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A Comparison of The Impact of Globalisation On The Political Economies of China and India
A Comparison of The Impact of Globalisation On The Political Economies of China and India
The Context
China and India are two neighbouring countries in Asia who share the two largest population of the world and in fact added together they represent nearly one third of humanity. Globalisation has imposed internal pressure and external pressure to bear on both India and China. For most Chinese and Indians alike, economic life is hard despite the fact that reforms and globalisation have created various new opportunities1 and as such both countries have witnessed an emerging middle class with americanised tastes and preferences, irrespective of this however, both countries remain very poor. Although the two countries went to war in 1962 due to some border dispute, they have since tried to normalise relations and in 1995 for the first time trade had exceeded US$1 billion2 between them.
They have lately received a lot of international attention being viewed as emerging giant economies as they both play key roles at the international level. For example China has been a permanent member of the Security Council at the UN, while India who has lead the NonAligned Movement for years and is still vying for a similar position. Furthermore, India has been one of the founding members of the WTO and has played a prominent role as one of
The case of the development of the IT sector in India as some of the new opportunities, will be discussed at length in the course of this paper 2 see article by Jyotsna Saksena adapting to a Uni-polar World, India in search of Asian allies in Le Monde Diplomatique 1997
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A comparison of the impact of globalisation on the political economies of China and India the developing nations whereas China has had to fight for decades to obtain its admission into this international organisation.
While both China and India have an extended history of international trade going back centuries ago, both their economies were until recently highly protected and controlled to a large extent albeit that their political systems are very different. China is still a very unique case in the sense that while it has allowed its economy to be opened to Capitalists MNCs, it is still governed by the Communist Party with a strong leadership not giving away state power.
The phenomenon of globalisation has however affected both these countries. Given their large populations, big land mass and abundant resource bases, they have both relied on indigenous capabilities to a large extent to develop a wide range of goods for their internal markets.
With the Japanese economy facing intense macroeconomic challenges and its Prime Minister publicly apologising for Japanese misbehaviours towards China and South Korea in order not to close its doors for business opportunities in that region, and America after the 11th of September rallying support from India and China who until recently were particularly highly critical of American Foreign Policy, the importance of these two nations in world politics and in the globalisation process are not to be neglected.
A comparison of the impact of globalisation on the political economies of China and India The changes incurred on the road to globalisation are explored as well as some of their differences and similarities are discussed and furthermore some of the reasons as to why China has overtaken the Indian economy is highlighted.
Background India became independent in 1947 from the British and its population grew from 340 million to exceed one billion in 2000. Its per capita GDP is US $475 making it one of the poorest countries, although paradoxically it has had nuclear capabilities since 1974 and is one of the few countries in the world which has its own satellite in orbit due to an indigenous space program. India has always faced internal problems connected to caste and wealth, religion and language issues amongst others and as a democracy it has survived and can boast to have a free press, regular elections and an independent judiciary3 .
It has definitely opened itself to globalisation especially as a result of changes in economic policies in the early 90s and will have to face increasing world competition given its commitments at the WTO.
China is the worlds most populated country with 1.3 billion people. The GDP per head is US$ 870 and had a total GDP of US$1.1trn in 2000 as compared to Indias total GDP of US$2233 billion for the same period4 . Plagued by a series of civil wars and invaded by Japan until the end of World War II, China then experienced communism under Chairman
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From theSouvenir magazine of Indias Golden Jubilee 1947-1997 federation of Indian associations of Victoria Inc. see article of Ilona silgardo India The Future 4 Economist.com Country Briefings: factsheets on China and India 3
A comparison of the impact of globalisation on the political economies of China and India Mao. Relying strongly on autarky to achieve labour-intensive industrialisation which subsequently failed, China suffered from a severe setback during the cultural revolution which saw several cadres being taken to the countryside to work as peasants. Deng Xiao Ping however recognised the backwardness of China and realised the suffering done to their own people. He then steered the country towards a progressively open economy under the control of the Communist party whereby in the 1980s various special economic zones were established to attract foreign capital5 . Also the approach to reforms in China have been different to that of the Soviet Union in what has been termed a gradualist strategy as opposed to shock therapy6 .
