Opinion | Lessons we could learn from Kremer’s O-Ring theory
The weakest link in the Indian economy are the MSMEs, whose incentive structure needs policy addressal
Even as India debates the achievement of a $5 trillion economy, the work of the third Nobel prize winner for economics this year, Michael Kremer, especially his O-Ring Theory of Economic Development, becomes significant. The O-Ring Theory owes its name to the National Aeronautics and Space Administration disaster in 1986, involving the space shuttle Challenger. The shuttle was made up of thousands of components. However, it was the malfunctioning of the tiniest of components, the O-ring, brought on by the high temperature at which the shuttle was launched, which caused it to explode.