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India's rise to the top of the global economy has been put on hold. Yes, the economy is still growing. But not at rates that we saw over the last few years. MIT Sloan School deputy dean and professor of management S. P. Kothari points to India's improve conditions for the more than 400 million Indians living in poverty. Without significant improvements in the education and overall standard of living for its citizens, India will always struggle to reach its economic potential. Kothari give a bit of a prescription at Forbes : First on the agenda: improving India’s hard infrastructure. The country’s power systems are woefully out of date. Its highways are congested; its roads are riddled with rocks and potholes. Its railways are limited, and its buses are overcrowded. Infrastructure is like a blood circulation system for an economy: It allows people and goods both physical and electronic to move quickly from one part of the country to another and out to the rest of the world. To make sure India’s economy is efficient and its exports remain competitive, India must make much-needed investments in infrastructure. Its soft infrastructure, especially its education system, is also in need of investment. Competing in the global economy requires an educated workforce, and though the country has made great strides in establishing a number of world-class universities, its primary and secondary schools are sorely deficient. India’s literacy rate is 74%. China’s, by comparison, is 92%. Rectifying this must be a priority. The country’s regulatory apparatus, also part of its soft infrastructure, needs an overhaul, too. Corruption is an integral part of Indian society. Bribery is common even among middle class households. So is tax evasion. Business owners routinely squirrel away undeclared profits. And regulators look the other way. Kothari goes on to write that more regulation is not the answer (just real enforcement of existing regulations), and no positive change will happen until India finds ways of increasing foreign direct investment. Read India's Faltering Boom, and How to Revive It here .

MIT economist Daron Acemoglu believes institutions matter when it comes to generating prosperity. And in analyzing what makes rich countries rich, and poor countries poor, one has to look primarily at government. Or as he writes in Esquire : "Put simply: Fix incentives and you will fix poverty. And if you wish to fix institutions, you have to fix governments." How do we know that institutions are so central to the wealth and poverty of nations? Start in Nogales, a city cut in half by the Mexican-American border fence. There is no difference in geography between the two halves of Nogales. The weather is the same. The winds are the same, as are the soils. The types of diseases prevalent in the area given its geography and climate are the same, as is the ethnic, cultural, and linguistic background of the residents. By logic, both sides of the city should be identical economically. And yet they are far from the same. On one side of the border fence, in Santa Cruz County, Arizona, the median household income is $30,000. A few feet away, it's $10,000. On one side, most of the teenagers are in public high school, and the majority of the adults are high school graduates. On the other side, few of the residents have gone to high school, let alone college. Those in Arizona enjoy relatively good health and Medicare for those over sixty-five, not to mention an efficient road network, electricity, telephone service, and a dependable sewage and public-health system. None of those things are a given across the border. There, the roads are bad, the infant-mortality rate high, electricity and phone service expensive and spotty. The key difference is that those on the north side of the border enjoy law and order and dependable government services — they can go about their daily activities and jobs without fear for their life or safety or property rights. On the other side, the inhabitants have institutions that perpetuate crime, graft, and insecurity. Read What Makes a Nation Rich? One Economist's Big Answer here . And take a closer look at the accompanying map/graphic (above) by clicking here .