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'China is not much more successful than India'
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April 01, 2005
Prof. John Harriss is the director of the Development Studies Institute (Asia Centre) at The London School of Economics and Political Sciences and also affiliated member of the department of anthropology.

He was responsible for starting the Institute Destin, with Lord Meghnad Desai and Drucilla Daley in 1990.

Prof John HarrissThe anthropology of South Asia has always interested him and much of his work has been done on India. He has also worked as the head of the regional office for South Asia of the Save the Children Fund in Nepal, as well as in Sri Lanka and Indonesia.

He is interested in the political economy of India and has co-authored a book -- Reinventing India: Economic Liberalisation, Hindu Nationalism and Popular Democracy -- with Stuart Corbridge.

He now plans to develop a comparative research on India and China in collaboration with Indian and Chinese scholars. He also hopes to develop stronger links in teaching as well as research between India and the London School of Economics.

He spoke to Shobha Warrier on a subject close to his heart and research: the impact of globalisation on the Indian society.

When India first opened up its economy, experts were of the view that poverty would soon be wiped out as there would be the trickling down effect of wealth from the rich to the poor. More than a decade later, that has not happened. Do you feel there has been an attitudinal change about globalisation all around the world?

I think there has been a shift in the view from the 1990s to this century, more outside India than within India. There is a recognition that those kinds of near liberal economic policies laid out in what's called the 'Washington Consensus', which placed emphasis on trade liberalisation and integration of economies into the global economy as the means to growth, have not worked.

It has been recognised -- as a result of the work of economists like Danny Rodrick at Harvard -- that integration into the global economy and trade liberalisation are not the automatic keys to growth. There has been recognition that countries that have been successful in the context of globalisation are countries that have engaged in globalisation on their own terms.

China has done this on its own terms to a large extent, and India too has done it to some extent.

The trickle down may be happening but is very slow. The disparities are opening up in our societies. The arguments put forward by the protagonists of globalisation as a means to poverty-reduction is that the world is unquestionably more equal now than 15 years ago.

This is because of the tremendous growth that occurred in China and India.

They ignore the evidence that many countries elsewhere in the world have lower incomes and higher levels of poverty now than 15 years ago. They also ignore the evidence of tremendous disparities within India and China.

You said that because of the economic growth that has taken place in the last 15 years, the difference in the life of an average Indian or a Chinese, compared to an average citizen of the world, is diminishing. Can we say that it was because of globalisation that the economies of these two countries grew, thus improving the life of the average citizen?

The relative success of the Chinese and Indian economies is not because of globalisation but because of the policies that have been pursued in these countries. These policies have enabled them to engage more or less successfully with global markets.

You also talked about the need for a country to integrate into the global market for growth. Is there a global market? Is it absolutely necessary for a country to integrate into the 'global market'?

Yes, there are increasingly global markets in many commodities and services. There is clear evidence around us of the integration of markets globally in relation to many commodities and services.

We do see unquestionably the integration of markets on a global scale. But the integration into global markets does not seem to be the key to growth. This is particularly not the key to growth in the great continental economies like China, India, Brazil or the United States.

There is a great difference between the United States as the global hegemony in the 20th and 21st centuries and Britain as the global hegemony in the 19th century. Britain encouraged free trade because it needed free trade to be economically successful, but the United States doesn't have the same kind of commitment to free trade.

We see the United States backtracking in different areas of trade liberalisation. The United States believes in investments in trade liberalisation because it constitutes in itself an enormous market.

India, China and Brazil too potentially constitute enormous markets. I say 'potentially' because only the surface of the domestic market of India is scratched.

I spent some days in rural Tamil Nadu after several years and I was pleasantly surprised that in many ways very little has changed. Of course, there has been penetration of certain kinds of consumer durables. People have more two-wheelers and refrigerators in their homes but many people don't have basic consumer goods. There is a huge market, which is very largely untapped.

Indian manufacturers are more interested in exports and foreign markets. Is it only because the purchasing power of the majority of Indians is low?

Yes that is an important part of the whole story. For this, the huge domestic market potential has to be realised, millions of people must have a lot more money in their pocket. What we see now is the result of 50 years of very significant, but skewed, industrial development.

So long as purchasing power amongst so many millions of people is so limited, Indian companies quite rightly turn to the international market. It has a positive side too: greater exposure to international competition will have a positive impact on Indian companies.

What we see today after the liberalisation and globalisation of economy is an increase in consumerism. Is it what a country or an economy really needs? Do you feel something better than mere consumerism should be taking place?

Yes, citizens have been made into consumers. The principal identity is as that of a consumer and not a citizen now. For instance, there are many more consumer goods that are readily available in countries like Russia, Hungary or Poland now than 20 years ago.

