AN IIPM THINK TANK GREAT INDIAN DREAM FOUNDATION JOURNAL E

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Since its incorporation (1973), IIPM has been an institution with privileged traditions, in the diversity of its fraternity, its global outlook, its world class research and its commitment to alternative national economic planning process.

It can be said, without much oversimplifi cation that there are no ‘underdeveloped economies’. There are only ‘under managed’ countries. Japan 140 years was ago was an underdeveloped country by every material measurement. But it very quickly produced management of great competence, indeed of excellence. The policy inference is that ‘management’ is the prime mover and ‘development’ is the consequence. At IIPM, every one considers that development is a matter of human energies rather than economic wealth. And the generation and direction of these human energies is the task of ‘management’. Accordingly, we formed The Great Indian Dream. Unlike any other dream, this is one dream which each one of us are determined to realise and that too in our own lifetimes. Each bit of cynicism and condemnation from pessimists makes us evolve even stronger and determined.

All our endeavours and initiative is towards realisation of this dream, where in we produce committed ‘bare foot’ managers and entrepreneurs who are needed by nation, on an insistent basis. As an educational institute, we aim at initializing a three dimensional personality in IIPMites, viz. � Pursuit of knowledge in economics and management� Commitment to economic, social, political and technological upliftment of masses and � Cultivation of taste for literature, fi ne arts and etc.

Economists often have limited access to the practical problems facing senior managers, while senior managers often lack the time and motivation to look beyond their own industry to the larger issues of the global economy. It has set before it the twin tasks: to reorient education and research towards the needs of both the private and public sectors and to establish the link between the National Economic Planning and the development of private enterprises in Indian economy. IIPM dares to look beyond, and understands that what we teach today, other adopt tomorrow. IIPM’s service output (education, research and consulting,) is a unique combination of two distinct disciplines: economics and management. Through this integration, IIPM helps guide business and policy leaders in shaping the Indian and global economy, bringing together the practical insights of industry with broader national and global perspectives.

A hall mark of IIPM is that it is armed with the comparative advantage of engaging the committed, passionate and brightest management post graduates and undergraduates, who pursued the education at IIPM and subsequently joined it, to realise the dream. IIPM alumni, spread across the globe, holding crucial decision-making positions in the corporate sector, are bonded by the one ideology of making a positive difference, turning that ideology into a movement itself.

The Great Indian Dream is another humble initiative towards the realisation of the same and more distinctly, engaging the broader publics and pertinent stakeholders.

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SEARCH, SIEVE, SCHEME...In economics, like in everyday existence, it is imperative to hear, perceive and consider what others have to say. Each

issue of The GID brings together a selection of important contributions on a particular theme, authored by some of the brightest minds in different areas of Indian economics. The provocation for publishing these issues arises from the fact that over the years economic journals have become copious, exclusive and expensive. Most of the journals and a good many of the books have gone beyond the cerebral and fi nancial reach of general students and other scholars. It is for them that these issues are primarily being raised and debated here.

Much about India is transparent enough. One does not require detailed criteria, cunning calibration or probing analysis to pinpoint India’s problems and recognise its antecedents. There is in fact much that is perceptible about India. But not everything about India is even if simplistic is so simple. The learned reader would appreciate the fact that India is like an elephant that looms too large to be grasped within a distinct structure and paradigm the constituent parts of which would fail to reveal the entirety. Obviously and observably, no suggested solution to any protracted and complex socio-economic problem will satisfy all sides and stake-holders evenly. Consequently, there exists an enormous diversity in economic thinking and perspectives, as is also refl ected in the viewpoints of different expert contributors in this issue. The intended outcome of this exercise is to facilitate the invention, improvement, deliberation and dissemination of innovation in economic thinking and national economic planning, insisting merely on well-grounded, open and unbiased debates, without predetermined outcomes. It is impossible to do justice to the entire fi eld of Indian economics in a single issue. The topics selected for this issue are those which are of critical and immediate importance to India. Majority of them were freshly and exclusively written. Encapsulated, it is a constructive attempt aimed at helping India actualise its promises and potential. The editors hope that this issue of GID proffer the reader a fl avour of dynamism and excitement and persuade her/him to participate in the journey towards realising ‘The Great Indian Dream’. At the same time, it illuminates the terrible, practical problems of India and Bharat.

ACKNOWLEDGEMENTSThe IIPM Think Tank likes to thank all the internal faculty who have been instrumental in coordinating with many authors all across India and according their unstinted support. The assistance of Prof. R.Krishnan (IIPM Chennai), Prof. Amlan Ray (IIPM Lucknow), Mr. Robin Thomas (IIPM Ahmedabad) and Mr Angshuman Paul has been more valuable than, perhaps, they realise.

4T H E I N D I A E C O N O M Y R E V I E W

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CREDITS (F)ACT SHEETThe Tri-polar World: Paradigm Shift in Economic Systems and the New World OrderPrasoon S. Majumdar............................................. ........................................... 05The 70mm RevolutionSray Agarwal ...................................................................................................... 06What the Liberals Tell us about the Rise of ChinaPatrick Corcoran....................................... .......................................................... 12From Geo-Political to a Geo-Legal Order Rabin Majumder ................................................ ................................................ 16How Relevant is Huntington Today?Saumitra Mohan .................................... ........................................... ................ 18Rise of South-South Economic Flows Raj Aggarwal ............................................................... ....................................... 22

Global Polarization and the World OrderAnand Teltumbde ................................... ........................................................ 26The Shifting Power Blocs: Age of New EmpiresAbdullah Shahnewaz............................ ........................................................... 30Critical Failures in Statistical AssessmentDev Kar....................................... .......................................................................... 34Offshoring and India’s Export Development in ServicesKlimis Vogiatzoglou......................... ................................................................ 38

Cover Design by: Pragnesh Patel

5T H E G R E A T I N D I A N D R E A M

The First Words and The Last WordEditorial

THE TRI-POLAR WORLD: PARADIGM SHIFT IN ECONOMIC SYSTEMS AND THE NEW WORLD ORDER

Post the end of the cold war of 90s, the world has gone through a considerable change. The world today is just not divided on the capitalist and com-

munist blocks, but more than that the kind of transfor-mations that has gone about within the champions of either economic systems. No doubt, the world today is more fragmented than what it used to be during the cold war but then the growing polarization of the world is undoubtedly changing the erstwhile power-equations. Besides, challenging the power equilibrium, the emerg-ing blocs are also on a perpetual evolution and that too quite radically.

Even couple of decades back it would have been a di-chotomous to even think of an socialist America, Capital-ist China and a capitalist and democratic Middle East. Who would have ever thought that markets would weigh so heavy on the American economy that President Obama would have to bail it out with a staggering $787 billion stimulus package — a phenomenon which was never in-doctrinated within the American system. The very con-cept of market being able to regulate itself with govern-ment’s meddling with it was challenged upside down. After decades of market driven prosperity, Wall Street went through its worst crashes forcing the government to put the economy back on track. Not just the world but for the fi rst time, even the Americans observed an alien-American-concept of their money being used for bailing multi-billion dollar worth companies — a practice that is customary in socialist nations, where the State intervenes to support its sick companies through mobilization of fi -nancial resources.

Just like what happened in the United States of Amer-ica is so non-American, what has been happening in China is so non-Chinese. Post the 1998 fi nancial crisis, China adopted free market concept to fortify their econ-omy. In the next phase, in 2006 China lifted its IPO sus-pension and world’s second largest IPO was offered worth $21 billion by the Industrial Bank of China. And eventu-ally in 2007, the Shanghai Exchange appeared out as the second largest stock exchange. Today the private sector owns more than 60 percent of total industrial production. China’s market revolution has conceptualised a com-

Prasoon S. Majumdar, Managing Editor

pletely novel model that is a hybrid of socialism and cap-italism, albeit with Chinese characteristics.

Amidst all these, the recent uprising in Middle-East has brought a paradigm shift in the region. With social-networking sites, internet and modern thinking being the cornerstone of the revolution, the region which was akin to autocracy have been increasingly adopting mo-dernity that were historically and traditionally not part of the lifestyle of the region. The rising new middle class, the capitalist mindset, and spirit of freedom, are not only bringing about a new wave in this region but is also transforming the cultural legacy of this region. Tur-key, for that matter, is a case in point. Today, Turkey is living example that had correctly struck a balance be-tween cultural & religions values and modern business-friendly environment.

However, the reasons for the ongoing radical transi-tions could be anything but the agenda is mostly common and that is to consolidate positions in the new world order. For nations who are not directly a part of this process are increasingly forming strong bilateral allegiance with ei-ther of these blocks. There is a clear visible and distinct line that has been increasingly evolving between the American, the Chinese and the Middle East blocks. Though the idea is to either retain economic supremacy or to attain the same, is being instrumental in causing this tectonic shift.

The new world order or shall I say the three emerging blocks is not only changing the political landscape of the world, but it is also impacting bilateral trade and geo-politics to a large extent. Though it is too early to say, whether it is for good or not so good, but one thing can be said for sure that the poles are moving, and the world is becoming increasingly tri-polar... Happy reading.Best,

Prasoon S. Majumdar

6 T H E I I P M T H I N K T A N K

POWER PRISM

THE 70MM REVPower blocs have exploited their cinemas to the tee to propagate their supremacy — some did it successfully and some ignored it at a large…


P A T R O N I S I N G P R O P A G A N D A S

EVOLUTION


SRAY AGARWAL Deputy Editor,The IIPM Think Tank

POWER PRISM

The motion picture industry is not merely concerned with fi nancial profi ts and return on investments but is engaged in weaving enter-

tainment to infl uence public reaction and opinion on vital issues and latently stream-line propagandas. The motion picture is one of those few medium that can create convergence of various senses and present them to promulgate political or diplo-matic agendas in form of art, or shall I say entertainment. The African-American director Spike Lee once said about his fi lms, “I’m just trying to tell a good story and make thought provoking, entertaining fi lms. I just try and draw upon the great culture we have as a people, from music, novels, and the streets.”

American fi lm industry has always been a front-runner when it comes to world-class and technologically advanced mov-ies, but they had also been a frontrunner in propaganda-based releases. Hollywood never misses an opportunity when it comes to showcasing history from the US point of view. Movies on incidents like Pearl Harbor and Vietnam War were scripted in a manner that not only established Amer-ican supremacy but also made the viewers comprehend the entire episode from America’s perception. Tweaking and dis-torting history and facts to showcase the positivity of American and America as a sole saviour has largely been an agenda of movie-makers in Hollywood. After Cold war movies made by US were all with an aim to portray a need for unipolar world with power nucleus at US. Most of the movie production house drafted scripts in a way that directly or indirectly propagated Americans (or white-skinned people) to be of good morale while black skin to be otherwise. Anything that was wrong al-ways had a link with either Middle-East or communist and at the end it was an

American who came for the rescue.Take for instance, the movie “Casa-

blanca” which depicted Americans with hitherto unseen bravery and valiant efforts to save hapless Europeans from Nazis and quietly ignored the enormous sacrifi ces made by the Russians and others. The list does not condense here. Movies like “Rambo II” (and even other Rambo series), “True Lies”, “Top Gun”, “Black Hawk Down”, to name a few, not only showed American version of war and terrorism but also received active support and assistance from military and defence experts. The facts get fortifi ed when one watches mov-ies like “Pearl Harbor”, “Bad Company” or “The Recruit”, all produced under the banner of Walt Disney. All of these movies got huge assistance from the US govern-ment, Pentagon and the CIA. And this verity gets even more evident after scruti-nising the profi le of the Board member John E. Bryson who is also a director of The Boeing Company (one of the US larg-est defence company) and the Walt Disney Company (one of the biggest movie produc-tion house of US). In credit list of the latest fl ick, the “Iron Man”, Boeing got a special mention for its special contribution. Dis-ney for that matter requires special refer-ence here. Not only their movies, but even their animation series had pro-American and anti-Arab agendas. Be it cartoon like “Aladdin” or movie like “Finding Nemo”, the positive character always had Ameri-can ascent and were white skinned while the negative character had Arabic ascent (although the language was English) and were black skinned. This was in spite of the fact that never had these characters trav-elled to US or for that matter had nay linked with American culture. The same is true for almost all their movies and ani-mated series. This entire practice of propagating supremacy touched its height

during the heart of the cold war. Films, in those times, were made with heavy anti-communist themes. In the same light, a series of seven propaganda fi lms named “Why We Fight” was released by United States government to justify American involvement in the world war II. Movies like “Deterrence” (March 10, 2000), not only talks about US nuclear supremacy but its one-sided staunch attitude. The movies concluded with a message that at any point of time, US has right to attack any nation (even nuclear attack) as US is supreme and it’s US that will eventually win.

The last few decades of Hollywood was a part of larger perception-building exer-cise of US government that not only fo-cused on establishing US supremacy but also tainted other budding nations and lower the morale of various other non-capitalist economies. Hollywood indis-criminately portrayed what America and likes wanted the world to read and the writing on the wall was clear — it’s American way or it’s wrong.

Fighting Americans at par, at least in this sphere, were the communist nations. Communist nations also tapped the same media for propagating their supremacy and establishing their polarity over the world. For the beginning, these two na-tions aped each other in order to prove themselves more powerful, and this is evi-dent in their movies as well. On one hand where they attacked each other’s philoso-phy then on the other hand, they also promoted their own agendas.

