A stylized fact of Indian economic history since 1950 is that the rate of growth of the economy has accelerated periodically and across policy regimes. In this paper we present a mechanism that can account for this behaviour in terms of cumulative causation through positive feedback. We write down a theoretical model incorporating start-up costs and pecuniary externalities that generates the behaviour observed, i.e., periodic acceleration. The model’s implications are tested using the methodology of co-integration analysis. We find evidence of positive feedback and error correction which are at the centre of cumulative causation. Further, we are also able to date the initiation of this process, which has remained the mechanism of growth in India for close to half a century by now. This leads us to conclude that the internal dynamics of the growth process are at least as important as changes in the policy regime to understand growth over the long term in the country. The article has a relevance beyond the context of its investigation. There has been speculation in the theoretical literature on growth and development on the importance of cumulative causation as a generic mechanism of growth. The results presented here attest that.
