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India set to be major economic power: World Bank

India, which is among the 24 more globalised developing nations, is set to become major economic power along with China in the face of rapidly declining poverty and higher economic growth, says a World Bank study.

India and China are growing for more rapidly than the OECD economies and the poverty reduction in the last 20 years is one of the positive aspects of complex process of globalisation, World Bank said in a research study titled 'Globalisation, Growth and Poverty'.

By contrast, the report points out, the 'less globalised countries such as Pakistan have grown less'.

The study, however, said not all states in India are uniform in their infrastructure to attract investment, and suggests that the benefits of globalisation will be even more if they catch up with more advanced states like Maharashtra.

The study also cites "some evidence that integration with the world economy is more important for small and poor economies than it is for large economies like India and China."

The study says that apart from India and China, the list of post-1980 globalisers includes Argentina, Hungary, Malaysia, Mexico, the Philippines and Thailand, which undertook reforms involving investment liberalisation, stabilisation and property rights.

"As they reformed and integrated with the world market, the 'more globalised' developing countries started to grow rapidly, accelerating steadily from 2.9 per cent in the 1970s to 5 per cent through the 1990s.

"They found themselves in a virtuous circle of rising growth and rising penetration of world markets. It seems likely that growth and trade reinforced each other, and that the policies of educational expansion, reduced trade barriers and strategic sectoral reforms reinforced both growth and trade," it says.

On extraneous issues to trade like core labour standards and environmental issues, the study endorsed India's viewpoint and said developing countries have good argument that trade agreements should not impose labour and environmental standard on poor countries.

Impose sanctions on developing countries for not meeting labour and environmental standards of developed countries could have deeply damaging effects on the living standards of the poor. Such protectionist measures will made the poor worse off, it said.

India and Uganda had rapid poverty reduction as they integrated with the global economy. The third wave of globalization may mark the turning point at which participation has widened sufficiently for it to reduce both poverty and inequality.

As countries such as China, India and Mexico have opened up, their exports have competing head-to-head with many of the products made in rich countries.

While praising India as a whole, the report lists Uttar Pradesh, along with Burma, Nigeria, Pakistan and the Russian Federation, as a region that did not participate strongly in the global economy.

The report recommends that countries such as China and India, which are not yet fully open to financial capital markets, "should approach financial opening with caution."

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