The baggage of bourgeois was the last thing that the erstwhile communist block nations would have liked as form of art or other component of media. Therefore


P A T R O N I S I N G P R O P A G A N D A S

creators of theatre, art, literature and other forms of creative pursuits invariably struck a dissonant chord with the authori-tarian communist regimes as freedom of expression carries with it the seed of op-portunity of dissent and consequently must be leashed. Moreover they smell foul of bourgeois culture that was abhorred by the communists. However, the movie was a relatively new medium at the time most communist regimes came to power, and was complementary to their cause of dis-seminating information and molding the perception of the masses. The communists also pioneered documentary fi lm produc-tion that suited their goal of infl uencing their population at a time when media reach was much lower.

To lead the way in propaganda fi lms was Soviet Union. In 1922, Lenin proclaimed that movies were the most important form of art, as it could reach the illiterate masses that otherwise could have been cut-off from Marxist-Leninist propaganda that was so important at that time. What-ever be the motive of Lenin in promoting fi lm industry, a tortuous hurdle was tran-spired as Stalin became the general secre-tary of the central committee and conse-quently Soviet censorship offi ce came into existence! Thus government control and government trajectory was proving to be

complete death knell for creative freedom. Even though Soviet Union started churn-ing out propaganda fi lms, they were at least futuristic like “Soviet Toys” released in 1924 by Dziga Vertov which was the fi rst Soviet animation fi lm and in the same year the same person produced a 58 seconds animation to provide tribute to Lenin. Later on more animation fi lms followed with bizarre propaganda against capital-ists, with fi lms like “Interplanetary Revo-lution,” directed by Nikolai Khodataev, Zenon Komisarenko and Yuri Merkulov, that showed battle between communists and capitalists in spaceships using ray guns, where communist heroes were blow-ing up capitalist villains! However with change of guard, and Stalin coming to power; he concentrated on matching American quality in fi lms, and champion-ing his resolve was Ivan Ivanov Vano who produced classics like “The Snow Maiden” in 1952 and “Someone Else’s Voice” in 1949. These fi lms despised Jazz (an impor-tant part of American entertainment), and extolled lifestyle of peasants! After Stalin’s death, the quality of Soviet fi lms could not match up with the Americans, although the propaganda went on through 1970s and 1980s. The tenor during this period was more resentful as one of the fi lm showed unemployment and misery in US and superiority of Communism per se!

The Communist regime is over long back in Russia and other constituents of Soviet block, but it is enduring in China, with propaganda movies coming out one after another. However, there is a di-chotomy in China between Mao’s era and the more progressive era that followed, the government doesn’t know what to do with Mao’s image -— if anything they want to alter that! The outlook of Chinese gov-ernment has changed from Mao’s time, and the government wants to portray that through their fi lms! In 2009, a fi lm called “Founding of Republic” was released that

commemorated the birth of People’s Re-public and celebrated the victory of civil war by the Communist Party of China. Nonetheless unlike in Mao’s time they did not demonized Guomindang, though ideological difference was highlighted. In 2010, another fi lm called “Aftershock” was released showcasing the peasantry life in the pre-earthquake time that struck China in 1976. A healthy and peaceful life of peasants and laborers form the corner-stone that epitomizes a typical communist regime, which was attributed in the fi lm. However, it was not shown, that China refused help from outsiders in the earth-quake, even though it did not have the required facilities to do it on its own.

In Hungary, after the Communist re-gime’s usurpation of power in 1948, every script and fi nished movies had to pass the acceptance of totally government control-led bureaucracy that continued till early 1990s! Moreover, the theme of the scripts must have had a clear demarcation between good (that is communism) and evil (which is off course exploitation of capitalism)! Some of the notable propaganda fi lms produced are “Sunday Romance” by Bakaruhában in 1957, and “Merry-Go-Round” by Körhinta in 1955, with both framing their plot on class confl ict. In Poland too civil rights were restricted after communists took over and they pushed only their own ideology through fi lms. In 1945, Antoni Bohdziewicz produced a fi lm that was banned because of his rightist inclination, so much so - that even his workshop was closed down and handed over to the next generation of fi lm makers corresponding to the leftist ideol-ogy. So, the leftist evangelists started pro-ducing communist-mouthpiece movies like Mlodosc Chopina by Aleksander Ford in 1952, where he incorporated all the right mix of leftist anthology showing life of a Polish piano composer as friend of the working class!

Amidst these two blocs, the third most

HOLLYWOOD INDISCRIMINATELY PORTRAYED WHAT AMERICA WANTED THE WORLD TO READ — IT’S AMERICAN WAY OR IT’S WRONG


POWER PRISM

sought-after bloc — the Islamist bloc — was the only one who relatively failed to exploit this medium of media to popular-ize their way of governance. Despite the presence of around 48 Muslim majority countries, Muslim Cinema (an answer to Hollywood) is still not well known com-modity to the rest of the world. Sanctions and instability in the region has not al-lowed this fi eld of art to prosper. However, defying the odds the trio of Iran, Egypt and Turkey seems to stand out as the most infl uential countries among all of the middle-east fi lm making nations.

Film making in this region is a quite non-conventional career option, more so due to stringent laws of the land that are not only staunch but to some extent ironi-cally adverse to freedom of art & expres-sion. Take for instance the cases of well known fi lmmakers like Jafar Panahi, Mohsen Makhmalbaf, Golshifteh Fara-hani, Mohammad Nourizad — to name a few, being detained in the jail or being attacked by vigilante mobs, for their fi lm’s message or content are plenty in these countries. Any kind of attack on religion, through any form of art, is absolutely prohibited. This kind of atmosphere en-courages only pro-Islamic movies.

Every region tries to promote their ide-ology and culture through different media like cinema and the new Muslim world is no exception. The Kingdom of Solomon (released on 7th October 2010 in Iran) — an Iranian made fi lm (directed by Shahriar Bahrani) based on certain events in the life of Prophet Solomon — is a perfect exam-

sons. In the “Kingdom of Heaven” (release 2nd May, 2005 in UK) — a fi lm made in Muslim minority country and di-rected by Ridley Scott — faced with Chris-tian aggression, the fi lm’s Arab leader, Saladin, demonstrated enormous toler-ance and portrayed Islam as a merciful religion. Critics argue that the plot was based on “Osama Bin Laden’s Version of History” and the romanticized view of the crusades propagated by Sir Walter Scott in his book “The Talisman” (published in 1825) and historically inaccurate.

Similarly, in “Robin Hood: Prince of Thieves” (1991), Azeem played by Morgan Freeman was a Muslim who helped Robin Hood fi ght the evil doers, eventually saving his life. In “The 13th Warrior” (1999), Antonio Banderas played a courageous Arab traveler, who helped a group of Scan-dinavian adventurers in a battle with a tribe of cannibalistic raiders. In the French fi lm “Days of Glory” (2006) Arab-Muslim soldiers fought for France and the Allies during World War II — both the director and main cast were Muslim. The documen-tary named “The Muslims I Know” (2008) by Pakistani-American producer/director Mara Ahmed actually depicted good as-pects of Muslims and that true Muslims are not like “militant jihadists”.

Cinemas face resistance from the con-servatives as they feel fi lms opposes the beliefs and values of Islam and the Middle East for that matter (except for Egypt) failed to acknowledge and comprehended the power of movies and fi lms in spreading their thought process. If they want to pro-mote Islamism in the entertainment media they have to cater to the larger masses and have to come up with much more movies.

Historically art has been the most sought-after medium of communicating with masses, especially when it comes to expressing agendas that are political and diplomatic. But with advent of technology, movies have emerged as the best tool in its category — especially given its reach and infl uence. And in coming years, this one medium would play a major rule in streamlining and altering global-percep-tion about power that be.

(With reserach assistance from Mrinmoy Dey & Sayan Ghosh of The IIPM Think Tank)

ple of such kind of movies. First of all, it was a very interesting choice of personality to make a fi lm upon considering he is a prominent fi gure in three religions — Is-lam, Christianity, and Judaism. The plot was obviously based on the Islamic view of Solomon as a sinless human being which contradicts the views of the other two reli-gions. The movie depicted the effect that sin can have on an individual and on soci-ety on a whole. Solomon came to rid the society of sin and to guide people on to the path of virtue. The movie cleverly talked about the good aspect of Islamism and to some extent tried and established the need for global Islamic supremacy. Another documentary fi lm named “Budrus” (1st premiered on 13th December 2009 in Dubai International Film Festival and released on DVD on 10th May 2011 in the US) directed by Brazilian fi lmmaker Julia Bacha told a story of an on-going non-violent protest movement on the West bank of the Pales-tinian Territories by Palestinians Muslims (who are often portrayed as fanatics by the western media) and created good impres-sion about the Islamism.

“The Message” AKA “Mohammad, Messenger of God” (released on 9th March 1977 in New York) — a fi lm based on the life of Prophet Mohammad directed by Moustapha Akkad — showed the origin of Islam. The fi lm was highly controversial and faced stiff resistance from the Holly-wood and had to go outside US to raise production money which was fi nally of-fered by well-known Libyan leader Muam-mar al-Gaddafi , for all the obvious rea-

THE INDIA ECONOMY REVIEW

‘THE GREAT INDIAN

DREAM’

A N I I P M T H I N K T A N K & G R E A T I N D I A N D R E A M F O U N D A T I O N J O U R N A L

TO TAKE FORWARD THE PHILOSOPHY OF COMMITMNET TO OUR GREAT NATION EPITOMISED IN THE PATH BREAKING BOOK‘THE GREAT INDIAN DREAM’

is now

POWER PRISM

WHAT THE LIBERALS TELL US ABOUT THE RISE OF CHINAUnited States can’t confront the challenges of the 21st century single-handedly and should work together with China in various global issues

PATRICK CORCORANResearch Associate, Public Affairs Council, Washington

The liberal paradigm, which I might add is essentially in-forming the Obama adminis-tration’s position on US-China

relations, was surmised very effec-tively by a keynote address given by Deputy Secretary of State James B. Steinberg at the University Of South-ern California U.S.-China Institute in September 2009. Steinberg’s ad-dress began by him quoting numerous policy makers and academics that indicated the United States (or any state for that matter) could not con-front the challenges of the 21st cen-tury single-handedly and both states should embrace the benefi ts that oc-cur from cooperation. As China continues to grow economically and militarily, the United States should work together with China, rather than spurn or try to dictate to the Chinese precisely the ways in which we believe the Chinese should be interacting (i.e. sanctions against Iran or increased pressure on North Korea) within the

international community. Steinberg argued similar policymaking should follow suit for India and Brazil, “while protecting our own national interests. This, I believe, is one of the key strategic challenges of our time. And the key to solving it is what I would call strategic reassurance.”

The crux of his argument rests on the assumption that China’s continu-ing rise will not be threatening to the security concerns of other states, and upset the status quo in the region or elsewhere. Steinberg, apart from as-suming this, also sought some sort of an offi cial Chinese government state-ment on their policies. Liberals claim, if China were to make a statement of policy intent, it would probably em-brace a benign and partnership-like policy with the United States and the region. To their credit, although dis-tinguishing rhetoric and fact is the most diffi cult of tasks, the Chinese government recently held a press conference, the goals of which was to


D E T O N A T I N G D R A G O N

dispel any notions of poor military transparency. Chinese military spokes-man Geng Yansheng said at the con-ference, “Our press conference aims to spread important information about China’s national defense and military building in a timely manner, and to help the world better under-stand China’s armed forces.” The conference was not only geared for the international community, but it was stated that informing the Chinese public was just as critical. The two main issues of military concern ad-dressed Japan’s concern of China’s expanding naval forces and the US-Taiwan alliance, particularly arms sales. Both issues were downplayed in importance, and Chinese overall mili-tary strength was described as being exaggerated. Can the United States expect China to be completely forth-right on this issue? Can states afford to accept such a position?

Steinberg also indicated that most states worry about the same threats as others, using this notion of shared burden as another motivating factor for cooperation (and more impor-tantly increasingly unmotivated factors for confl ict). Steinberg listed several areas in which the United States and China could share (or is the United States trying to move the burden onto China’s shoulders?) the load. The number attached to the point is Stein-berg’s suggestions; however, I have added my own critique of what he sees as burden sharing.

ENVIRONMENTAL CONCERNS For the fi rst time in China’s “Five Year Plan” history, they have included cut-ting domestic emissions as part of their attempt to mitigate global cli-mate change. However, China, along with the United States, both have weak records on environmental policy. China’s growth over the last two dec-ades was not “green” in any sense, and from what I can infer, they will not stifl e economic growth because of environmental concerns, i.e. using coal plants and an increased depend-ence on oil.

POLICY TOWARDS NORTH KOREAAnother areas would be ending their nuclear program and working together for peace between the North and the South. However, China has shown lit-tle intention on trying to disarm the regime in North Korea because it views North Korea as a buffer between the mainland and the west.

AFGHANISTAN AND PAKISTAN BORDER SECURITYAfghanistan and Pakistan border secu-rity is one more area, China being one of fi ve bordering countries of Afghani-stan. However, China’s own internal domestic dissent is a much more press-ing issue of concern when compared with the stability of Afghanistan; they view it as a problem of the United States. The same is true for Pakistan, why would China want to involve itself in Pakistan when they know that India will serve as a balance against Pakistani aggression. In both cases, if the United States and Indian will be weakened in any way because of their involvement in South West Asia (causing resources diversion), why would we expect China to discourage that?