Introduction
What is globalisation? This contemporary issue has been formulated differently by many academics while the basic notion that some cross-border trade and investment are happening between nations due to interdependency and an increasingly integrated international economic system, should be a starting point in developing any such paradigm. One could then argue about whether the concept is new and if not how does it differ from the old globalisation? The main difference comes from the impact of technological progress and also from the idea of free trade with receding barriers promoting Ricardos agenda of comparative advantage. The worlds national economies are being redefined and interconnected at an unprecedented rate due to an increase in the mobility of capital as a consequence of deregulation, new communications and information technology.
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see country reprts in Mahoney et al 2001, international business pp68-70 prentice hall Australia See article highlighting the comparisons by Steven Goldstein, China in Transition: The Political Foundations of Incremental Reforms pp143-187 in Walder Chinas transitional Economy1996 Oxford University Press NewYork 4
A comparison of the impact of globalisation on the political economies of China and India
A number of contemporary academics would emphasise economic globalisation and that such a construct would lead to new forms of social organisation that are supplanting or that will eventually supplant traditional nation-states as the primary economic and political units of world society according to hyperglobalisers7
The giving away of national sovereignty and some new forms of colonialism by MNCs. The decline of the State as a protector of individuals and groups and the rise of virtual states depending on investment and production abroad, not to mention the fact that due to the size of the the top forty MNCs having GDPs bigger than a country like Turkey for example, this creates an impression that governments have surrendered their power to capitalism8 .
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Global Transformations, Politics, Economics and Culture David Held et al 1999 Polity Press cambridge UK See arguments for and against globalisation in The Economist September 29th 2001, A survey of globalisation 5
A comparison of the impact of globalisation on the political economies of China and India This sort of argument is very common in India todate and has been used to attract a lot of support from nationalist parties (swadeshi philosophy)9 and trade unions specially because they associate the presence of MNCs with colonialism.
This research paper outlines some of the factors that have influenced the globalisation process in China and India, while analysing commonalities and differences in their approaches. While this research paper centers on the globalistaion process in China and India, around economic reforms it also highlights the cultural element of globalisation as well. It encompasses new avenues developing with increasing human migration and
communication which favour economic and technological change in a way which is described by Appadurai as the complex ways in which culture and nation are refracted and reinvented through the disjointed social, economic, technological and ideological dimensions of the contemporary world10 .
This paper shows the impact of globalisation on the formulation of two different styles of the management and implementation of public policy in relation to issues like privatisation of State Owned Enterprises, government approaches to deal with FDI and technology policy and development. Opposers of globalisation in India emphasise the link between promotion of FDI and the international institutions like the World Bank, the International Monetary Fund
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Swadeshi is a hindi term meaning Indians first and that was widely associated with the BJP which now is the main party in indian Parliament, however the party has diluted this long cherishes policy and is now in favour of the opening of the Inidan Economy although according to observers, the process is very slow. See arguments on the Swadeshi effect in Indias Economic Prospects 1999 :The Promise of Services Swaminathan S. Anklesaria Aiyar Former Editor,The Economic Times; Financial Express Center for the Advanced Study of India University of Pennsylvania http://www.sas.upenn.edu/casi/ 10 See artcle by Crane G, Imagining the economic nation: Globalisation in China New political Economy, Volume 4 Issue 2 PP215-232 ISSN 13563467 Abingdon July 1999 6
A comparison of the impact of globalisation on the political economies of China and India and the World Trade Organisation who all support economic liberalism and reduction of government intervention while fully supporting privatisation.
In the case of China, in the absence of democracy has meant that socio-political tendencies which may be latent but are invisible, do not hinder the march to globalisation. However the Chinese government will fairly soon have to change a series of policies when adhering to
WTO rules and regulations, in other words, the State will have to give away some of its sovereignty on economic matters and international trade.
Although it can be argued that these two giant economies have to face a different set of challenges because of the major differences in their political systems, they are both attracting a significant volume of foreign direct investment due to their size and low level of capital intensity.
Foreign direct investment is the locomotive of globalisation and because both China and India unlike many other third world countries have a sizeable number of highly skilled workers as well as an enormous supply of low unskilled labour, their development are closely linked to similar sectors in which they have comparative advantage and therefore face similar challenges.
