Remittance: Money sent by a migrant worker to a household or community in the worker’s country of origin.

Social protection: Public or employer-supported programs that reduce economic insecurity, including pensions, health insurance, unemployment support, and assistance during hardship.

Concept Check

1. Why is it misleading to describe South Asian economies as moving neatly from traditional to modern?
2. What evidence demonstrates the scale of India’s recent economic and social transformation?
3. How does Amartya Sen’s capability approach differ from measuring development through income alone?
4. Why can two people with the same legal rights possess different capabilities?
5. What is the difference among outsourcing, offshoring, and a global capability center?
6. Why can a highly productive digital sector transform an economy without directly employing most workers?
7. How might artificial intelligence both create and reduce economic opportunity?
8. Why is Bangladesh’s garment industry difficult to classify as simply beneficial or exploitative?
9. Why does informal employment remain part of the modern economy rather than a survival of the past?
10. What does research suggest about the strengths and limitations of microcredit?
11. How can caste act as an economic constraint even when formal discrimination is illegal?
12. How can an informal settlement improve materially while remaining insecure?
13. What were the principal achievements and environmental costs of the Green Revolution?
14. Why is it inaccurate to say that all improved seeds must be repurchased each year?
15. What does Gross National Happiness measure that GDP does not?
16. How can AI increase access to information without increasing human capability?

References

Bangladesh Garment Manufacturers and Exporters Association. (2026). Export performance.

Banerjee, A., Karlan, D., & Zinman, J. (2015). Six randomized evaluations of microcredit: Introduction and further steps. American Economic Journal: Applied Economics, 7(1), 1–21. doi:10.1257/app.20140287

Centre for Bhutan & GNH Studies. (2023). GNH 2022: 2022 Gross National Happiness survey report.

Davis, K. F., Chiarelli, D. D., Rulli, M. C., Chhatre, A., Richter, B., Singh, D., & DeFries, R. (2018). Alternative cereals can improve water use and nutrient supply in India. Science Advances, 4(7), eaao1108. doi:10.1126/sciadv.aao1108

Hoff, K. (2016). Caste system. World Bank.

International Accord for Health and Safety in the Textile and Garment Industry. (2023). Bangladesh Agreement on Health and Safety in the Textile and Garment Industry.

International Labour Organization. (2023). The Rana Plaza disaster ten years on: What has changed?

International Labour Organization, & Institute for Human Development. (2024). India employment report 2024: Youth employment, education and skills. International Labour Organization.

Ministry of Electronics and Information Technology. (2025). Estimation and measurement of India’s digital economy. Government of India.

National Association of Software and Service Companies. (2024). India GCC landscape report: The five-year journey.

NITI Aayog. (2024). Multidimensional poverty in India since 2005–06. Government of India.

Sen, A. (1981). Poverty and famines: An essay on entitlement and deprivation. Oxford University Press.

Sen, A. (1985). Commodities and capabilities. North-Holland.

Sen, A. (1999). Development as freedom. Alfred A. Knopf.

Sinha, R. (2018). Closer, but no cigar: Intergenerational mobility across caste groups in India. World Bank.

United Nations Development Programme. (2025). Human development report 2025: A matter of choice—People and possibilities in the age of AI.

World Bank. (2023a). Urban heat in South Asia: Integrating people and place in adapting to rising temperatures.

World Bank. (2023b). The economics of groundwater in times of climate change.

World Bank. (2024a). Bridging the caste divide: How financial inclusion drives social integration and mobility.

World Bank. (2024b). Migration and development brief: Remittance flows to low- and middle-income countries.

World Bank. (2025a). South Asia development update: Jobs, AI, and trade.

World Bank. (2025b). Community-led climate adaptation in informal settlements.

World Bank. (2026a). South Asia economic update: Economic outlook.