ANTI-PIRACY EFFORTS OFF THE HORN OF AFRICAChina is heavily invested in Africa, and because of their detached nona-lignment foreign policy theory, i.e. do not interfere in the affairs of an-other country — most notably in Sudan and Zimbabwe both of which have horrendous human rights records — China continues to strike business deals, mainly for oil, and other resources. China has not shown any indication that they will shift their nonalignment policy to one of interventionist. In terrorism alone, we have seen China veto reso-lutions critical of the Sri Lankan government during their Civil War and their reluctance to sign onto sanctions against Iran. They will not sacrifi ce their investments for human rights, but then again, what rising power would?


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TRANSNATIONAL TERRORISMChina does not deal with their internal threats, why should we expect them to waste resources combating transna-tional threats?

These are all lengthy and very com-plex goals that the United States has (the effectiveness is of which is arguable), and will assumingly continue to work with China on mitigating on. Although the notion of cooperation offers read-ers a much more positive outlook, it is important to note that cooperation, if it does happen, will only develop be-cause of the strain on resources — not because states choose to cooperate for the sake of cooperation alone. How-ever, Steinberg did argue that there are several areas of concern for the United States, with a particularly emphasis on Chinese military spending and total technological modernization. In addi-tion, “There are many points of tension between the two powers: Taiwan, the South China Sea, military arms in-creases, and differences over non-proliferation issues. In economic terms, the trade imbalance has not been recti-fi ed, and the Renminbi remains incon-vertible at too low a valuation. And the Chinese population does not yet fully benefi t from a greater consumption sustained by Chinese industrial progress.” Steinberg presented a large part of the liberal thesis; however, there are varying perspectives within the paradigm itself.

Liberals, particularly those who be-lieve in liberal institutionalism, argue that the economic interdependence, in the era of globalization (especially be-tween the United States and regional actors) combined with China’s continu-ing, and in some cases, increasing participation in international institu-tions will soon trump any security competition between the two (or oth-ers) states. The Untied States and China are both members of approxi-mately 70 different international or-ganizations (some of which they are observer or member status, others are subsets of larger organizations). And by virtue of what liberals refer to as the democratic peace theory; the prospects

for confl ict are extremely low, if not nonexistent. The participation in these organizations, when combined with strong diplomacy will mitigate any large scale source of confl ict between the two states.

More specifi cally, classical liberalism argues, “that if marketization and de-mocratization take place in China, the economic rise of China will not pose a threat to peace.” In other words, Chi-na’s changing domestic landscape (perceived emergence of a middle class through free market principles), will ul-timately lead to democratization; the results of which would offset any secu-rity competition (regardless of their in-ternational institutional participation fi gures) between states involved in the economic relationship. However, clas-sical liberalism is working off the as-

sumption that capitalism will produce a lesser authoritarian-like regime with a strong population who work off democratic principles, theoretically having some impact on the state’s deci-sion making process and informing the dialogue on foreign relations more than China has today, if existent at all.

Constructivists discard both the re-alist and liberal theories: the realist balance of power theory and liberal peace theory are both irrelevant. Nei-ther one of these theories presents any insight on the potential for confl ict between the two states and instead argues that “a shared identity will de-termine whether the two states view each other as threats.” Also, China has adapted (and continues to) from an “aggrieved Maoist revolutionary state to a developmental state and a good


D E T O N A T I N G D R A G O N

global citizen,” which, though its inter-connectedness with the international community has accepted the norms and reaps the benefi ts across the board thereby probably nullifying any future urge for confl ict.

Although China may perceive itself as a victim of Western domination, it also perceives itself as a contributor, and ultimately a decider in world af-fairs, particularly economically. Liber-alism and construtivism offer the inter-national relations community different predictions on how China’s rise will come to fruition. However, after a survey of the literature, it appears to me, that realism offers us the most comprehensive approach for the rise of China over the next generation.

LIBERALISM AND ECONOMIC RELIANCEThe liberal theory, accepts the realist premise that states are important ac-tors and confl ict is still theoretically plausible, but they do not defi ne the international community as anarchical, but restrained because of the existence of international institutions and ra-tional decision making processes. Lib-erals also do not defi ne the state’s role solely through power or high politics. Liberals incorporate low politics, which in the case of US-China appears cen-tered around economics and coopera-tion on various security issues within Asia and the world (some of which were listed in Steinberg’s assessment).

I want to fi rst address the how Liber-als frame the economic relationship. Liberals claim these interests will stifl e the chances for confl ict because China will not rise in a belligerent way, “The cost/benefi t ratio of fi ghting a war has been tilted away from war, which is very costly, and towards trade, which is in-

creasingly benefi cial.” This point was echoed by soft power scholar Joseph Nye, “In reality, China and the United States do not have deeply rooted con-fl icting interests. Both countries, along with others, have much more to gain from cooperation.” Liberals claim Chi-na’s possible economic domination has to be understood in a different frame.

The economic relationship will be the means, by which confl ict will be avoided between the United States and China, “concluded that confl ict was still possible between the U.S. and China, but could be averted by progressive and rapid adjustments to each other.” Stein-berg conceded, “China’s economy has grown and its global interests have ex-panded, its military spending has quite naturally increased, and its capabilities have been extended at sea, in the air, and in space.” Daniel Yergin wrote in Foreign Policy magazine, “The math is clear: More consumers mean more demand, which means more supplies are needed. But what about the poli-tics? There the forecasts are murkier, feeding a new scenario for interna-tional tension — a competition, even a clash, between China and the United States over ‘scarce’ oil resources.”

The bilateral reliance on oil is only part of the equation; let us not forget the economic relationship the United States and China also enjoy. Dan Gris-wold, an expert from the CATO Insti-tute argued in lieu of the current calls from U.S. congressmen that China should be “punished” for purposely depreciating its currency value. Gris-wold argues against their claims, “China’s demand for U.S. exports was just as hot before it appreciated its cur-rency beginning in 2005. From 2001 to 2005, when the Chinese currency was even more undervalued than it is today,

U.S. exports to China more than dou-bled. The share of U.S. exports going to China has been rising steadily, from 2.7% in 2001 to 6.6% in 2009.” Within the military build-up, the United States is also urging a transparent build-up, assuming not only to know what Chi-na’s arsenal is comprised of, but to re-iterate its commitment to global secu-rity, not global domination.

Adding to the security aspects, the tremendous economic reliance, “two-way trade and investment,” and slow-ing the demand (and not competing) for global resources will be another area of contention and concern over the next fi fty years, but nevertheless coopera-tion will prevail as the interests are mutual and not unilateral. Last, but certainly not least, working together to improve human rights and civil liber-ties within China, and openness to the growing technologies, mainly the inter-net and communications. This is obvi-ously a very brief, sort of grand scheme of the major issues that the United States and China are, and will have to continue to deal with in the future, but nonetheless important for our under-standing of the liberal position.

The liberal position expresses concern about the future potential for confl ict but optimistically assume that the economic interdependence, along with some sort of societal con-nection and one’s own perception as a global citizen rather than a nation-alist, combined with the necessity (for state’s survival) for burden-sharing will redirect the state’s will-ingness to cooperate.

(PATRICK R. CORCORAN is a re-search associate at the Public Affairs Council and a research assistant at National Defense University. He is also an adjunct consultant with Consul-tancy Africa Inteland the international relations staff writer forInfl uentials Network.

The views expressed in the article are personal and do not refl ect the offi cial policy or position of the organisation.)

THE ECONOMIC RELATIONSHIP WILL BE THE MEANS, BY WHICH CONFLICT WILL BE AVOIDED BETWEEN THE UNITED STATES AND CHINA


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The most stimulating task is to strike a proper balance to ensure that Indian laws and legal structures should not get swayed away by the growing commercial intent of the globalization and polarization

FROM GEO-POLITICAL TO A

RABIN MAJUMDERAdvocate-on-RecordSupreme Court of India

GEO-LEGAL ORDER

L A G G I N G L E G I T I M A C Y


Some nerves suggest that due to ever growing knowledge econo-my, the “Stealth Miracle” is sus-tainable in India, fuelled by

achievements in education, demograph-ic dividend, sound fi nancial system, growing services exports and a more sustainable buoyant manufacturing sec-tor, amongst others. And India has emerged front bencher in quick learning this global reality. India, alongside much talked about energy security, now feel necessity of a legal security with robust legal systems and a diplomatic judiciary having direct focus to global economy and its pros and cons.

Some argues that economic, social and legal handicaps are self reinforcing re-sulting in spatially concentrated poor and creating a culture of poverty which often cause justice inaccessible to the poor and needy. It is often argued that globalization is seen as harbinger of in-equality and it serves as a signifi cant limiter of the dominance of any single nation-state as well as that although glo-balization is designed to advance the interests of developed countries, how-ever, its exploitative capacity is limited by factors that are largely external to core states. However, the age of post-industri-al globalization has brought signifi cant changes to the relationship between rich and poor states but leaving a sharp po-larization in the geo-politics. The modus operandi of globalization has turned out to be an essential part of the recent eco-nomic reforms made in India. Globaliza-tion in India is seen in the recent days with companies expanding their horizons to other nations. It is also argued that globalization has posed manifold chal-lenges to the future of judicial systems in India, but it has provided an occasion

to challenge the status quo, which is a crucial disorder for seeking any reform with updated judicial systems. It is felt that the attitude of lawyers and judges will become serious for addressing future experiments of geo-legally needed governance.

All through world, it is witnessed that incompatibility between de-mand and supply of laws and le-gal procedures is responsible for the creation of legal system with

totally different standards and values. Until not very long ago, the law schools

in India could do well as long as their program was focused on Indian law and issues relating to the country’s legal sys-tem. The legal system was centrally fo-cused and now, the judiciary has to try and adjudicate matters ranging from matri-monial, commercial and other individual issues having cross-border effects. It ap-pears that growing polarization has direct infl uence on the rule of law that chal-lenges the globalization. In fact, the ap-petite of Indian law scholars for under-standing international and comparative law has meaningfully enlarged over the years in a situation that India is not only economically fertile democratic country but also has emerged legally fertile juris-prudence evidencing rule of law country.

The globalization has necessitated ef-fective and effi cient judiciary supported by a fully charged legal system from a inadequately equipped time-machine as part of the global requirements at a speed at which the justice delivery system in India to act and react to the geo-legal requirements. It needs to oil its own machines to speed up, both in letter and spirit. If India does seriously committed to integrate itself with global economy, it will need to have economic policy which will impact on Indian legal systems as well, amongst others. And it is ex-pected that in the process of integration, as said above that Indian legal systems should emerge and not submerge, would lead to harmonisation of international treaties for the smooth conduct of inter-national trade.

CONCLUSION It may be safely submitted that globaliza-tion has created an economically polar-ized world that is unsustainable over the long term. And, to my mind, it has glooming impact of adversely affecting

the legal systems of a country like India as well since it is one thing to try pizza/burger in stead of roti/dosa than that In-dian legal and judicial systems can as-similate itself with “global” require-ments. India is seen as deep routed culturally reach nation where its’ adop-tive legal systems have reached its epito-me from where it can look out for a “global tie-up” horizontally. As wit-nessed that legal inequality has not only been accepted as a byproduct of the cur-rent form of globalization, it has served as a necessary component of the global order, thus, India needs self-preservation in all spheres of governance with trans-parency and diplomatic reform to other-wise crippled justice delivery systems which has caused thwarting of justice to the poor. The most stimulating task is to strike a proper balance to ensure that Indian laws and legal structures should not get swayed away by the growing com-mercial intent of the globalization and polarization. Indian legal systems and its judiciary need to emerge in the globaliza-tion and not submerge with interna-tional commerce and foreign legal sys-tems. It has to make presence felt. A diplomatic political perspective of the Indian legal systems needs to be studied to coincide with geopolitical require-ments of today which would reduce legal confl ict due to two culturally different legal procedures.

(RABIN MAJUMDER is Advocate-on-Record in Hon’ble Supreme Court of India. He is also Central Government Counsel in Central Agency Section of the Hon’ble Supreme Court of India. He is also on panel of United Bank of India.

The views expressed in the article are per-sonal and do not refl ect the offi cial policy or position of the organisation.)

GROWING POLARIZATION HAS DIRECT INFLUENCE ON THE RULE OF LAW THAT CHALLENGES THE GLOBALIZATION

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HOW RELEVANT IS HUNTINGTON

TODAY?

SAUMITRA MOHANDistrict Magistrate and Collector, Birbhum, West Bengal

There may not be a ‘clash of civilizations’ in the strict sense of the term but there defi nitely is a ‘clash of ideas’ today


It was way back in 1993 that Samuel P. Huntington, who died on 24th December 2008, had declaimed in ‘Foreign Affairs’ journal that the

post-Cold War confl icts would not be ideological or economic, but cultural. He said, “The local confl icts most likely to escalate into major wars shall be those along the fault lines separating the civi-lizations from one another.” The next world war, he further said, shall be a war between civilizations. Since Huntington came out with this thesis, reams have been written arguing for and against it.

