Read Online NonAlignment 2.0: A Foreign and Strategic Policy for India in the 21st Century by Sunil Khilnani - Free Book Online
Authors: Sunil Khilnani
Ads: Link
gain most from globalization that have put their own house in order.
India’s global economic engagement has to pursue two tracks simultaneously. On the one hand, India has to take advantage of its human capital and become a hub for low-cost manufacturing and services. Our ability to do so will depend upon our domestic laws and regulations, and ourability to invest effectively in infrastructure and human capital. But there is every reason to believe that with modest reforms and political stability, India can be a very attractive destination for investors in its manufacturing capacity.
But India also has the potential to become a hub for high-end technology and value-added services. The twenty-first century will belong to economies that are at the cutting edge of technological innovation. It is difficult to imagine a technologically innovative economy that is not also an open economy. Competing in the international economy can be a spur to innovation, it can allow easy assimilation of technology and it has the potential of converting India into a research and development hub.
Domestically there will be some losers in the process of globalization. We should by no means overlook this fact. But India has the potential of globalizing in ways that minimize its costs. For one thing, India has to ensure that it does not globalize in a way that artificially represses domestic consumption. Second, some of the gains from growth have to be leveraged by the state to build a social safety net that can mitigate social risk. There need not be any contradiction between globalization and building a social safety net. At India’s stage of development the two are reciprocally connected. Growth will allow safety nets to be built. And social safety nets will in turn ensurethat we are in a position to take advantage of the global economy, and socially better able to weather some of its risks and uncertainties.
While the opportunities for India are immense, we should be clear-eyed about the potential complexities we have to navigate. The global economy is entering unchartered waters. A series of crises in Europe and America, emerging challenges for the Chinese economy, the rise of new competitors in Africa and other parts of Asia, all portend an uncertain decade of adjustment and readjustment. The global economy will see major realignments at different levels. Patterns of trade and manufacturing will continue to shift. The future of the dollar as a reserve currency is open for question. The architecture of global economic governance will be severely contested.
It follows that many of the intellectual premises that have shaped globalization over the last couple of decades will be questioned. Domestic political pressure in advanced economies may lead to more trade and immigration restrictions. The legitimacy of capital mobility will be seriously contested. Different national interests may make it difficult to create a global economic architecture based on consensus. In short, countries may not continue to view globalization as a non-zero sum game.
Internally too, each of the major economies is in a period of adjustment. Europe and Japan face, among other things, the challenge of an ageing population. Advanced economies will struggle to redefine and sustain their social protections. Governments may resort to industrial policy as a conscious policy tool. These patterns and trends are uncertain. But paying closer attention to the domestic policy choices of other countries, and determining how we can capitalize on them by our own policy choices, may afford India huge economic opportunities which could override the challenges posed by uncertainties in the developed economies.
India’s primary strategic interest therefore is to ensure an open economic order. While India has often been accused of being protectionist in the past, current events have left India on the better side of liberalization arguments. Thus, India might end up becoming one of
India’s global economic engagement has to pursue two tracks simultaneously. On the one hand, India has to take advantage of its human capital and become a hub for low-cost manufacturing and services. Our ability to do so will depend upon our domestic laws and regulations, and ourability to invest effectively in infrastructure and human capital. But there is every reason to believe that with modest reforms and political stability, India can be a very attractive destination for investors in its manufacturing capacity.
But India also has the potential to become a hub for high-end technology and value-added services. The twenty-first century will belong to economies that are at the cutting edge of technological innovation. It is difficult to imagine a technologically innovative economy that is not also an open economy. Competing in the international economy can be a spur to innovation, it can allow easy assimilation of technology and it has the potential of converting India into a research and development hub.
Domestically there will be some losers in the process of globalization. We should by no means overlook this fact. But India has the potential of globalizing in ways that minimize its costs. For one thing, India has to ensure that it does not globalize in a way that artificially represses domestic consumption. Second, some of the gains from growth have to be leveraged by the state to build a social safety net that can mitigate social risk. There need not be any contradiction between globalization and building a social safety net. At India’s stage of development the two are reciprocally connected. Growth will allow safety nets to be built. And social safety nets will in turn ensurethat we are in a position to take advantage of the global economy, and socially better able to weather some of its risks and uncertainties.
While the opportunities for India are immense, we should be clear-eyed about the potential complexities we have to navigate. The global economy is entering unchartered waters. A series of crises in Europe and America, emerging challenges for the Chinese economy, the rise of new competitors in Africa and other parts of Asia, all portend an uncertain decade of adjustment and readjustment. The global economy will see major realignments at different levels. Patterns of trade and manufacturing will continue to shift. The future of the dollar as a reserve currency is open for question. The architecture of global economic governance will be severely contested.
It follows that many of the intellectual premises that have shaped globalization over the last couple of decades will be questioned. Domestic political pressure in advanced economies may lead to more trade and immigration restrictions. The legitimacy of capital mobility will be seriously contested. Different national interests may make it difficult to create a global economic architecture based on consensus. In short, countries may not continue to view globalization as a non-zero sum game.
Internally too, each of the major economies is in a period of adjustment. Europe and Japan face, among other things, the challenge of an ageing population. Advanced economies will struggle to redefine and sustain their social protections. Governments may resort to industrial policy as a conscious policy tool. These patterns and trends are uncertain. But paying closer attention to the domestic policy choices of other countries, and determining how we can capitalize on them by our own policy choices, may afford India huge economic opportunities which could override the challenges posed by uncertainties in the developed economies.
India’s primary strategic interest therefore is to ensure an open economic order. While India has often been accused of being protectionist in the past, current events have left India on the better side of liberalization arguments. Thus, India might end up becoming one of
Similar Books