But people have lost a lot in terms of high quality public services like transport, healthcare, education, which they enjoyed earlier. This can be described as one of the losses that people of Central Europe have experienced as a result of the liberalisation of their economies.

People of Central Europe have become consumers that they were not before and in the process, they lost a lot as citizens. Maybe you can see the same sort of trend taking place here in India.

Is globalisation a necessary evil?

I describe globalisation as interconnectedness and it can be in different ways across the globe. I think there is a huge amount of positive (possibilities) in that. I come back to what I said in the beginning, which is, it is absolutely vital that countries engage globalisation on their own terms.

In a truly globalised world, should there not be a free flow of people also than just a flow of more capital, revenue across countries?

I agree that free movement of people should be part of globalisation. It is important to take into account demographic trends across the world. In major European countries there has been a decline in population, although not in Britain or the United States. So population will be burgeoning in other parts of the world.

The pressure for more free movement of people is going to become greater. The most important aspect of globalisation is flow of money. It is extraordinary the way in which money sloshes around the world partly as a result of the liquidity that is being pumped into financial markets by the United States.

You said in one of your speeches that instead of blurring geographies, geographies have become very distinct after globalisation. Why is it so?

I argue that one of the consequences of globalisation is it has made us all more aware of our distinctiveness, our own identities. I referred to ways in which people are investing in what they were not doing in the past. These are in aspects of their culture, whether material or spiritual.

Those who are most successful -- for example, those in the software industry -- are not necessarily going overboard to adopt western lifestyles. They are very selective. So, in a sense, geographies are becoming more distinctive.

Is it good in the long run?

I believe it is good in the long run. The valuation of the distinctiveness of own identities, own cultures is an immensely important part of human freedom. It is also vitally important that people should be able to make choices about their cultures.

Only those amongst groups of old men feel that cultural distinctiveness becomes dangerous. They dictate what your culture should be, what you must do, and people are denied the possibility of making rational choices.

Should immigrants try to keep their distinctiveness intact or integrate with the society they live in? You also mentioned about growing violence in certain parts of the world as a result of globalisation. Do you think that maintaining a distinct identity in an alien society would lead to violent reactions from the local community?

I think the most successful cases of immigrants are those of Punjabis in Britain. I don't want to underestimate the extent of racism in contemporary British society. I think what we see is a certain degree of give and take. Clearly, immigrant communities have to accept the responsibilities and obligations as well as taking on the rights of citizenship in another country.

I think it is perfectly possible that people can become fully integrated into another society while retaining significant aspects of their identity in terms of where they came from originally. This surely was a great triumph of the United States in the 19th century and the early 20th century.

But America is the land of immigrants. . .

The American society in the 19th century was very much a British society. And people came in from all over Europe into what was essentially British culture. Now America is an instance of truly a very successful integration of various cultures.

Slowly, the same thing is happening in Britain too. Britain is also becoming a genuinely multicultural society. London is quintessentially a global city, very cosmopolitan and there is a recognition of the tremendous contribution made to British society by those who have come from elsewhere. I don't think it is difficult.

People who are very conscious of their roots in Punjab or Gujarat or Bengal think of themselves as British, but still go and cheer like mad for India at the Oval when India plays England! If it is England versus Australia, they cheer like mad for England! I think this is very healthy.

You said that India's economic growth is not sustainable because the growth is jobless. You compared this with China and said that China realised its mistake and has started emphasising on manufacturing. Could you elaborate?

I do think that it must be a matter of huge concern for India if high rates of economic growth do not give rise to lot of productive employment.

I emphasise the need for productive employment-intensive growth, because jobs that are not productive are not good for growth. Without productive employment growth, even if there is some trickle down from those who are succeeding in the context of the new economy, the disparities in society will widen.

Increasingly high-income enclaves set in the midst of a sea of relative poverty are enormously destructive socially and politically.

The point that I was trying to make was that inclusive growth is not only important socially but it is also important economically. Inclusive growth means growth which is balanced, and where there is realisation of the potential of the domestic market of this country.

Do you feel China could take such decisions because of the kind of system that is followed there?

I think it is important not to get too carried away with the notion that China is somehow very much more successful than India. If you look at the foreign direct investment, you will see that huge investments in China are done largely by overseas Chinese rather than by international companies.

We must also not forget the enormous population of migrant workers in China. A population of 99 million people are mobile, and are going in search of jobs. So, let's not get too carried away by the notion that China is much more successful than India.

But I do think that Chinese growth has included enormous development of manufacturing. We are now seeing wage levels rising in the coastal areas of China where industrialisation took off 15 to 20 years ago.

We should see those sort of effects taking place in India, in Bihar and Madhya Pradesh and Eastern Uttar Pradesh, and not only in Gujarat, Maharashtra and South India.

Photo: Sreeram Selvaraj

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