But any claim of a ‘clash of civiliza-tions’ springing from divergent religious beliefs represents an oversimplifi cation of the reality. As Amartya Sen wrote in 2003, ‘this single-dimensional categori-zation of human beings and the increas-ing tendency to overlook the many identities that any human being has try-ing to classify individuals according to a single pre-eminent religious identity is an intellectual confusion that can animate dangerous divisiveness.’ That is why, Huntington thesis has been called reductionist, over-simplistic and one-sided.

Focusing just on the grand religious classifi cation is not only to miss other signifi cant concerns and ideas that move people, Huntington also had the effect of generally magnifying the voice of religious authority. The insistence, if only implicitly, on a choiceless singular-ity of human identity not only dimin-ishes us all, it also makes the world much more fl ammable.

Even though George W. Bush said that ‘there is no clash of civilizations and it is only a passing myth of history’, the truth remains that today, a war rages between the forces of ‘good’ and ‘evil’ in one form or the other. There may not be a ‘clash of civilizations’ in the strict sense of the term as posited by Huntington, but there defi nitely is a ‘clash of ideas’ today.

There are many groups which con-tinue to terrorise the international civil society for the attainment of an idea-tional space they call their own. What binds together a globalized force of these extremists from many continents is a united hatred of liberal-democratic

values. Today, a coalition of all such evil forces seems to be taking shape. Many of these terrorists and terror groups have been functioning with impunity and more often than not, their activities have caught us unawares.

And, one really fails to gauge the real motive or usefulness of many mindless terrorist killings or the purpose behind them. After all, whatsoever grievances they may have against the system, what do they wish to gain through violence and innocent killings? Be it naxalites or any other terrorist groups, they should fi ght a just war in a just manner through just means. Such means may include participation in electoral politics and subsequent formation of government to implement the ideas they espouse.

See the examples the world over. All the places where the revolutionary forces were animated by their conviction of systemic change and employed violent means for the achievement of the same, they have all either vanished or accepted the inevitability of the values of liberal democracy. Be it Fascism, Nazism, Com-munism or any other ideology, they have all been overpowered by the values of

liberal democracy which gives choice to the people to shape their destiny as per their desire. While this victory of liberal democracy may not really have sounded the death-bell of ideology as claimed by Daniel Bell in his ‘End of Ideology’ or by Francis Fukuyama in his ‘End of Histo-ry’, it defi nitely warrants that other ide-ologies need to adapt themselves rather than be confi ned to a straitjacket.

Now the point is that at a time when the world is increasingly becoming ‘borderless’ as Keniichi Ohmae has been talking for quite some time and when the State’s sovereign power to defend its citizens and act as the over-powering sovereign, has been severely dented, how long can we continue to rely on the capacity of the nation-states to defend their citizens against such forces of darkness?

It is increasingly felt that the concept of the nation-state has become archaic and we need to move beyond it to talk of a literally borderless world which can be truly globalized. The United Nations need to be given more teeth in such a world and the member states should be more than willing to cede it some pow-

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ALTHOUGH THE ENTIRE WORLD PAYS LIP SERVICE TO DEMOCRACY TODAY, THERE IS STILL NO GLOBAL CONSENSUS ON THE SELF-EXPRESSION VALUES

ers if they want it to be effective. Today’s global problems warrant a global re-sponse. Ergo, the nation-states need to coordinate their actions to fi ght com-mon evils.

Mind you even in these times of com-plex inter-dependence, it is inter-de-pendence only in trade which allows mobility of the capital, but not of the labour. Also, militarily there is hardly any interdependence as seen in pre-World War days. The interdependence matters more for the smaller states rather than the bigger ones who still continue to produce and consume 80-90 percent of their needs rather than ex-changing the same in an inter-dependent world. Nevertheless, as observed by Kenneth N. Waltz, it is an abstract force which moves the world today. Things are seldom wished or directed to occur in a particular fashion; they just happen. Whether you want it or not, you are af-fected. Be it the operation of the capital market, the effects of a global warming or the operation of international terror-ism, you are affected. You have to join forces with the other members of the comity of nations to survive or be ready

to perish. In fact, the sole problem with the ex-

tant world system appears to be the fact that many states continue to be mired in history as pointed out by Francis Fuku-yama in his celebrated ‘End of History’ theory. Such states are those who con-tinue to deny basic freedoms to their citizens. The absence of an open society often gives rise to forces whose blink-ered vision leads to negative channeling of human energies as experienced in case of terrorism.

Although the entire world pays lip service to democracy today, there is still no global consensus on the self-expres-sion values — such as social tolerance, gender equality, freedom of speech and inter-personal trust — that are crucial to democracy. The extent to which a soci-ety emphasizes these self-expression values has a surprisingly strong bearing on the emergence and survival of demo-cratic institutions.

Today, the divergent socio-political values constitute the real clash between the closed and the open societies every-where. Many of these closed societies lack the core political values which are usually supposed to facilitate a repre-sentative democracy. They include separation of religious and secular au-thority, rule of law and social pluralism, parliamentary institutions of repre-sentative government and protection of individual rights and liberties as the buffer between the citizens and the power of the state.

The World Value Survey reveals that at this point in history, democracy has an overwhelmingly positive image through-out the world. According to the latest Freedom House ranking, almost two thirds of the countries around the world are now electoral democracies. This is a dramatic change from the 1930s and 1940s, when fascist regimes won over-

whelming mass approval in many socie-ties, and for many decades, communist regimes had widespread support.

Now that there seems to be a consen-sus that democracy is the best form of government. We need to ensure that the same becomes the form of government everywhere, if required, with necessary local modifi cations. Benjamin Barber, a political scienctist, also said in 2003 that ‘a war between Jihad and MacWorld (symbolizing today’s liberal society) can be won in favour of the international civil society only with the untrammeled march of democracy on this planet’.

So, what we need today to secure ourselves against the marauding terror-ists and extremists on the loose is a co-ordinated action among all the members of the Comity of Nations through the agency of a reinvigorated United Na-tions, while simultaneously trying to continue a dialogue with these forces of revisionism including terrorism, within the doctrinal framework of liberal de-mocracy. The victory of the democratic discourse over the forces of darkness is the ultimate Holy Grail to be pursued by us. Huntington’s relevance shall lie in disproving his thesis.

(DR. SAUMITRA MOHAN is a member of the Indian Administrative Service of 2002 batch and belongs to the West Bengal Cadre. He is presently posted as the Dis-trict Magistrate and Collector, Birbhum in West Bengal. Before entering the IAS, he had worked as Assistant Regional Director with Indira Gandhi National Open Uni-versity, as a Lecturer in Political Science with Meerut University and as a Journalist with the Press Trust of India.


C L A S H O F C I V I L I Z A T I O N S

The relative decline of north-south trade and the rise of south-south economic fl ows seem to be moving the world closer to a multi-polar structure

RAJ AGGARWALSullivan Professor of Interna-tional Business and Finance,University of Akron, Akron, OH

RISE OF SOUTH-SOUTH ECONOMIC FLOWS

Since the middle of the twentieth century, there has been a strong push for multilateral trade and investment agreements to lower

barriers to international economic fl ows. These agreements have been spectacularly successful and have eliminated in many cases, or greatly

lowered in other cases, barriers to trade and investment fl ows globally. This global multilateral approach to global economic integration was carried out with the strong backing of the western world led by the US and its allies. This process was on the way to achieving a uni-polar integrated global economy

with the many attendant economic benefi ts that arise from an integrated global economy.

In recent years, tectonic forces of de-mographics, sustainability, technology, and globalization are forcing obsolesce in developed country business models and simultaneously leading to the emer-

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gence of challengers on the global stage of some large developing economies. Consequently, the process of global eco-nomic integration has slowed down considerably and seems to have stalled in recent years giving way to many bilateral and regional multilateral trade and in-vestment agreements. There is consider-able fear of re-polarization of the global economy with consequent loss of the benefi ts arising from an integrated global economy. One possible reason for this re-polarization of the global economy is the rise of new economic powers such as the BRICs (Brazil, Russia, India and China) and the associated rise in South-South trade and investment. According to Gordon Brown, the former Prime Minister of Britain, this rise of the eco-nomic south was a basic cause of the 2007-2008 economic crises and, further, it will continue to shake the world economy and likely cause additional crises (Brown 2011).

The analysis presented here shows that traditional European, US, and other developed country dominance in trade and investment fl ows is being signifi -cantly supplanted by trade and invest-

ment fl ows among developing countries. This rapid and signifi cant rise of South-South economic ties is leading to a rela-tive decline in European and US eco-nomic hegemony and perhaps the rise of a new Southern economic bloc. Further, this analysis indicates that the nature of the economic ties in this Southern bloc may be quite different than the tradi-tional trade and investment ties domi-nated by the developed countries. Fi-nally, it also seems that the rise of new economic powers and of South-South economic fl ows have to be accommo-dated by existing economic powers with-out disruptions.

Such accommodations are likely to be challenging especially as existing multi-lateral institutions are inade-quate to the task having been struc-tured over seven decades ago when the global economic structure was quite different. Thus, this article calls for creative solutions in the form of sig-nifi cant and major changes in existing multilateral institutions or the creation of other new institutions to accommo-date the rise of the new economic pow-ers on the global stage.

THE NEW GLOBAL ECONOMIC STRUCTUREWe live in an age of great discontent and important economic disruptions. In-creasingly prevalent technologies of communication and transportation are leading to more frequent national and international clashes between lifestyles and economic classes and between free-dom and modernity on the one hand and tradition and poverty on the other. Un-precedented tectonic forces of demo-graphics, sustainability, technology, and globalization are changing the global economy in a number of ways and in-creasing the importance of the formerly under-developed countries.

FUNDAMENTAL FORCES CHANGING GLOBAL ECONOMICSFor some decades now, all businesses have been facing and dealing with a number of inter-related forces: demo-graphics, technology, and sustainability not only impact each other, they are the fundamental drivers of globalization. Indeed, each of these forces interact and infl uence each other in a complex brew specifi c to each country, industry, and

G L O B A L G A P S


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sitioning from the industrial age to the information age, with the focus is shifting from atoms to electrons and photons. Information and communication tech-nologies are supplemented by new mate-rials and business models that involve the deconstruction of value chains. Con-sumption is de-materializing with ever smaller proportions of income spent on heavy physical objects and ever larger proportions on intangibles. It is now pos-sible and will soon be imperative to plan for and provide mass-customization in every business model. Further, given the automation of most routine work by computers in various forms, the nature of work itself is changing as it is less physical or observable. Human intellec-tual ability, now the main form of work, can be extended and sourced globally.

Technology is transforming the way we do business and the nature of the prod-ucts and services we consume. The make-up of our consumption is increasingly lighter and more electronic (intangibles) — all materials are becoming lighter and stronger (e.g., carbon fi ber airplanes, tita-nium golf clubs) and high value consump-tion includes large quantities of weight-less electrons and photons and consumer electronic products to process them (e.g., movies, music, and iPods; micro-processor enhanced light weight electric cars; etc.). This consumption mix, lighter and more

electronic, make it increasingly cheaper to ship it long distances and source it globally. The pace of technological change is unlikely to slow down. Accord-ing to Moore’s Law, that has now held for over a quarter century, computing power continues to double in power and halve in cost every 18 months.

Further, technology and the increas-ingly electronic nature of goods is reduc-ing marginal costs so they are practically zero — leading to new business models where some goods (e.g., e-mail) may be free but the resulting consumer attention and ability to sell them other goods is worth a great deal. This is indeed the business model being used by many of the most successful new age fi rms such as Google and Facebook. While some may argue that this is nothing new, as it is only an update of the old razor and razor blade model invented long time ago by Gillette, this business model is now being extended to a much larger range of goods such as air travel (e.g., Ryanair) and other intangibles, and increasingly to physical goods such as print newspapers and magazines (Anderson 2008).

More generally, technology is chang-ing value chains, i.e., technology changes where every business adds value, with some previously valuable locations de-clining in value-added activities while other locations rising in value-added

business. This essay contends that in dealing with the challenges of globaliza-tion, businesses must understand how globalization is infl uenced by these three underlying driving forces, demographics, technology, and sustainability. Thus, effective business strategy must refl ect and integrate these underlying forces facing businesses.

First, demographic changes are slow moving but inexorable. There is strong negative correlation between income and birth rates. While incomes are rising and birth rates declining in most countries, the aggregate world population is still rising albeit at a declining rate so that the current world population of about seven billion is expected to rise to nine billion by 2050 and possibly to 10 billion by 2100. While human ingenuity will un-doubtedly fi nd new materials and re-sources as old ones are exhausted, it is likely that we have run out of the “low-hanging fruit” (e.g., free land, mass higher education, tech breakthroughs) in our quest for economic growth (Cowen 2011). Further even though birth rates are declining and life expectancies are rising everywhere, population growth is uneven across countries. The proportion of the elderly and retired as compared to the young and working age vary greatly across countries. For most developed nations, this dependency ratio is increas-ing rapidly while it is still generally de-clining in developing countries. These global and national demographic chang-es have important implications for fi scal policies and business strategies.

Second, businesses face important changes related to sustainability and climate change mitigation. Regardless of the few remaining scientifi c skeptics, most businesses face multiple pressures to respond to sustainability and climate change mitigation issues. Indeed, while governments across the world have yet to agree on appropriate joint efforts in response to sustainability and climate change mitigation, many businesses (like Wal-Mart) and governments (like Califor-nia), are taking the lead in using sustain-ability and lower carbon footprints to drive innovation and profi ts.

