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Razeen Sally. European Centre for International Political Economy (ECIPE) London School of Economics (LSE). GLOBALISATION AND INDIA SHINING. India at 60 From Gandhian mysticism, economic isolation and social backwardness to globalisation and India Shining. GLOBALISATION AND INDIA SHINING.

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Razeen sally l.jpg

Razeen Sally

European Centre for

International Political Economy (ECIPE)

London School of Economics (LSE)


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GLOBALISATION AND INDIA SHINING

India at 60

  • From Gandhian mysticism, economic isolation and social backwardness to globalisation and India Shining


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GLOBALISATION AND INDIA SHINING

  • Snapshot

    -- Macroeconomic conditions

    -- Trade and foreign investment (FDI)

    -- Financial markets

    -- Domestic business climate

    -- Politics and the state

    -- Comparisons with China


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GLOBALISATION AND INDIA SHINING

b) Prospects

-- Politics, economic policy, the business climate

-- Comparisons with China

c) Focus

-- States and cities

-- Higher education


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GLOBALISATION AND INDIA SHINING

  • History (1947-91)

    -- From Fabian socialism to Soviet-style central planning and the ‘license raj’

    -- Foreign policy: nationalism, non-alignment and the Soviet Union as First Friend

    -- The economy: a ‘Hindu equilibrium’


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GLOBALISATION AND INDIA SHINING

  • Market reforms, 1991-

    -- Half measures in the 1980s

    -- The 1991 crisis and ‘big-bang’ reforms (1991-93)

    -- Gradual, stop-go reforms (1993 to present)

    -- The state of play


Figure 1 aggregate gdp l.jpg
Figure 1: Aggregate GDP

Source: World Bank, World Development Indicators (WDI)


Figure 2 per capita gdp l.jpg
Figure 2: Per-capita GDP

Source: World Bank, World Development Indicators (WDI)


Figure 3 poverty as of population l.jpg
Figure 3: Poverty as % of Population

Source: India 1950-1978 World Bank Poverty in India Dataset Poverty and Human Resources Division Policy, Research Department, The World Bank, Berk Özler, Gaurav Datt, Martin Ravallion. January 1996 (http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTRESEARCH/0,,contentMDK:20699301~pagePK:64214825~piPK:64214943~theSitePK:469382,00.html); India and China 1981-2004 Chan and Ravillion "How have the world's poorest fared since the early 1980s?" The World Bank Research Observer, vol. 19, no. 2 (Fall 2004)


Figure 4 inequality india gini l.jpg
Figure 4: Inequality India (GINI)

Source: Ozler, Berk, Gaurav Datt and Martin Ravallion. 1996. "A Database on Poverty and Growth in India," mimeo, Policy Research Department, World Bank.


Figure 5 savings gdp l.jpg
Figure 5: Savings/ GDP

Source: World Bank, World Development Indicators (WDI)


Figure 6 investment gdp l.jpg
Figure 6: Investment / GDP

Source: World Bank, World Development Indicators (WDI)


Figure 7 foreign exchange reserves l.jpg
Figure 7: Foreign Exchange Reserves

Source: IMF International Financial Statistics (IFS)


Figure 8 i share agriculture in gdp l.jpg
Figure 8 (i): Share Agriculture in GDP

Source: World Bank, World Development Indicators (WDI)


Figure 8 ii share of manufacturing in gdp l.jpg
Figure 8 (ii): Share of Manufacturing in GDP

Source: World Bank, World Development Indicators (WDI)


Figure 8 iii share of services in gdp l.jpg
Figure 8 (iii): Share of Services in GDP

Source: World Bank, World Development Indicators (WDI)


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Figure 9: Total Trade (Goods & Services)

Source: WTO, International Trade Statistics


Figure 10 trade gdp l.jpg
Figure 10: Trade/ GDP

Source: World Bank, World Development Indicators (WDI)


