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Razeen Sally

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

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  1. Razeen Sally European Centre for International Political Economy (ECIPE) London School of Economics (LSE)

  2. GLOBALISATION AND INDIA SHINING India at 60 • From Gandhian mysticism, economic isolation and social backwardness to globalisation and India Shining

  3. GLOBALISATION AND INDIA SHINING • Snapshot -- Macroeconomic conditions -- Trade and foreign investment (FDI) -- Financial markets -- Domestic business climate -- Politics and the state -- Comparisons with China

  4. GLOBALISATION AND INDIA SHINING b) Prospects -- Politics, economic policy, the business climate -- Comparisons with China c) Focus -- States and cities -- Higher education

  5. 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’

  6. 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

  7. Figure 1: Aggregate GDP Source: World Bank, World Development Indicators (WDI)

  8. Figure 2: Per-capita GDP Source: World Bank, World Development Indicators (WDI)

  9. 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)

  10. 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.

  11. Figure 5: Savings/ GDP Source: World Bank, World Development Indicators (WDI)

  12. Figure 6: Investment / GDP Source: World Bank, World Development Indicators (WDI)

  13. Figure 7: Foreign Exchange Reserves Source: IMF International Financial Statistics (IFS)

  14. Figure 8 (i): Share Agriculture in GDP Source: World Bank, World Development Indicators (WDI)

  15. Figure 8 (ii): Share of Manufacturing in GDP Source: World Bank, World Development Indicators (WDI)

  16. Figure 8 (iii): Share of Services in GDP Source: World Bank, World Development Indicators (WDI)

  17. Figure 9: Total Trade (Goods & Services) Source: WTO, International Trade Statistics

  18. Figure 10: Trade/ GDP Source: World Bank, World Development Indicators (WDI)

  19. Figure 11: Current Account Balance Source: World Bank, World Development Indicators (WDI)

  20. Figure 12: Current Account Balance (% of GDP) Source: World Bank, World Development Indicators (WDI)

  21. Pie 1 (i): Share of Global Trade (Goods) Source: WTO, International Trade Statistics

  22. Pie 1 (ii): Share of Global Trade (Service) Source: WTO, International Trade Statistics

  23. Figure 13: Exports of Goods and Service Source: WTO, International Trade Statistics

  24. Figure 14: Growth in IT Services/ GDP Source: World Bank, World Development Indicators (WDI)

  25. Figure 15: Inward FDI Flows Source: UNCTAD, FDI Key Data

  26. Pie 2: Share of Global Inward FDI Stock Source: UNCTAD, FDI Key Data

  27. Figure 16: Outward FDI Flows Source: UNCTAD, FDI Key Data

  28. Figure 17: Stock Market Capitalisation Source: World Bank, World Development Indicators (WDI)

  29. Figure 18: Inward Portfolio Capital Flow Source: World Bank, World Development Indicators (WDI)

  30. 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

  31. 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

  32. Table 1: Ease of Doing Business Source: The World Bank Doing Business Database

  33. Table 2: Trading Across the Border Source: The World Bank Doing Business Database

  34. Table 3: Governance Indicators Source: The World Bank Doing Business Database

  35. 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

  36. 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

  37. GLOBALISATION AND INDIA SHINING • Focus (2) -- India’s expanding demand for higher (and lower) education: insufficient, low-quality supply; foreign investment prospects; reform hurdles

  38. 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

  39. Figure 19: Share of Global GDP (i) Source: Agnus Maddison

  40. Figure 19: Share of Global GDP (ii) Source: Agnus Maddison

  41. 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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