Third, there are many changes related to technology. In fact, we are now tran-


G L O B A L G A P S

activities. In order to understand the full impact of technology, all businesses have to de-construct the value chains of their products and services, and have to reen-gineer and focus on the new best places to add value, and perhaps, outsourcing other parts of the value chain to where value may be added more effi ciently. These changes in value chains are trans-forming whole industries and the inter-national competitiveness of entire coun-tries. Thus, we are seeing the continuing growth of domestic and international outsourcing and the growth of ever longer and more complex supply chains and generally more focused and less vertically integrated businesses.

One aspect of value-chain transfor-mation is the increasing economic pos-sibility of mass customization where it is possible to provide customized prod-ucts cost-effectively to the masses. Driven by advances in information technology, individual customer prefer-ences and requirements can now be transmitted to production locations to produce output customized to the needs of individual consumers within ever shorter time periods. This phenomena of mass customization is most easily accomplished for intangible products and services, but it is becoming increas-ingly cost-effective for physical goods as well (e.g., the BMW plant in South Caro-lina already produces individually cus-tomized automobiles cost effectively for shipment to over a hundred countries).

These fundamental transformations of value chains and business models are being driven by the continuing drop in information costs and the resulting de-cline in cross-enterprise transactions costs. Not all businesses prove to be equally adept at developing and imple-menting new business models to refl ect deconstructed value chains, and many of those that are slow or incapable will go out of business. Indeed, as businesses face these great challenges in the move from the industrial age to the informa-tion age, according to Money Magazine (June 2011, pp. 40-41) the average tenure of a company in the S&P500 is declining; it is now only 15 years, having dropped from 75 years in 1930 at the height of the industrial age-as another measure, 40%

of the S&P500 have been dropped over the last 10 years and this percentage is even higher for other indexes such as the NASDAQ 100 (66%) or the Russell 2000 (69%).

Not only does technology help globali-zation by facilitating international com-munication and transportation, but glo-balization makes technology more valuable by providing larger global mar-kets for any new technology. Thus, tech-nology and globalization form a mutu-ally reinforcing cycle that makes each more pervasive over time. Consequently, with the continuing rise of technology and declines in the importance of dis-tance, every business faces increasing globalization. As noted briefl y, the na-ture of globalization is heavily infl uenced by demographics, sustainability, and technology. For example, demographic forces are creating global imbalances in worker populations and in government

fi nances, the world economy faces sus-tainability and climate change challeng-es, technology is accelerating globaliza-tion and changing the nature of work.

Finally, these forces of demography, sustainability, and technology, mean that many formerly economically backward and underdeveloped countries can now start growing rapidly and even leapfrog some traditional steps in the process of economic development. Indeed, the global economy is being re-oriented as the major emerging economies such as Brazil, China and India rise to become ever larger portions of the global econo-my. In fact the proportion of the global economy accounted for by the so called economies of the “South”, i.e., the devel-oping countries is rising rapidly.

CONCLUSIONSAfter three-quarters of a century period of unprecedented growth, the global

economy is facing signifi cant change. Tectonic forces of demographics, sustain-ability, technology, and globalization are forcing obsolesce in developed country business models and simultaneously leading to the emergence of challengers on the global stage of some large devel-oping economies. One of the conse-quences of these changes is the need to smoothly accommodate the rise of the formerly developing economies and economic fl ows between them.

In recent years, we are seeing a move towards a multi-polar world economy. In addition to North America, there is now at least the united EU. It is expected that in the near future these two poles will be supplemented by a third, the Asian pole with China, India, and Japan. Others believe that we are headed to a multi-polar world economy. Indeed, the rela-tive decline of north-south trade and investment and the rise of south-south

economic fl ows exemplifi ed by increasing Indian OFDI and economic ties with Africa seem to be moving the world closer to a multi-polar structure. If we are to avoid a re-polarization of the world economy and the attendant loss of economic welfare, we must take active steps to combat it.

(DR. RAJ AGGARWAL is the Sullivan Professor of International Business and Finance and former Dean of the College of Business Administration at the University of Akron. He has received many honors including university-wide distinguished scholar and distinguished faculty awards, and has taught at Harvard, Michigan, and South Carolina.


WE ARE HEADING TOWARDS A MULTI-POLAR WORLD WHERE, IN ADDITION TO US & EU, THE LIKES OF CHINA IS EXPECTED TO FORM A THIRD POLE


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26

ANAND TELTUMBDEManagement Consultant; Formerly: Managing Director and CEO of Petronet India Limited

It is the multi-axiality of polarizations, not mere polarity, which is most important in understanding polarization and its potential towards global change

Polarization is defi ned as the tendency towards concentration at two opposing extremes (poles). It is the process by which

a power distribution is altered through alignment and coalition formation. So-ciologists are prone to use polarization when describing processes of social change — as, for example, in Karl Marx’s account of the polarization of capitalist societies into ‘two great hostile camps’ of bourgeoisie and proletariat. The po-larization between contending social forces is seen as a key cause of the end of many regimes, and many other deci-sive breakdowns of political order. Po-larization subsumes unequal develop-ment but is not the same as unequal development. Unequal development has been integral with history since antiquity but “it is only in the modern era that polarization has become the immanent byproduct of the integration of the en-

tire planet into the capitalist system”. Polarization is a systemic process that

divides population into two opposite camps, e.g., rich and poor, capitalist and workers, blacks and white and so on. When the contradiction between these two camps reaches its zenith, the system (society) undergoes qualitative transfor-mation. This principle of dialectics led Marx to anticipate proletariat revolu-tion, transforming the capitalist society into a socialist society. Whether one subscribed to this Marxist dialectics or not, polarization is always associated with the threat of change. Insofar as polarization in the world has been around for a long time, ordinarily it should have led to some kind of qualita-tive change. But, there is no such change in sight, either at the global level or at the level of nation state.

This paper seeks to trace polarizations in recent history in order to understand

GL BAL POLARIZATION AND THE WORLD ORDER

the relationship (or absence of it) be-tween polarization and social change, primarily at the global level and extend the process to the micro levels.

POLARIZATION AND POLARITYSamir Amin (1994) has conceptualized how polarization has changed with the evolution of the capitalist mode of pro-duction. In the mercantilist capitalism (1500-1800), it was in the form of domi-nant Atlantic centres, and the periph-eral zones (the Americas). In the classical form of capitalism that followed mercan-tilism, after the industrial revolution, the peripheries extended to include all of Asia (except Japan) and Africa, which remained rural, non-industrialized, and as a result their participation in the world division of labour took place via agriculture and mineral production, and the centres were crystallized into core industrial systems as national auto-can-


P O L I T I C A L P A R I T Y

tered systems which paralleled the con-struction of the national bourgeois state. These two characteristics gave rise to the ideology of national liberation with the goal of industrialization as synonym for liberating progress and, the goal of con-structing nation-states inspired by the models of those in the core. This re-mained the dominant characteristic of polarization, which gave rise to two world wars, lasted up to the end of the Second World War. In the post-war pe-riod (1945-1990), the peripheries gain-ing their political autonomy and achiev-ing some amount of industrialization, this characteristic weakened and com-mensurately saw progressive dismantling of auto-centric national production sys-tems and then re-composition as consti-tutive elements of an integrated would production systems, the deepening of so called globalization.

Each of these polarizations is further characterized by the number of autono-mous centres of power in the interna-tional system, which is a function of the distribution of power only among major actors. It is usually referred to as polarity, which describes the nature of the inter-national system in any given period of time. Although, the concept of polarity has been subject to imprecise and often diverse use, it does serve the purpose of depicting international systems in terms of their power dimensions as distinct structural variables, taking into account polarized patterns of confl ict coexisting with processes of power diffusion. Polar-ity, as Waltz (1975) suggests, has been the subject of a great deal of theorizing, much more so than any other aspect of the distribution of power. The conven-tional notion of polarity involves an ordi-nal scale ranging from unipolarity to multipolarity with bipolarity in between. Unipolarity is normally associated with the concept of hegemony, although that term connotes a form of dominance by a single country which is somewhat less direct than imperial rule. Multipolarity is frequently seen as a prerequisite for the operation of a balance of power system.

PROSPECTS OF WORLD REVOLUTIONFrom the polarization that began hap-


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consumer markets, which in turn created acute competition between the ‘imperi-alist’ blocks.

Lenin defi ned imperialism as: capital-ism in that stage of development in which the domination of monopolies and fi nance capital has established itself; in which the export of capital has ac-quired pronounced importance; in which the division of all territories of the globe among the biggest capitalist powers has been completed. He identifi ed fi ve char-acteristics of imperialism: 1) The con-centration of production and capital developed to such a stage that it creates monopolies which play a decisive role in economic life; 2) The merging of bank capital with industrial capital, and the creation, on the basis of ‘fi nance capital’, of a fi nancial oligarchy; 3) The export of capital, which has become extremely important, as distinguished from the export of commodities; 4) The forma-tion of international capitalist monopo-lies which share the world among them-selves; and 5) The territorial division of the whole world among the greatest capitalist powers is completed.

Lenin saw in the longer term this process undermining imperialism, and thereby capitalism in the core through development of nation-state rivalry, culminating into inter-imperial wars. The costs and devastation of these wars would weaken core nation-states, not only because the losers would fi nd themselves with a diminished capacity to exploit the periphery, but because

nationalist movements in the periphery and anti-colonial wars would under-mine the capacity of even victorious core nations to exploit the periphery. Once the core lost control over its colo-nies the imperium would stagnate do-mestically, which would raise the level of antagonisms between the bourgeoi-sie and the proletariat, leading to a so-cial revolution in the core. The theori-zation had great strategic signifi cance for the world revolutionary project Lenin conceived. It assured the world proletariat that their emancipation was imminent. While those in core, (a sec-tion of which he called ‘labour aristoc-racy’, bribed by the capitalists) should shun their short term interests and fi ght the capitalists, those in periphery, should tactically shun class struggle and align with their bourgeois nationalist struggle in order to weaken the imperi-alists. The polarization seemed to con-fi rm to this theorization inasmuch as the fi rst and the second World Wars proved the inter-imperialist rivalry. However, thereafter the imperialist camp adjusted itself and freed colonies from political control on their own, but without undermining capitalism in any manner. The resultant situation resem-bled Kautskian ultra-imperialism than Lenin’s imperialism and even confi rmed that Lenin’s criticism of Rosa Luxem-burg was somewhat misfounded.

The Leninist theory of imperialism has not only failed to bring about world revolution, on the contrary, it has under-

pening from the third quarter of the 19th century, in terms of intensifi cation of engagement of European core with pe-ripheries, many theorists had developed notion of imperialism. John Atkinson Hobsoni, a British fabian socialist and Rudolf Hilferding, an Austrian born Marxist economist were to note this phenomenon as imperialism. Rosa Lux-emburg another Marxist to explain im-perialism as essentially embedded in the basic process of accumulation. Vladimir Lenin, who heavily relied upon the former two works and disputed the lat-ter, in his study Imperialism, the Highest Stage of Capitalist Development (1915-1916) became the most infl uential theo-rist of imperialism. His entire book is a study of imperialism as a stage in capital-ist development. Immediately after the publication of the Lenin’s book, his own Bolshevik comrade, Nikolai Bukharin also published his study, Imperialism and World Economy (1917), with a favo-rable introduction from Lenin, which had “world economy” as a centrepiece for its analysis, while discerning the processes of imperialism.

Lenin developed his theory based on concentration of capital into large mo-nopolistic corporations integrated with and led by a few large fi nancial oligar-chies. Lenin described how highly con-centrated ‘fi nance capital’ had come to dominate and control capitalism by the very late 19th and early 20th centuries in the US, Germany, France, and to some extent Britain. Lenin theorized that in-tensifi cation of engagement of the capi-talist countries with the periphery and the concentration of capital into large fi nancial oligarchies were intrinsically linked. The concentration of capital engendered inequality and loss of pur-chasing power with masses, which con-strained aggregate demand levels in the capitalist core. The general population could not absorb the mass of commodi-ties produced by higher levels of produc-tive capacity. While the insuffi cient de-mand created continual realization crises, the rising price of raw materials threatened profi ts further. The falling rate of profi t required economic expan-sion to open up new regions for invest-ment, sources of raw materials, and new



mined the class struggle, the prescribed instrument for it. It has unintendedly extended the lease of life to the capitalist system, and thereby prolonged the suf-fering of people.

Indeed, the economic polarization all over the world is pervasive. Interna-tional inequality, generally measured by comparing national per capita incomes, has been increasing with unprecedented pace. Countries with the highest per capita incomes in the early 1800s are still today’s richest countries, indicating persistence in the structure of interna-tional inequality. In 1820 Western Eu-rope’s per capita income was 2.9 times Africa’s; in 1992, it is 13.2 times. In the 1990s per capita incomes increased slowly but steadily in high income OECD countries, but many transition countries in Central and Eastern Eu-rope, particularly the CIS, many parts of Sub-Saharan Africa and some countries in Latin America and the Caribbean experienced economic stagnation. In-come surveys suggest that global ine-quality increased between 1987 and 1998. Some studies suggested that global individual incomes were converging until 1970 but thereafter they began in-creasing and returned in 1995 to the level of 1950.