Figure 11 current account balance l.jpg
Figure 11: Current Account Balance

Source: World Bank, World Development Indicators (WDI)


Figure 12 current account balance of gdp l.jpg
Figure 12: Current Account Balance (% of GDP)

Source: World Bank, World Development Indicators (WDI)


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Pie 1 (i): Share of Global Trade (Goods)

Source: WTO, International Trade Statistics


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Pie 1 (ii): Share of Global Trade (Service)

Source: WTO, International Trade Statistics


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Figure 13: Exports of Goods and Service

Source: WTO, International Trade Statistics


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Figure 14: Growth in IT Services/ GDP

Source: World Bank, World Development Indicators (WDI)


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Figure 15: Inward FDI Flows

Source: UNCTAD, FDI Key Data


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Pie 2: Share of Global Inward FDI Stock

Source: UNCTAD, FDI Key Data


Figure 16 outward fdi flows l.jpg
Figure 16: Outward FDI Flows

Source: UNCTAD, FDI Key Data


Figure 17 stock market capitalisation l.jpg
Figure 17: Stock Market Capitalisation

Source: World Bank, World Development Indicators (WDI)


Figure 18 inward portfolio capital flow l.jpg
Figure 18: Inward Portfolio Capital Flow

Source: World Bank, World Development Indicators (WDI)


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GLOBALISATION AND INDIA SHINING

  • Reform results

    -- Massive changes: opening to the world, transformed business landscape, IT powerhouse, emerging world-class firms

    -- But lopsided growth: benefits urban middle classes but not the vast majority of the poor – unlike China


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GLOBALISATION AND INDIA SHINING

  • Reform gaps

    -- Unreformed agriculture

    -- Lack of labour-intensive manufacturing and throttled labour markets

    -- Overregulated, underperforming services sectors

    -- Remaining trade and FDI barriers

    -- Remaining capital controls

    -- The unreformed Indian state


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Table 1: Ease of Doing Business

Source: The World Bank Doing Business Database


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Table 2: Trading Across the Border

Source: The World Bank Doing Business Database


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Table 3: Governance Indicators

Source: The World Bank Doing Business Database


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GLOBALISATION AND INDIA SHINING

  • Politics

    -- The most difficult country to govern: vast, hugely diverse, split so many different ways

    -- Messy democratic politics: multi-party coalitions at the centre; kaleidoscope of musical-chair politics in the states

    -- But advantages (compared with China): unity and stability; checks and balances; British-endowed liberal institutions; the English language; political and civic freedoms


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GLOBALISATION AND INDIA SHINING

  • Focus (1)

    -- The states in a federal system

    -- Growth engines in the south and west (with outliers)

    -- Policy reforms and business transformation: e.g. Tamil Nadu, Karnataka, Andhra Pradesh, Maharashtra, Gujarat, Punjab, Haryana

    -- Key sectors, NRIs and FDI

    -- Transformation of India: a bottom-up, not a top-down story


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GLOBALISATION AND INDIA SHINING

  • Focus (2)

    -- India’s expanding demand for higher (and lower) education: insufficient, low-quality supply; foreign investment prospects; reform hurdles


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GLOBALISATION AND INDIA SHINING

  • Prospects

    -- The big picture: the new Asian Drama

    -- Asia’s transformation of the world economy: much more competition; gains for the West and the Rest; but more difficult adaptation required; wider inequalities; the middle-class squeeze; the middle-income trap

    -- Role of India in the new Asian Drama


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Figure 19: Share of Global GDP (i)

Source: Agnus Maddison


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Figure 19: Share of Global GDP (ii)

Source: Agnus Maddison


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GLOBALISATION AND INDIA SHINING

  • Prospects (cont.)

    -- Lou Dobbs is wrong: stupid economics; bad business logic; noxious politics

    -- Lessons for policy: contain protectionism; constructive economic engagement; strategic foreign-policy partnership


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