How India Is Making Its Place in the World PART II
Knowledge@Wharton: If you look at the recent past of India and the growth
that it has had, are there other countries that are going through similar types
of issues now, in terms of their growth?
Ayres: In so many ways, India is unique on the world
stage, in terms of size, complexity, and the challenges it has faced. India’s
economic trajectory, in terms of reforms and the onset of reforms is about 15
years behind China’s. That doesn’t necessarily mean that India will follow the
same precise path, but it does suggest that the pathway that India began in
1991 still has tremendous potential ahead of it. I am a specialist of this
region, and I don’t do global comparative work. But I just can’t think of a
country with similar scale, similar complexity, and similar political
complexity that India has.
Knowledge@Wharton: Yes, and obviously when you’re talking about the
political side of it, the difference between China and India is fairly significant.
Ayres: It’s enormous.
Knowledge@Wharton: So you would be hopeful that India would take a much
different path in terms of mindset and freedom and other issues than going down
the path of China.
Ayres: Well, this is the issue. The political challenges
to economic reform are really substantial in India because people have a voice.
They can debate. They can throw leaders out of office if they don’t like the
direction that they’ve been going. You have civil society, which can hold
protests and say, “We object to this. You’ve got to take us into
consideration.” You’ve got mechanisms through the judicial system, where people
can file public interest litigation about problems like, say, a large dam that
may displace people.
None of those complexities [affects] China.
[It] can make big changes right away – it moves quickly, no problems. But this
is a challenge and a vulnerability for India, because it also makes it much
harder to carry out large-scale infrastructure development, for example.
As I say in the book, these complexities are
real, but that aside, I’ve never met anybody in India who would trade democracy
for a faster-moving system.
Knowledge@Wharton: Since we were speaking of China, I wonder if we could
talk about one Chinese initiative about which a lot has been written –
the One Belt, One Road initiative. What has been India’s strategic response, and what
should that be?
Ayres: India has had a very specific strategic response to
this. It has been very vocal, and is the one country on the world stage that
has not endorsed the One Belt, One Road initiative. India declined to send an
official to the Belt and Road Forum last May, and India’s ministry of external
affairs has created a list of the problems and concerns it has with the
initiative. Foremost among them are issues such as the lack of transparency, in
terms of the way Belt and Road loans are negotiated … and the financing [of the
projects]. This can create problems of a debt trap or what has in other
contexts been called “predatory economics,” [affecting] the viability and
sustainability of some of these projects.
At the same time, India partners with China
in other contexts. India is the number two capital contributor to the Asian
Infrastructure Investment Bank. India partners with China in the BRICS
Organization – the multilateral institution formed by Brazil, Russia, India,
China and South Africa. They [also] created their own development bank. So you
do see India partnering with China in groupings of other countries that are
carrying out infrastructure investment loans on a transparent basis.
Knowledge@Wharton: The last section of your book deals with how the U.S.
should deal with a rising India. Is the strategy of the Trump administration
towards India the same as that of the Obama administration and previous
administrations, or do you see a difference? And if there is a difference, is
it one of style or of substance?
Ayres: There is a difference on the economic side. I think
on the strategic and defense side, they are continuing on the trajectory that
was begun under the George W. Bush administration and carried forward by the
Obama administration. You do see the Trump administration continuing to partner
deeply with India, and looking to grow the strategic consultation and
cooperation. That is a very positive story.
I do hope that it will continue to see the
rise of the concept of the Indo-Pacific region as a space where India and the
U.S. can continue working more closely together to uphold a free and open
Indo-Pacific, and partnering closely with Japan and Australia. Defense is in
many ways one of the leading edges of the U.S.-India relationship now.
I do see a difference in the way the Trump
administration is approaching India on the economic side. [The U.S. has] a long
list of frictions with India on the trade front. Certainly U.S. government
officials consistently seek greater market access, a level playing field and
access to the Indian market for American companies. That’s very high on any
U.S. government official’s list.
Now the Trump administration has taken up
some economic approaches that are quite different than previous
administrations, such as a focus on bilateral trade deficits. This was really
never on anybody’s laundry list of discussion points.
India makes that list. There’s about a
$26-billion trade deficit with India. So that’s now added to the frictions
list. It turns out other things create additional frictions. The Trump
administration has imposed steel and aluminum tariffs. This is not directed at India, but India is caught up
in this, like some other countries, as well. The issues on immigration, again,
do not specifically target India, but broadly, this also is an issue on the
frictions list.
Knowledge@Wharton: The issue of H-1B visas for skilled workers has been in
the news quite a bit. So looking at the economic relationship between the U.S.
and India, do you foresee any potential landmines that could blow up the
relationship and undermine the positive relationship that exists?
Ayres: I try to be optimistic, and I try to look for areas
where success is likely to occur. For example, defense trade has been a great
story. Procurements from U.S. companies have gone from essentially zero to more
than $15 billion over the last 15 years. That’s a big deal. That’s a big
change. I hope that does continue.
You see intensified interest in India in its
own defense modernization and intensified interest from the United States in
supporting that process. So India can be and can continue to grow its capacity
as a net provider of regional security, across the Indian Ocean region.
But are there huge landmines? There are not
so much huge landmines poised to blow up, but rather maybe a series of small
gates and hedges that will be a problem, and people are going to find
themselves stepping into brambles that may not go away easily.
India’s not the easiest place to do business.
This will continue, and is not specifically directed at American companies, but
India is No. 100 on the World Bank’s Ease of Doing Business index. The optimistic view is that it has moved up 43 places
in the past three years – that’s great. [However,] it’s not in the top 50;
there is some distance to travel before it’s an easier place to do business.
You always hear from companies about problems they face. For example, somebody
needed a permission, and it has taken 10 months. I think that those types of
issues will continue.
http://knowledge.wharton.upenn.edu/article/india-making-place-world/?utm_source=kw_newsletter&utm_medium=email&utm_campaign=2018-05-29
No comments:
Post a Comment