Cornia with Kiiskii studied the trends in within-country income inequality in 73 countries from 1950s to the mid 1990s. They found that in several coun-tries inequality declined during the fi rst 20-25 years of the post World War II period following a decline in unemploy-ment, stable earnings inequality and growing redistribution in the OECD and socialist countries and the introduction of programmes of land reform, educa-tional enlargement and some redistribu-tion in developing countries. This trend towards lower inequality came gradually to a halt in many countries. Starting

from the mid 1970s, and increasingly so since the early 1980s, frequent reversals in national inequality trends were ob-served in the OECD countries (begin-ning with the USA and UK) and the Latin American nations. This brief sum-mary suggests that the declines in in-come inequality observed (with some exceptions) during the Golden Age were reversed over the last two decades, as country after country experienced an upsurge in income inequality. As a re-sult, the trend of the domestic Gini coef-fi cients has taken a more or less pro-nounced U-shape, with the turn-around year placed most commonly between 1980 and 1990. Only in nine small and medium-sized countries (such as Hon-duras, Jamaica, France, and Malaysia) is there evidence of a decline in inequality over time. Inequality remained constant in 16 countries including Germany, as well as in countries for which data from 1995 to 1999 show a perceptible deterio-ration of their inequality trend.

This extreme economic polarization that is characterizing the present global order would ordinarily lead to breaking the ties that bind the social poles to-gether and create the ideological foun-dations of revolution. But this does not seem happening. It only indicates that polarization or its polarity is important in consideration of preservation of world orders but inconsequential to changing it. The reason for this may be found in the assumption that polariza-tions along various dimensions neces-sarily cohere. While it is true that eco-nomics induced polarization gets refl ected in political polarization, but there are many other axes, particularly identitarian axes, which may not cohere with the former. Rather these identitar-ian axes are known to cross the mate-rial axes most times and weaken them. They escape attention of the polariza-

tion discourse, whether it is at the glo-bal level or at the local level. At the global level, along with the stark eco-nomic polarization, one fi nds polariza-tions along religious, national, ethnic and other identities. Take for instance, the ‘clash of civilizations’ thesis of Huntington proffered at the time when economic polarization was reversing its historical trend for the worse, which had almost dominated the polarization discourse for almost a decade. After 9/11, and invention of Islamic terror, the polarization into Islamic and non-Islamic worlds is a more dominant discourse than the economic polariza-tion. This is equally valid at the level of a nation, where class polarization is weakened by the polarization along identarian axes such as caste, commu-nity, language, region and so on. This has been the main reason for the para-doxical fi nding that when the necessity of change in global order is felt most, the forces that could bring it about are the weakest.

Thus it is the multi-axiality of polari-zations, not mere polarity, which is most important in understanding polarization and its potential towards global change. The forces of status quo have long rec-ognized this principle and have success-fully strategized to stave off the pro-change forces. However, those who needed to know it most do not seem to comprehend it.

(DR. ANAND TELTUMBDE is a writer, columnist and a management profes-sional based in Mumbai. He has BE (Mech), MBA (IIM, A), Ph D (Cybernet-ics) and over 25 research publications to his credit. With over 30 years of rich ex-perience in oil industry, he has been Managing Director and CEO of Petronet India Limited till recently.Presently he operates as free lance management con-sultant. Besides his professional career, he is well known in the activist circle as civil rights activist with rich contribution in that sphere.


EXTREME ECONOMIC POLARIZATION WOULD BREAK THE TIES THAT BIND THE SOCIAL POLES TOGETHER AND CREATE IDEOLOGICAL REVOLUTION


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30

ABDULLAH SHAHNEWAZResearch Intern, Bangladesh Institute of Law and International Affairs (BILIA)

The end of the cold war has not brought the end of history. On the contrary, as we move into the new millennium, the tempo of

change is quickening. Global economic and cultural interdependence grow year by year. Economic expansion and the spread of industrialization continue, but most spectacularly so in the underdevel-oped countries. The majority of the world’s population now live in cities and work for wages. Women increasingly are freeing themselves from patriarchal control. Defi nitions of the family and, indeed, gender are being transformed in some countries, while in other places tribal, ethnic, and religious authorities desperately attempt to reassert control. Economic inequality and environmental degradation worsen. Representative democracy and capitalism are appar-ently dominant everywhere and every-where are being questioned as never before. The United States has dramati-cally ruptured the post-Cold War order by brazenly trying to assert itself as the single and undisputed world power. Its bid for imperial dominance is being con-tested by rival states and regions in Eu-rope and Asia, worldwide popular op-position, and its own internal social and economic weakness. China and the rest

The non-polar world — dominated not by one or two or even several states but rather by dozens of actors — possesses plethora of power

THE SHIFTING POWER BLOCS:AGE OF NEW EMPIRES



of the Asia have begun to rival the eco-nomic and, increasingly, the political supremacy of Europe and United States. History clearly has not ended. Indeed, the future has never been of greater concern to humanity, and yet it appears more confusing, less certain, and more pregnant with change than ever. THE BONE OF CONTENTION: THE ATOMIC BOMBThe sudden detonation of two atomic bombs over Japan by the United States in August 1945 raised Soviet suspicions. The United States had not shared its secret of the new weapon, and the U.S. - British nuclear monopoly eroded what-ever goodwill there had been. Advisers to U.S. President Harry Truman believed that the Soviet Union was a decade away from constructing its own atomic bomb, and some recommended that the United

States used its atomic arsenal to check Soviet aggression. Members of Manhat-tan Project, the clandestine U.S. nuclear program that had developed the bombs deployed in Japan, disagreed. It was J. Robert Oppenheimer’s opinion that the Soviets would end the U.S. nuclear mo-nopoly in only four years and Oppenhe-imer was right. In 1949 the Soviets deto-nated their fi rst nuclear weapon (Wenger & Zimmermann, 2004).

THE FALL OF COMMUNISM: THE END OF HISTORY?The important dimension of the end of the Cold War is the end of communism as a political force. Francis Fukuyama described the fall of communism in the Soviet Union as the end of history (Little, 1995). As he observes, “what we may be witnessing is not just the end of the Cold War, or the passing of a particular period of postwar history, but the end of history as such: that is, the end point of man-kind’s ideological evolution and the universalization of Western liberal de-mocracy as the fi nal form of human government” (Fukuyama, 1992).

The demise of communism is a phe-nomenon confi ned to Europe: but the trend within China would seem to indi-cate a move towards capitalism, if not liberalism and the remaining communist states (Cuba, Vietnam, and North Korea) are unable to provide an international alternative. One important question arises here: what the future of an alterna-tive to capitalism is? In regard to this it seems that no programme of political challenge to liberal capitalism from the left now has any serious credit or sup-port: the communist revolutionary chal-lenge is exhausted (Halliday, 1995).

After the fall of the Communist states in the Eastern Bloc, the world commu-nist movement was arguably weakened. However, the political movement of communism survived the fall of the So-viet Union and the Eastern Bloc. Of the fi ve remaining communist states, China, Vietnam, and Laos have moved toward market economies but without major privatization of the state sector.

THE TRIUMPH OF CAPITALISMIt has frequently been argued in the af-

termath of the Soviet Union’s demise not only that the West won the Cold war but also that the claims made in favour of capitalism have fi nally been vindicated. Francis Fukuyama in The End of History and the Last Man (1992) applauds the globalization of capitalism and sees the development as the end point of a ra-tional working out of historical forces. By contrast, Wallerestein is acutely con-scious of the oppression which exists in the prevailing system and seeks to iden-tify anti-systematic forces which will help to move the world on to another phase beyond capitalism (Little, 1995).

Wallerestein defi nes the world economy as capitalist in form. But, in fact, he tends to see capitalism and world economies as ‘obverse sides of the same coin’. From Wallerestein’s per-spective, the demise of communism cannot be construed in terms of the triumph of capitalism, neither can be seen to have precipitated any dramatic change in the structure of the world economy. But he does accept that the demise of communism will have an ef-fect on the world economy.

In 1944, through the establishment of World Bank Group, in the Bretton Woods City of USA, the whole interna-tional economic system was captured by a few powerful capitalist countries. Moreover the powerful, developed world established the international Monitory Fund (IMF), the World Bank, the Gen-eral Agreement on Trades and Tariffs (GATT), the world trade Organization (WTO), the North American Free Trade Agreement (NAFTA) etc. In the name of trade liberalization, they only serve their own interests. Most of the developing countries can improve their poor eco-nomic conditions a few through the policies given by these organizations.

Common sense and most academic thinking argue that a hegemon’s prime objective should seek to maintain the prevailing international system, but that is not the world in which we live today. Measured in any conceivable way, the United States has a greater share of world power than any other country in history. Positioned at the top of the hier-archy, the hegemon should want to maintain and solidify it. The current in-


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that the United States is a hegemon feeds its revolutionary impulse. Hope as well as fear, opportunity as well as threat are at work.

ISLAMIC BLOC: SEARCHING FOR UNITYIslamic bloc to play a major part in world affairs is still beyond reality. We can eas-ily trace that Islamic force was to occupy the vacuum space after the demise of communism as an anti-West entity. And in this broad debate two important ele-ments are pivotal i) development through consumption ii) development through sacrifi ce. As Islam believes in sacrifi ces it does not allow reckless consumption thus Islamic force stands against market ex-pansion viz. capitalist market economy. And this debate further got momentum by Samuel P. Huntington’s provocative and controversial thesis of ‘The Clash of Civilizations’. Huntington Argued …For forty-fi ve years the Iron Curtain was the central dividing line in Europe. That line has moved several hundred miles east. It

ternational system, although not neces-sarily perfect, is certainly satisfactory, partly because the United States has played such a large role in establishing it. No state can have a greater stake in the prevailing order than the hegemon, nor can any state have greater power to maintain the system.

Although the 1992 Defense Guidance was drafted by neoconservatives and is often seen as foreshadowing current U.S. policy, the contrast between the two is actually quite severe. Few interlinked elements that have become central to contemporary U.S. foreign policy had little place in the draft document almost a decade earlier. First, current doctrine emphasizes that peace and cooperation can exist only when all important states are democratic. Because a country’s foreign policy refl ects the nature of its domestic regime, states that rule by law and express the interests of their people will conduct benign foreign policies, and tyrannies will infl ict misery abroad as well as at home. Second, a vital instru-ment to preserve world order is what the administration calls preemption but is actually prevention, including preventive war. In extreme cases such as Iraq, the United States has justifi ed the use of force by arguing that even though Sadd-am Hussein did not have weapons of mass destruction (WMD) programs, he would have developed them when condi-tions were propitious. It was better for the United States to act rather than wait for this to occur (Jervis, 2006).

The United States believes itself caught in a version of the familiar secu-rity dilemma. To make itself secure, it must impinge on the security of non-democracies. Despite the intrinsic value it places on democracy, it might be will-ing to live in a mixed world if it were a safe one. Yet, such safety could not be guaranteed because nondemocracies will always threaten the United States. Although the current world system is unipolar, the situation resembles that of the Cold War, when the United States and the Soviet Union were mutually threatening and threatened because their contrasting ideologies and domes-tic regimes made each an inherent menace to the other. Ironically, the fact

is now the line separating peoples of Western Christianity, on the one hand, from Muslim and Orthodox peoples on the other” (Huntington, 1996).

The “Muslim world” denotes both Muslim majority countries and a transna-tional Muslim community that includes growing minorities within Western and other countries. This transnational com-munity is incredibly diverse. Muslims — some more pious, others more secular — differ by race, ethnicity and social class, and are active citizens in very dif-ferent national contexts. What binds a diverse Muslim world together is a shared religious identity based on mono-theism, the prophethood of Muhammad, and the revelation of the Qur’an, how-ever differently understood and lived (World Economic Forum, 2008).

The disunity within the ummah is very apparent for all to see; Muslims are mak-ing false claims against one another, creating hostility, preaching hatred and even killing one another. The ummah is in a desperate situation and in dire need



of reform.The Muslim world remains embroiled

in a whole host of religious, social, po-litical, economic, and cultural disputes. Without any real international infl uence, despite the 57-member Organization of the Islamic Conference, great wealth, and large numbers, Muslims are mere spectators in world politics; Islam is syn-onymous with extremism; and Muslims are often labeled as terrorists. Such is-sues, as well as questions of media bias, the validity of the “clash of civilizations” thesis, Islamophobia, and realistic Mus-lim responses led to the debate of Mus-lim disunity.

The current state of disunity has weakened the ummah and left it in a vulnerable position. This is why we see Muslims under attack in their own countries across the globe. In the wake of the current global political climate, Islam as an institution an ideology and a way of life, is being attacked. The oc-currence of Islamophobia is rising and Muslims are fi nding it hard to fi ght back due to the lack of a unifi ed and cohesive Muslim front.

THE AGE OF NONPOLARITYThe principal characteristic of twenty-fi rst-century international relations is turning out to be nonpolarity: a world dominated not by one or two or even several states but rather by dozens of actors possessing and exercising various kinds of power. This represents a tec-tonic shift from the past.

