One-sided defense of globalisation
| These notable economists, with the exception of Prabhat Patnaik, have been leading India's march into the global economy. Thus, while it accurately presents the view of the 'globalisers', it fails to do justice to the opponents of the same. |
| This partisan nature of the readings is most notable in the 'comment' to Prabhat Patnaik's paper. It is indeed good to present a contrary viewpoint before the readers and leave them to judge the matter. But why single out Prabhat Patnaik's paper for this honour? This belies the editor's one-sided preference for the supporters of globalisation. |
| Even the selection of articles appears to be biased. For example, Jagdish Bhagwati is on record labelling the WTO as a rent collector for multinational corporations. But instead of including his views that are somewhat critical of globalisation, Nayar choses to include an article in which he, in the main, defends globalisation. |
| There is nothing wrong with presenting a one-sided defense of globalisation as Nayar has done. But that negates the stated objective on the book's cover "" that the book provides a 'comprehensive view of the debates surrounding globalisation' and it 'offers diverse viewpoints'. |
| Nayar's logic, as explained in his well written introductory article, is also questionable. The case for globalisation "" ie, external opening of trade and capital flows "" is established, in the main, by pointing out weaknesses of the pre-reforms economic performance. There is no scope for a third alternative here. If 'A' is weak, then 'B' is automatically assumed to be right. There is no possibility of both 'A' and 'B' being wrong and 'C' being the correct alternative. |
| This problem is best explained in reference to Nayar's four-point defense of globalisation. Nayar says the alternative to globalisation is a 'technological ghetto'. The choice is presented in terms of globalisation-with-technology or closed economy-without-technology. The implicit assumption is that developing countries cannot develop technologies on their own. But the experience of Param supercomputer and cryogenic engine indicates otherwise. The alternative to (1) leaving technological innovation to global market forces; and (2) bureaucratic technological intervention by the state; is (3) the state may invest in technological innovation while using the market forces. The internet, for example, was developed by grants to private operators from US Commerce Department. Further, developing countries may accept FDI only where it comes with frontier technologies. This alternative escapes Nayar's attention. |
| Nayar correctly states that the national elite of India were engaged in rent seeking in the pre-reforms period which has been limited by globalisation. But the latter has enabled the MNCs to extract technology rents. The third alternative is to strengthen domestic governance and implement a domestic competition policy to prevent such rent seeking both by national elites as well as by MNCs. |
| Nayar correctly points out that public sector undertakings have not delivered in India. They have extracted monopoly rents behind import barriers. That said, he also accepts that MNCs have turned rent seekers. The developing countries are engaged in a 'race to bottom' in trying to attract FDI, he says. He suggests that developing countries should evolve common guidelines for attracting FDI to solve this problem. But he ignores that the market does not tolerate such 'guidelines'. Let us not forget that supporters of globalisation have attacked OPEC for precisely making such a formation. |
| Nayar correctly points out that the rate of growth in pre-reforms India was low in India as also in other countries. But the jury is still out on the final results of globalisation of trade and capital. Some economists predict that China is destined for an economic crash which will be precipitated by the sinking of the US economy. These apprehensions do not find any mention in Nayar's book. It is assumed that the present high rates of growth of China and East Asian countries are self-evidently sustainable. |
| To sum up, the book presents a good exposition of the arguments of the supporters of globalisation but fails to present a balanced view of the relevant debates. |
| Globalization and Politics in India |
| Baldev Raj Nayar (ed) Oxford, New Delhi 590 pages; Rs 695 |