INDIA AND ASIA IN GLOBALISATION ERA
Posted on 15/4/2006
Some people have said the 21st century will be the Asian century while others believe the 21st century will be freedom’s century. Both are true, as the one does not exclude the other. But it does not mean that it will be Asia’s Century, or indeed any region’s century, in terms of the dominance of any single region or power. Those days are gone. In this globalised world, inter-dependence is unavoidable, and the world will become better only when all work together.
It is believed that the process of globalisation would result in better growth and development across various countries as nowadays the world is becoming more interdependent. The development of science and technology and the introduction of new techniques of management has forced different nations to look out for help of each other so that they can take advantage of these developments and bring about growth and development and adopt better management practices in their countries to improve efficiency. It is also argued that there are certain functions that the market can perform more efficiently and that the state and public bureaucracy can divert its attention on other functions which cannot be carried out by the private sector or only Government can perform them more effectively and efficiently.
Several factors are responsible to force the states towards the policies of liberalization and globalisation. The most import factor contributing to liberalization has been the surplus value that has crossed territorial borders and transcended national boundaries. The United States and other rich countries have played an active role in promoting liberalization so that they can have some say in the economies of less developed countries. Yet another factor for the growth of liberalization has been the role played by the United Nations and its key affiliated agencies such as the World Bank, International Monetary Fund (IMF) and the World Trade Organisation (WTO) by advising the poor and less developed nations to structurally adjust their economies in lieu of international aid. By now almost all nations around the world have opened up their economies.
The reality of Asia’s significance in the global economy today cannot be brushed aside. The economic balance is definitely and decisively shifting to Asia as half the growth in world output now comes from Asia. In manufacturing and services, Asia is a globally competitive region. Asia is possibly equally competitive in agriculture if it had fewer distortions in agricultural trade. In global finance, Asia now funds almost the entire current account deficit of the rest of the world. The time has now come for financial markets and the global financial architecture take cognizance of this shift in balance and reform the architecture in the best global interest.
Just as Asia has changed in the last decade, India too has changed. With the initiation of a new turn in economic policies in 1991, nobody anticipated that within a decade India would be “driving” global business. Its share of global merchandise trade and capital flows was very low, and continues to be low. Yet, by 2001 Indian enterprise was making a difference to global business in various sectors.
It began with “Y2K”. Global companies reached out to Indian professionals to secure an edge in a competitive global market. Companies and countries that made good use of Indian talent benefited and remained competitive. Graduating out of Y2K, the Indian information technology industry offered a range of services that have found a growing market worldwide.
Indian enterprise and talent are driving global business in a wide range of sectors across the world. This has given Indian business a new sense of confidence. Gone are the days of the “Bombay Club”. There is today more steel in the resolve of Indian enterprise! This new sense of confidence comes from growing success of Indian enterprise in the face of competition in an increasing number of sectors.
Tariffs at home have come down, but our share of world trade has gone up! There was a time when finance ministers were pilloried for cutting tariffs, today they are praised for doing so!
In 1992, Government launched India’s “Look East Policy”. This was not merely an external economic policy, it was also a strategic shift in India’s vision of the world and India’s place in the evolving global economy. Most of all it was about reaching out to civilizational neighbours in the region. Our trade with Asia has increased exponentially in the past decade. Today the East Asian Community of nations has overtaken Europe and the Americas as the largest bloc among our trading partners.
India’s share in the global flows of goods, services, knowledge and culture has grown in the past decade. Today, its external economic profile is robust and reassuring to investors, at home as well as abroad. The economy has recorded close to 8% annual growth for two years in a row. Our savings rate is now over 29% of GDP and the investment rate is about 31% of GDP.
In the past year and a half, our policies relating to investment, taxation, foreign trade, FDI, banking, finance and capital markets have evolved to make Indian industry and enterprise more competitive globally. (PIB Features)
** DU Research Scholar