The twentieth century started out distinctly multipolar. But after almost 50 years, two world wars, and many smaller confl icts, a bipolar system emerged. Then, with the end of the Cold War and the demise of the Soviet Union, bipolar-ity gave way to unipolarity — an interna-tional system dominated by one power, in this case the United States. But today

power is diffuse, and the onset of non-polarity raises a number of important questions. How does nonpolarity differ from other forms of international order? How and why did it materialize? What are its likely consequences? And how should the United States respond? (N. Hass, 2008)

More recently, the financial and eco-nomic crisis that hit the US economy beginning in Fall 2007 — coupled with the rise of new great powers like China and India, and the resurgence of Russia — have raised questions about the de-cline of America’s relative power. These doubts found official expression in the National Intelligence Council’s (2008) Global Trends 2025 report (Layne, 2009).

World Out of Balance (Layne, 2009) is a forcefully argued rebuttal to arguments that American hegemony is waning and that unipolarity provokes other states to check US power. Contrary to the argu-ment in World Out of Balance, a strong case can be made that the early twenty-first century will witness the decline of US hegemony. Indeed, notwithstanding their claim that unipolarity is robust and US hegemony will endure well into the future, Brooks and Wohlforth actually concede that uni-polarity is not likely to last more than another 20 years, which really is not very long at all (Layne, 2009).

In contrast to multipolarity — which involves several distinct poles or concen-trations of power — a nonpolar interna-tional system is characterized by numer-ous centres with meaningful power. In a multipolar system, no power dominates, or the system will become unipolar. Nor do concentrations of power revolve around two positions, or the system will become bipolar. Multipolar systems can be cooperative, even assuming the form of a concert of powers, in which a few major powers work together on setting

the rules of the game and disciplining those who violate them. They can also be more competitive, revolving around a balance of power, or confl ictual, when the balance breaks down.

CONCLUSIONHistory clearly has not ended. The world of 1945 has evolved dramatically, funda-mentally and irreversibly. From Waller-stein’s perspective the demise of com-munism cannot be construed in terms of the triumph of capitalism and he further argued that the future remains open and he identifi ed the emergence of ‘antisys-temic movements’. Wallerestein has in-sisted that we are now moving into an ‘era of disintegration of the capitalist world-economy’ in which ‘the fi nal col-lapse of liberalism as a hegemonic ideol-ogy’ (Little 1995). Moreover, the eco-nomic crisis that hit the US economy due to waging several protracted wars in Afghanistan and Iraq — coupled with the rise of new great powers like China and India, and the resurgence of Russia — have raised questions about the de-cline of America’s relative power. Be-sides these powers shifting questions there are some other fundamental changes in world politics. These includes: A shift in power to global “South” (Chi-na, India, Brazil and other nations), The rise of transnational threats, The specter of weak and failing states, The prolifera-tions of various terrorist groups, The mounting infl uence of non-state actors, Evolving norms of sovereignty and inter-vention, The spread of regional and sub-regional organizations etc. And certainly these elements will infl uence to form the future world governance system.

(ABDULLAH SHAHNEWAZ is a Re-search Intern at Bangladesh Institute of Law and International Affairs (BILIA). He has completed both Honors and Mas-ters in Peace and Confl ict Studies from the University of Dhaka. His fi elds of interests are Confl ict Analysis and Confl ict Resolu-tion Procedures & Human Security.


RISE OF GREAT NEW POWERS LIKE CHINA AND INDIA HAVE RAISED QUESTIONS ABOUT THE DECLINE OF AMERICA’S RELATIVE POWER

POLICY PERSPECTIVE


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CRITICAL FAILURES IN STATISTICAL ASSESSMENT

Correct and well-balanced assessments are essential as external creditors rely upon the quality, timeliness, and integrity of offi cial data in order to accurately price sovereign risks in lending to the country

N U M B E R N U M B S


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DEV KAR Lead Economist,Global Financial Integrity (GFI),Washington, U.S.A

POLICY PERSPECTIVE


This article brings out the gaps in the assessment of Greek offi cial statistics and suggests a way for-ward in avoiding such mistakes in

the future. The reason why high-quality assessments are important is that users need assurance from an independent body that the country data they are using to make important decisions (e.g., to lend to the country) are reliable. An IMF study found that subscribers to its Special Data Dissemination Standards (SDDS) can expect to enjoy lower borrowing costs as a result of greater transparency and time-liness of data which are eagerly sought by external creditors. In fact, the study found that yield on new bonds issued by SDDS subscribers declined on average by close to 20 percent or by an average of about 55 basis points. Hence, accurate and reliable assignment of ratings under statistical assessments is critical for markets to as-sess sovereign risks and to price govern-ment bonds accordingly. To the extent there is a failure to assess statistical sys-tems correctly, that failure has adverse implications for the formulation of policy. Also, all external creditors bear a loss while governments are lulled into believ-ing that they can keep on borrowing at unrealistically low rates. This exacerbates the risk of a fi nancial crisis.

WARNINGS IGNORED AND OPPORTUNITIES MISSEDIn a report dated January 2010, the Euro-pean Commission noted that in October 2009, Greece informed Eurostat, the European statistical agency, that the gov-ernment defi cit for 2008 was revised up-wards from 5.0% to 7.7% of GDP. The Commission noted the 5.0% fi gure was published and validated by Eurostat in April 2009. Revisions of the fi scal gap of this magnitude are undoubtedly sharp and according to the Commission, ex-tremely rare in other EU member states. However, such revisions to Greek fi scal data have taken place at different times — in the years prior to 2004, the Greek authorities misreported fi scal data in no less than 11 separate instances.

The quality of fi scal data is not the only problem related to Greek statistics — na-tional accounts data are not much better. GDP fi gures have also been subjected to

counts, consumer price index, producer price index, government fi nance, mone-tary statistics, and balance of payments statistics”. The assessment was carried out against the IMF’s SDDS, which al-most all members with relatively ad-vanced statistical systems subscribe to. Such a subscriber must meet SDDS specifi cations for coverage, periodicity, and timeliness of the data, and for ad-vance release calendars, although a member may use the “fl exibility options” on up to two data categories that are not met at the time of subscription.

signifi cant revisions in the past. Given the pervasive problems with Greek data, the Commission opined that the governance and institutional setup related to Greek statistics needs to be analyzed in depth. Based on the information at hand, it seems that there were two main reasons for the frequent and large revisions to the government defi cit — weaknesses in methodology and “failures of the relevant Greek institutions in a broad sense”, in-cluding the lack of independence of the national statistical agency and the Gen-eral Accounting Offi ce from the Ministry of Finance. The Commission acknowl-edged that the Greek authorities would need to rectify the methodological weak-nesses and reform the statistical system by putting in place transparent and reliable working practices between the various government agencies in order to reverse the serious loss of confi dence in the reli-ability of Greek statistics.

While much of the above analysis in 2009 benefi ts from hindsight, the Com-mission noted that Eurostat has “consist-ently contested” the quality of Greek fi scal statistics for several years. The number and frequency of these reserva-tions was much more than they were for other member states of the EU. For in-stance, in 2003, Eurostat found out that the Greek authorities were overesti-mating tax revenues by recording un-collected taxes that were much higher than assumed. As a result, Eurostat asked the Greek authorities to switch to a method of recording tax reve-nues based on another, more reli-able and internationally approved method called “time-adjusted cash”. This recommendation was never carried out.

The IMF’s statistical assess-ment system called the Re-port on the Observance of Standards and Codes (ROSC) Data Module (henceforth Data ROSC) did not fare much better. The Data ROSC is supposed to provide a review of a country’s data dissemination practices against the IMF’s standards. An IMF Data ROSC team that visited Athens in late 2002, published a report in early 2003 which provided an “in-depth assessment of the quality of Greece’s national ac-

N U M B E R N U M B S


THE NEGATIVE EXTERNALITY ASSOCIATED WITH FAULTY ASSESSMENT SYSTEMS TRANSLATES INTO A LARGER RISK FOR LENDERS

The IMF Data ROSC assessment failed spectacularly in concluding that the Greek statistical agencies have a legal and institutional environment that supports statistical quality. In fact, on government accounts which caused so much angst among creditors and international or-ganizations such as Eurostat and the EU, the IMF report awarded the highest rat-ings (O=Practice Observed and LO=Practice Largely Observed) to almost all elements of data compilation. In fact, integrity of data compilation (covering such elements as professionalism, transpar-ency, and ethical standards) got the highest ratings. Only two elements of fi scal data compilation got poor marks (LNO=Practice Largely Not Observed): the resources devoted to compilation and the accessibility to methodological notes on those accounts. As it turned out, these assessments were widely off the mark and failed to capture the essential problems with the unreliable and misleading Greek fi scal data. Ratings in other areas of sta-tistics such as national accounts were also misleadingly generous.

A WAY FORWARD The Greek case highlights certain weak-nesses in the current system of statistical assessments carried out by international organizations such as the IMF and Euro-stat. For one, there seems to be a lack of coordination among them in overall as-sessments and in the assignment of rat-ings. As far as this author is aware based on his experience at the IMF, Data RO-SCs are typically not discussed with the regional statistical agencies such as Eu-rostat. As noted at the outset, there were at least 11 separate instances in the years prior to 2004 when the Greek authorities misreported fi scal data. Yet, this simple fact was not refl ected either in the Data ROSC’s strong ratings (O and LO) for data integrity, methodological soundness,

accuracy and reliability or in the subse-quent update to that report in February 2005. Indeed, the fact that Eurostat found serious problems with the record-ing of tax revenues back in 2003, raised no fl ags in the 2005 Data ROSC update. Moreover, the overall tenor of the update was quite bland. In short, it represented another missed opportunity to fl ag seri-ous breaches of methodology and the prerequisites of quality. The lesson here is that much better coordination among relevant international organizations re-sponsible for statistical assessments needs to be implemented as a matter of the highest priority.

Second, the IMF’s Data ROSC teams rely too much on information provided by government statisticians. This mindset needs to change. For instance, the reports would be stronger if they were more forthright in their assessments even in the face of sharp dissention by the agencies assessed. In the author’s experience, IMF Data ROSC assessments tend to shy away from critical commentary. Users not only need to see a frank discussion of out-standing issues but they need to be as-sured that the criteria underlying the ratings have been tightened greatly. The highest rating should be awarded spar-ingly and only after extensive discussion within the IMF and with other relevant international organizations.

Third, the Data ROSC should assign a high priority to garnering the maximum feedback from both domestic and exter-nal users of the statistics. The users’ sur-vey of the 2003 Data ROSC notes that the 17 users of fi scal data questioned the un-derlying methodology and wanted more detailed data on a timely basis. In hind-sight, the users’ survey provided a clue to the serious problems affecting the quality of Greek fi scal data. It is clear that the users’ surveys should be given more prominence in future assessments and

that the sample survey should be extended to external creditors such as banks and other fi nancial institutions that participate in the government bond markets.

Finally, the Data ROSC team must subject key balance of payments, national accounts, monetary, and fi scal data to rigorous consistency checks. The checks are particularly important for any country that subjects its macroeconomic data to frequent and signifi cant revisions. For instance, large revisions in the fi scal defi -cit must be consistent with the monetary and balance of payments accounts. The area departments of international or-ganizations — the departments that are directly involved in policy discussions with the authorities — must take the lead in ensuring that the statistical system is in-ternally consistent.

CONCLUSION There is an urgent need to improve the statistical assessment systems of the IMF as they are important to investors to ac-curately price sovereign risks. The nega-tive externality associated with faulty as-sessment systems translates into a larger risk for banks and other fi nancial institu-tions that decide to lend debtor countries based on misleading data.

Correct and well-balanced assessments are important because external creditors depend upon the quality, timeliness, and integrity of offi cial data in order to accu-rately price sovereign risks in lending to the country. The article suggests measures that can be implemented to reduce such negative externalities. While IMF assess-ments of statistical system serve many useful purposes, investors need to be aware that such assessments cannot al-ways be perfect which calls for strong in-house research to carry out in-depth analysis of the risks associated with sover-eign lending.

(DEV KAR is the Lead Economist at Glo-bal Financial Integrity (GFI). Dev was also a Senior Economist at the International Monetary Fund (IMF), Washington DC.


38 T H E I I P M T H I N K T A N K38

OFFSHORING

KLIMIS VOGIATZOGLOUResearch Fellow, Centre of Planning and Economic Research,Athens, Greece

During the last twenty years global economic integra-tion has proceeded with accelerating steps and

moved beyond simple trade rela-tions among countries. This deeper form of globalization has with in-creasing intensity interconnected national economies and has created a global production and supply chain. In the literature as well as in the business world this phenomenon is known as offshoring and interna-tional production sharing. Offshor-ing arises when the production of a fi nal good or a service activity is sliced into several production stages / business activities which take place in different countries. The various intermediate inputs-business ac-tivities, resulting from each produc-tion stage at a different location, are combined in the last stage to pro-

POLICY PERSPECTIVE

AND INDIA’S EXPORT DEVELOPMENT IN SERVICES

duce the fi nal good or service. Here international trade in intermediate inputs is an integral part of the overall production process.

Offshoring results from a fi rm’s (whether multinational or not) strat-egy with respect to the organization of production with the goal of minimizing overall costs. This stra-tegic option is aided by low tariffs, open trade relations, low transport costs, substantial cross-country wage differentials, and new produc-tion technologies which allow the production process to be fragment-ed. Indeed, the existence of the above conditions is crucial for off-shoring to take place.

