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| Towards an inclusive globalisation | | |
Manmohan Singh
Globalisation has not removed personal and regional income disparities. The gap between the rich and the poor is widening. We need a new global vision that ensures the gains from globalisation are more widely shared.
WHEN I came up to Cambridge in the mid 1950s, the Cold War had frozen the world into two blocs. India had won independence a few years before and under the leadership of Jawaharlal Nehru was trying to establish its own place in a divided world. For Indians it was an era of hope, and there was great optimism about the prospect of development.
Today the world appears radically altered. The Cold War is history. A new age of freedom has harnessed to it new technologies that have transformed production and communication. The dismantling of state control has unshackled economic forces. More countries are now integrated into a global economic system in which trade and capital flow across borders with unprecedented energy. The age of freedom is also the age of economic growth. Prometheus has truly been unbound.
A very significant feature of the global economy is the integration of the emerging economies in world markets. In fact, the weight of global economic activity is gradually shifting to these emerging economies. They now account for more than two-fifths of world exports compared to a fifth 25 years ago.
In many parts of the developing world, especially India and China, per capita incomes are doubling or are expected to double over every decade. This will lift millions of people out of poverty. This pace of change is unprecedented, far exceeding what was witnessed during the Industrial Revolution in Europe. Freer trade and financial flows in the world as a whole are helping to contain inflation, keep interest rates low, and sustain higher levels of investment.
In my own country, the economic reforms we initiated in the early 1990s have made our economy more competitive. Indian business is responding to new market opportunities. India's growth is underpinned by a vibrant and growing entrepreneurial class. Indian youth is keen to get into technical and scientific institutions — helping India gain salience as a knowledge based economy. Our country, I believe, is now on growth path of 7 to 9 per cent per year, while maintaining price stability. The proportion of people living below the poverty line is declining.
Some concerns
These achievements of the era of globalisation should not blind us to the new anxieties that globalisation has brought in its wake. The reach of globalisation is yet to touch many parts of the world. Moreover, the evidence suggests that the process has not removed personal and regional income disparities. In many developing countries, growth is bypassing the rural areas. Also, in the face of stagnation in their real pay, the working classes in industrialised countries are becoming fearful of the opening of markets. The gap between the rich and the poor is widening. This, coupled with the inability of the public sector to provide adequate and quality services in health and education, and cater to the needs of the poor, is causing resentment and alienation. This is nurturing divisive forces and putting pressure on the practice of democracy.
These are real and palpable concerns and they cannot be ignored. I suggest to you that we address these vital concerns by making globalisation an inclusive process. We need to work for inclusive globalisation. This calls for a new global vision.
That vision must ensure that the gains from globalisation are more widely shared. It is a matter of deep concern that the Doha Development Round of trade negotiations has reached an impasse. If trade is to be an instrument of combating poverty and spreading manufacturing capacities more evenly in the world, it is vital that barriers to the export of agricultural goods from developing countries be eliminated.
Nearly two-thirds of the population of developing countries live in rural areas. In the developed world this falls to less than ten per cent. My appeal is that developed countries should not allow short-term national interests to prevail at the cost of promoting freer trade and combating poverty. The prosperity of so many cannot be sacrificed for protecting the interests of so few. The price of myopia is heavy on the exchequers of the developed world. The issue also has profound moral dimensions.
To convince people in poor countries about the benefits of globalisation we must take a more enlightened view in liberalising trade in services and labour intensive manufactures, in which developing countries are competitive. I see trade not only as a means to prosperity, but also as peace building. Collectively we need to devise an enlightened approach in approaching negotiations over the reduction of harmful gas emissions, intellectual property rights in the production of life saving drugs, transfer of technologies that help to combat poverty and such issues.
Prosperity is not divisible. Neither is global peace possible without the eradication of poverty. As Jawaharlal Nehru said in his address to the Canadian Parliament in 1949:
"There can be no security or real peace if vast numbers of people in various parts of the world live in poverty and misery. Nor, can there be a balanced economy for the world as a whole if the underdeveloped parts continue to upset that balance and drag down even the more prosperous nations."
Confluence of civilisations
The best efforts to eradicate poverty will be in vain if our societies and nations are threatened by the spectre of terrorism and extremism. Open societies like India and Britain are more vulnerable to this threat. The very openness of our societies makes us more vulnerable. Yet we must fight terrorism without losing the openness or the rule of law that guarantees the freedom of the individual.
I believe that terrorism can be defeated only by combating fundamentalism and promoting respect for diversity. Britain, the land of John Stuart Mill and Bertrand Russell, the cradle of common law, liberty and democracy, has a unique role to play in fighting fundamentalism. India too has its own pluralistic traditions and openness to other cultures. The legacy of Mahatma Gandhi and Nehru ordains that we remain committed to combating fundamentalism. We do not believe in a "clash of civilisations." What we believe in is enrichment of the human condition through cultural inclusiveness and a "confluence of civilisations."
As democracies we must also stand together in making governance across the world more democratic. As a democracy we aspire to a world in which global institutions are more democratic and more representative of all the peoples of the world. The governance processes of global institutions of today — be they Bretton Woods institutions or the UN Security Council — reflect the realities of the world as it was more than half a century ago.
A more inclusive global process that carries the population of the world with it calls for a reform of these institutions, in which the developing world will have a greater voice. Not to do otherwise is to risk alienation and to render ineffectual the global system. I look to Britain, the Commonwealth and other great nations of the world to join forces in bringing about such a reordered global system.
(Excerpted from the Prime Minister's speech at the University of Cambridge on October 11 on the occasion of his being awarded the honorary degree of Doctor of Law.)
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