Thursday, December 1, 2011

Foreign investment, trade, Amitav Ghosh and Arundhati Roy

Amitav Ghosh's blog entry for November 5 was a review of Churning the Earth: The Making of Global India by Aseem Shrivastava and Ashish Kothari. The book makes out a case against foreign investment which Ghosh accepts, with a few caveats:

"I don’t for a moment doubt that Aseem and Ashish are broadly correct in their diagnoses and prognostications – yet I do think that they paint a picture that is, in some respects, too monochrome in its darkness. Take the Information Technology sector of the Indian economy for example: this is a non-polluting, knowledge-based industry; the compensation is usually fair and the working conditions are generally safe. This sector has been a godsend for hundreds of thousands of young people and it has served to decentralize economic power in India, moving it away from its traditional locations to other towns and cities. It is also a fact that the people who run this industry are on the whole much more thoughtful and socially conscious than other industrialists. I see nothing to bemoan in the success of this sector, limited though it may be: on the contrary I think it offers much cause for celebration."

It's common knowledge that the IT sector derives its revenues almost exclusively from exports, the bulk of them coming from the United States. There's been a lot of grumbling in the US about American jobs being offshored, and many politicians on the Left favour a more protectionist system. Most Congressmen and Senators, though, feel the US must remain a broadly open market if it is to be an evangelist for lower trade barriers around the globe. There will, however, be a breaking point at some stage. It is naive to believe our IT exports will be allowed to grow indefinitely even as we retain strict barriers to imports and investment. The future of Indian information technology is dependent on a continuous process of lifting trade and investment barriers within India.

This is a connection that opponents of foreign investment in retail fail to make. Aside from the benefits and impairments that follow as a direct result of Tesco and Walmart opening supermarkets in India (and there will doubtless be impairments; those who claim kirana stores will be totally unharmed should study the battle between Tesco and small retailers in Thailand), the move is a logical step in a process that offers India gains in areas unrelated to retail.

While Amitav Ghosh sees some positives in India's experience of liberalisation, Arundhati Roy is a far more strident critic of the process, and more closely allied to Shrivastava and Kothari's monochrome black palette. Back in 2006, in a talk titled Bombay in the Age of Globalisation that was part of a conference at the Tate Modern in London, the recording of which you can listen to here, I took on a passage from Roy's book The Algebra of Infinite Justice :

"In the early days of Indian liberalisation, I was convinced that it was a sell-out to neo-imperialists. Though I do not retain that belief, there are many who do. Arundhati Roy, one of the most eloquent speakers against the twin processes of liberalisation and globalisation, has written it has resulted in 'a kind of barbaric dispossession that has few parallels in world history.' She follows this up in the same essay with the statement: 'Across the world as the free market brazenly protects western markets and forces developing countries to lift their trade barriers, the poor are getting poorer and the rich richer.' Here are the statistics for the balance of trade between India and the US [PowerPoint Slide].
Trade Surplus in favour of India:
2001: 5.98 billion dollars
2002: 7.71 billion dollars
2003: 8.07 billion dollars
2004: 9.46 billion dollars
2005: 10.81 billion dollars
As you can see, India has been running a surplus, and this has grown from 5.98 billion dollars in the year 2001 to 10.81 billion dollars in 2005. A strange outcome if western markets are as protected and third world markets as open as Roy contends. But I suppose one should never let mere facts come in the way of a good theory. The book of hers I quote from was, by the way, published by Viking Penguin, which is owned by Pearson PLC, an 8 billion dollar multinational conglomerate."

Is there any country where the phrase 'do as I say, not as I do' is applicable more frequently than in India?

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