Given the capacity of China and India to be competitive in both labour intensive sectors as well as in capital intensive product lines, this particularity has reduced the dependence of the
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A comparison of the impact of globalisation on the political economies of China and India region on trade with industrial countries and open up further opportunities for intra-asian trade and will be reinforced furthermore by the flow of direct investment from Japan and other industrial countries11 .
They both have a substantial number of people who have migrated all around the world for various reasons and while this migrating process was very common at the time colonisation had just started many are still emmigrating to countries having higher standards of living and the days of migration of cheap labour are over. Most of the migrants are now highly demanded professionals.
While the Chinese overseas network has played a major role in bringing FDI into China, India has tried promoting a similar policy towards its Non Resident Indian(NRI) and the Global Organisation of People of Indian Origin(GOPIO) is also actively engaged in the promotion of International business.
Two issues illustrating the intricacies of globalisation and its impacts linked to technology transfer, comparative advantage and flows of capital and labour will be discussed taking one example from China and one from India.
A clear example of the globalisation process is discussed below:--The story of the IT industry in India is a good illustration of the intricacy of the globalisation process. The first example is the case of the development of the IT industry in India. When I was studying engineering at Delhi University one of the best Universities of India in 1984, the appearance of PCs in Labs
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see articleof Malcolm Dowling, Industrialisation in Asia: A tale of Two Regions, Journal of Asian Economics 8(2), 1997 8
A comparison of the impact of globalisation on the political economies of China and India had just begun and it took a couple of years before a substantial number of students could actually get to use them given the imbalance in the number of students and the demand for the limited number of PCs. Computer engineering or computer science as degree courses were new avenues. After some 15 years, India started being hailed as one of the largest sources of skilled and trained computer technicians and IT specialists in the world.
What were the reasons behind this massive development and how does this link to the issues of globalisation? For a very long time due to lack of opportunities and also a yearning to go and discover the West, many of the young Indian elite from the very best engineering colleges have been going abroad for higher studies as well as for securing some challenging and highly paid jobs specially in the United States. While for years this constituted certainly a brain drain for India, it was a source of highly talented human resources trained at the cost of Indian taxpayers money for America.
However once in the United States and in other countries of the OECD, those very same Indian talents participated in the creation of intellectual capital and it is a fact that technical knowledge is vital as a central factor of production. Also many of them became entrepreneurs setting up their own businesses. The Silicon Valley is a very good example of this phenomenon and according to various IT sources and reports, Indian scientists and entrepreneurs are in decisive numbers in most of the major companies and in fifty per cent of start-ups. In this field India has the advantage of having the second largest pool of Englishspeaking scientific labour in the world, and the cost of that labour in India is among the lowest12 . One Silicon Valley joke is that the I in IC (Integrated Circuits) stands for Indian and
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See artcle on Indias IT superstars in Business Asia Volume 8 Issue 12 August 2000 pp8-12 9
A comparison of the impact of globalisation on the political economies of China and India C for Chinese as a sizeable number of Chinese Scientists are also present in the Valley except that they do not have as much linkages with the home industry because of the disadvantage of English language.
Despite the brain-drain effect the positive side of the story is that due to a lack of trained personnel in the industrialised world, and given the Indian connection a lot of linkages have been developed with India in this field, so much so that according to India Today many of the final year students of the famous Indian Institutes of Technology have already become software entrepreneurs running projects and research and development for many of their senior college fellows now in the USA. While in 1999, Indians received 47% of the 100,000 high-skill visas issued by the USA, an interesting development in India lately has been the massive investment made by Indian based in America in ploughing back some US$300million into more technology education in India.
Based on the US Silicon Valley model, India has created its own cybercity in Bangalore and Microsoft giant made sure it is present in India by locating itself there. According to Business Asia, India has 250,000 software workers which makes about 30%of the world total IT workforce and in the past ten years, they have been involved in developing half of the world software programs through export contracts. Indian IT companies are now listed on the NASDAQ.
The IT sector in India has not only become one of the leading players in software development but another factor which is closely linked to this is the fact that the movement of labour even in IT has become unnecessary at times as data are transferred electronically
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A comparison of the impact of globalisation on the political economies of China and India from various parts of the world to India and in real time while America sleeps transformations of data takes place and hours later are sent back through the internet. Many call centers are now being relocated from Europe and USA to India due to the internet revolution. IT has revolutionized the way the world does business across-borders and has definitely dislodged the geographical factor as an advantage.