There is a considerable amount of accumulated evidence showing an increasing importance of off-shoring activities (e.g. Bridgman, 2010; Molnar et al., 2007; Arndt and

Kierzkowski, 2001). Those are most importantly found in the clothing, automobile, and electronics sectors (Lall et al., 2004). However, offshor-ing has grown substantially in recent years also in other manufacturing industries, as well as in the service sector. Particularly for the case of the South and East Asian region, large intra- and extra-regional pro-duction sharing networks in South-East Asia have been formed and expanded (e.g. Machikita and Ueki, 2010; Hiratsuka, 2008).

As a matter of fact, China has increasingly been involved in (in-ward) offshoring activities, and there is evidence suggesting that this involvement has played a key role in China’s export development (e.g. Lemoine and Unal-Kesenci, 2004). Foreign-owned fi rms have relocated the labour-intensive pro-

An extremely strong positive correlation between India’s inward offshoring activies and India’s exports indicates that exports are greater to those countries from which India receives a greater amount of offshoring activities


sector; that is, the supply and use sec-tors are the same) that India imports and uses in a given sector as an in-put from each source country. This indicates the extent of offshoring/production sharing that occurs be-tween the source/supply country and India (the host country). More specifi cally, the reasoning behind this is that the source country (the country that relocates the given busi-ness activity/production stage that belongs to a specifi c industry to the host country) exports the intermedi-ate production stage to India (and thus India imports it) in order to produce the subsequent production stages (those that are further in the production line of the given industry) in the host country.

The offshoring related imported intermediate goods of India have risen signifi cantly during 2000-2010. Most importantly, offshoring in India occurs from the European Union (EU), China, Switzerland,

duction activities (such as assembly of the components) to China, and export their goods to the western markets from there. Thus, China has been transformed to a produc-tion, assembly, and export platform for foreign fi rms.

More recently, other economies such as India and several South Asian countries have also achieved a signifi cant opening-up of their economy and improved their export performance. Most importantly, India, which resembles China in terms of country size, has emerged in the global Information Technol-ogy (IT) services sector as one of the major exporter of IT services in the world (e.g. Banga and Kumar, 2010; Bussiere and Mehl, 2008; Banik, 2007). In addition, India is increasingly becoming an interna-tional centre of IT-related research and development activities (e.g. Al-tenburg et al., 2008). The relatively little empirical evidence that exists seems to indicate that offshoring in India’s service sector has increased, and that the intermediate business activities of foreign fi rms that have been relocated to India have had a positive impact on the development of the service sector and its export performance (e.g. Kuruvilla and Ranganathan, 2008; Meyer, 2007; Patibandla and Petersen, 2002).

OFFSHORING DEVELOPMENTSIN INDIAGiven the importance of the subject matter, we analyze the development of offshoring activities in India (originating from several source coun-tries) and its impact on India’s export growth over the 2000-2010 period. First, the offshoring in the manufac-turing sector is examined. We obtain information on the offshoring ac-tivities of India’s major trade part-ners from the OECD’s international trade in intermediate inputs input-output (IO) database for manufac-turing goods and services.

We calculate from this database the intra-industry intermediate in-puts (those that occur in the same

and the USA. In particular, we examine the

trends in the fi nance and insurance service sector, the computer and information services sector, and in other business services. It is found that offshoring activities exhibit an upward trend in all service sectors. Offshoring is particularly pro-nounced in fi nance and insurance services, but computer and informa-tion services have increased signifi -cantly over the 2000-2010 period, and have in recent years become equally important. It is also evident that offshoring in services occurs mainly from the EU and the USA.

INDIA’S EXPORTS AND THE EFFECT OF OFFSHORING Exports of manufactures show a signifi cant rise in all partner coun-tries. India’s most important export destination of manufacturing goods is the EU followed by the United States. Hong-Kong and Japan con-

POLICY PERSPECTIVE


stitute also important export mar-kets for India. Regarding exports in services, the export growth that has been achieved over 2000-2008 (lat-est available year for services) is even more impressive. The USA is clear-ly the most important export desti-nation followed by the EU. Japan and Hong-Kong follow the list, but are much less signifi cant.

It is interesting to examine the relation between India’s inward offshoring activities (originating from several OECD and other coun-tries) and India’s exports. Thus, we fi rst conduct Pearson correlation analyses using cross-country obser-vations on India’s offshoring source countries and India’s export partner countries for the years 2000, 2005, and 2010. This examination reveals whether or not India’s exports are greater to those countries from which India “receives” a greater amount of offshoring activities, or stated alternatively, whether the countries that engage more in off-shoring in India are those that im-port more from India (and thus constitute India’s most important export destinations).

This analysis is performed for both the manufacturing sector (correlat-ing manufacturing exports and off-shoring in manufactures) and the service sector (correlating service exports and offshoring in services). The results, indicate that there is a statistically signifi cant positive cor-relation between manufacturing exports and offshoring in that sector. However, this correlation is not strong (for 2010 the Pearson coeffi -cient is about 0.48). On the other hand the positive correlation be-tween service exports and service offshoring is highly statistically sig-nifi cant and also extremely strong (there is almost perfect correlation with a coeffi cient of 0.96 in 2008).

Thus, we fi nd evidence that the extent of offshoring and India’s ex-port level move in the same direc-tion. In order to examine this fur-ther and quantify the effect of offshoring, we estimate an appro-

priate panel-econometric model. The estimable equation is based on and derived from the Chamberlin-Heckscher-Ohlin theoretical frame-work of international trade with vertical multinationals fi rms that engage in offshoring (Helpman and Krugman, 1987).

CONCLUDING REMARKS AND POLICY IMPLICATIONSOur fi nding of offshoring constitut-ing an important determinant of India’s export development is in line with the empirical literature for both India (e.g. Kuruvilla and Ran-ganathan, 2008; Meyer, 2007) and other economies (e.g. Vogiatzoglou, 2011). Moreover, there is some evi-dence suggesting that developing countries that have become hosts of offshoring activities have witnessed to some extent a technological up-grade. In the case of China, the technological advancement that has been achieved in the Information and Communication Technology sector (Fan, 2008) seems to have been particularly facilitated by the country’s extensive participation in offshoring (e.g. Gaulier et al., 2007). More generally, there is also evi-dence indicating that international technological spillovers may occur to the domestic economy arising from industrial linkages with tech-nologically advanced economies (Lopez-Pueyo et al., 2009).

With regard to India, it has been found that there are signs of an im-provement in the country’s innova-tion capability (Fan, 2008). Further-more, R&D efforts and technology transfers from foreign-owned fi rms operating in India seem to have a positive effect on local fi rms and India’s exports (Hasan and Raturi,

2003). Thus, an important policy implication seems to be hinted by our results coupled with some of the literature’s fi ndings. Policies that promote a more extensive involve-ment in IT-related and other high-tech offshoring activities (originat-ing from advanced economies) may prove to be particularly benefi cial for the local technological capacity and export performance of India in the long-run. However, this pros-pect may heavily depend on the type of offshoring, the established inter-national industrial linkages, the general macroeconomic conditions, and India’s overall education and technology policy.

(DR. KLIMIS VOGIATZOGLOU is a Research Fellow at the Centre of Planning and Economic Research, Athens, Greece. He was also a Visit-ing Lecturer of Political Economics at the University of Continental Greece (fall semester 2007) and Vis-iting Professor of Economics at Seoul National University (academic year 2006-2007). He did his Masters in Economics from University of Manchester (2002) and did PhD in International Business & Econom-ics, University of Patras (2005). His research interests lies mainly within the fi elds of International Economics and Aplied Economics, and include issues in international trade, FDI, industrial specialisation, economic geography, globalization and re-gional economic integration. in ad-dition to these he has also wrote ar-ticles for various journals.

The views expressed in the article are personal and do not refl ect the offi cial policy or position of the organisation.)

THE POSITIVE CORRELATION BETWEEN SERVICE EXPORTS AND SERVICE OFFSHORING IS HIGHLY STATISTICALLY SIGNIFICANT AND EXTREMELY STRONG

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“Undoubtedly, it is of exceptional quality and amongst the best that I have seen in my interaction with similar organisations in different countries. I merely wanted to write to you and congratu-late you and your institution on an extremely well researched and

presented endeavour... I have taken the liberty of putting the cop-ies that I had got along in the WTO library.”

Mr. Shishir Priyadarshi, Development Division, WTO, Geneva

“...The Great Indian Dream is a very informative document.” Dr. V.L.Chopra, Member, Planning Commission, New Delhi

“...I found it very useful material, which has dealt with the vital issues that we are facing in the field of education, health, poverty and employment. I would like to compliment all the authors as well as the editorial team for bringing out such a valuable publica-tion.”Dr. Arun Nigavekar, Chairman, UGC, New Delhi

“If the purpose of a think tank is not merely to think issues through but also to ignite thinking among the readers, I think you have succeeded very well indeed.”Mr. R.Badrinath, Director, Division of Trade Support Services, Interna-

tional Trade Centre, Geneva

“Modern India certainly needs more think tanks like yours... unlike most academic journals, yours is well-designed, readable and also conveys a sense of aesthetics and humour through the illustrations... it well reflects the high standards of the IIPM.”Mr. Brij Khindaria, President, Diplomatic forum for Business, Geneva

“I have received the GID issue...very impressively put together with a lot of solid analysis...kudos to those who are bringing it out.”

Mr. B.S.Raghavan, IAS(Retired), ex-US Congressional Fellow, ex-

Policy Adviser to UN(FAO), ex-Adviser to International Commission on Peace

and Development, ex-Director, Politician and Security Policy Planning, Gov-

ernment of India

“I am much impressed by the content and quality of the journal The Great Indian Dream and the wide range of issues it covers. The editors indeed fully deserve the title of ‘think tank’!”Dr. V.M.Madiman Rao, Institute for Social and Economic Change,

Bangalore

PRAISE FOR THE GID

“Thank you very much for sending me the Great Indian Dream 2007 on India’s Policy Deficit: Planning for Change. I appreciate the initiative taken by the IIPM Think Tank in this area.”Dr. Indira Hirway, Centre for Development Alternatives, Ahmedabad

“Your publication is interesting and useful to us in our work.”Mr. Mihir.R.Bhatt, Honorary Director, All India Disaster Mitigation Institute,

Ahmedabad

“It is nicely designed and also rich in contents.”Dr. Rudra Narayan Mishra, Gujarat Institute of Development Research,

Ahmedabad

“We at IDEI do appreciate the efforts being made by your or-ganization...GID which is committed to enhance public awareness of policy issues in economics and management and to engineer solutions that will fulfil the Great Indian Dream.”Ms. Rajpreet Kaur, Program Support Officer, International Development

Enterprises (India), New Delhi

“I like the content, which is extremely detailed but balanced and certainly offers a good non-ideological mix from leading au-thors.”Dweep.I.Chanana, UBS Philanthropy Services, a consulting unit of UBS

AG, Zurich

“I managed to flip through the journal and found some of the articles very interesting ... GID has an interesting mix of articles and the photos and layout are also very well done.”Ms. Kumkum Dasgupta, Hindustan Times, New Delhi

“They are highly informative, focusing on contemporary is-sues.”Dr. Rajib Kumar Sahoo, Senior Economist, Canara Bank, Bangalore

“Presentation of IIPM Think Tank is really of high quality. Your team led by Dr. M. K. Chaudhuri and Prof. Arindam Chaudhuri deserve the appreciation from every one who has a vision and dream for a new innovative India. Hope your effort will become a path finder for innovative research workers.”

Dr. Gouri Pada Dutta, Chairman, Subject Committee (Health), State

Planning Board, West Bengal, Kolkata

“I would like to Congratulate IIPM for bringing such critical policy issues to the forefront, especially as India and world’s other great economies tread on the path of globalization and economic liberalization. Your efforts at adding the human face to some very core management areas are indeed commendable.” Mr. Bharti Ali, Co-Director, HAQ: Centre for Child Rights, New Delhi

“I have been reading it with great enthusiasm, interest and cu-riosity nonetheless. I would also like to congratulate you and your team for truly high-quality editions of the GID that are of the prime importance to the future of India’s thriving economy.”Dr. Rok Spruk, Slovenia

“I have received your energy /environment special issue. I enjoyed reading it. This is one of the most comprehensive reviews available on the subject today... This number is timely and will serve as a basic reference for leading policy makers/planners in India. In fact, I can say that all your volumes are packed with information/ideas for development workers. I wish you all the best in your new assignment.”Dr. G.Poyya Moli, Member, CEM, IUCN & Member, SEAC & SHCC, Govt

of Puducherry, Reader, Department of Ecology & Environmental Sciences, Pon-

dicherry University, Pondicherry

“I am impressed particularly with the varieties of issues that you have been able to cover in this publication. Thank you for this spec-tacular piece of work.”Dr. Soumendra K. Dash, Chief Economist, CARE Ratings Ltd, Mumbai

“I find that the journal covers a wide range of subjects in Eco-nomics, and is very useful both for reference and research.”Dr. Prabha Panth, Professor of Economics, Osmania University, Hydera-

bad

“The copies of GID are excellently produced and its so nice to see that you have many new names from new institutions.”Dr. PadmaPrakash, Editor, eSocialSciences

AN IIPM THINK TANK GREAT INDIAN DREAM FOUNDATION JOURNAL E

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