While the impact of It on globalisation of the Indian economy can be closely linked to development of technology, it must be emphasised that Indian human resources and networking remain central in the above mini-case study.
Similarly the advent of liberalism and its success in China is largely due to the often referred Overseas Chinese Network which has provided China with the necessary FDI to achieve reforms and industrialisation. This aspect will be discussed in the following section.
Economic Reforms in China and India One of the most important political events of the late twentieth century, has been a world shift towards more liberal policies and free trade with reduction of protectionism and it has happened in most regions of the world with remarkably few exceptions13 . In many countries, the public debt became unbearable and the ideology of promoting import substitution and capital controls were replaced by policies in favour of pro-market and pro-foreign investment.
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See L. Bryan et al pp14-19 where hediscusses the major factors causing the shift from transition economies to economic liberalism in Race for the World Strategies to build a great global firm 1999 Mckinsey & Company, Inc. Harvard Business School Press USA 11
A comparison of the impact of globalisation on the political economies of China and India Earlier on a combination of nationalism and sick home economies made it difficult for China and India to take advantage of globalisation.
At the very outset , it must be emphasised that in the case of both China and India, reforms were initiated more as a result of compulsion rather than due to any other reasons albeit that both countries initiated the reform process at different times with Deng Xiao Ping in 1979 and Dr. Manmohan Singh Indian Finance Minister in 1991.
In fact the shift towards economic liberalism and to a more and more free-market economy has been noted worldwide specially after the demise of the Soviet bloc and the consequence of the latter was instrumental in the shift of the Indian economy towards liberal reforms. That was due to an excessive dependency of exports from India to the USSR. With the collapse of the USSR, India had to face a severe economic downturn coupled with the reaction of the Gulf War in 1991 where again India lost considerable businesses as Iraq was not only an important importer of Indian goods and services, but was also a major provider of oil.
In both countries, it would be right to say that economic reforms did not take place because entrenched political and business leaders suddenly discovered the virtues of a capitalist economy but rather, it became apparent that a certain historical approach of running centrally planned economies became bankrupt after forty years of growing state intervention through state owned enterprises and this state-led development finally ran out of steam as argued by Bryan et al14 . China had the advantage of having started economic reforms much earlier ie in
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Ibid 12
A comparison of the impact of globalisation on the political economies of China and India 1979 as compared to India, and this can be judged by looking at the economic progress15 of China during the last two decades and the reasons as to why it continues to be the largest destination of FDI outside the US, Europe and Japan.
Despite the reforms and the continued economic growth in India, a team of leading American economists from Harvard and Columbia have lead a comparative study with Chinese economic growth during the same period and have noted that India did not succeed in linking foreign investors, capital and expertise with a large and low-cost labour force by assuring investors of the basic quality infrastructure, physical security, adequate power, decent logistics and other key conditions for profitability. While China did provide same to investors as far back as the early 80s, India did not provide them with adequate infrastructure and logistical support and links to airports coupled with government red-tape thus failing in basic policy strategy16 . The centralisation of power with New Delhi, a highly regulated labour market and government approval for exit policy even for loss-making firms and regulations against full foreign ownership are further impediments which discourage FDI despite the governments effort to promote foreign investment. As in China, there are similar problems whereby State Enterprises that have borrowed heavily from creditors mainly public sector banks finally default on debt repayment and government many a times have to rescue such Public bodies by providing them subsidies.
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See attachments of economic data from the Economist on China and India. See introduction in India in the Era of Economics reforms by Sachs J et al 1999 Oxford University Press New Delhi 13
A comparison of the impact of globalisation on the political economies of China and India According to Sachs et al as compared to China, the tax and tariff structures in India remain to a large extent anti-export17
This analysis is further confirmed by Swaminathan 18 when he argues that the reforms are half-baked and not achieving the targets due to reasons put forth above. In addition corruption in India in the banking sector leads to a lot of efficiencies and similarly Chinas industrial strategy of holding on large-scale reforms towards the privatisation of SOEs whereby some cronies from the Communist Party manage the State Owned enterprises. Corruption income hinders economic expansion due to misallocation of subsidies.
Is the Overseas Chinese Business Network a model for India in the globalisation process? It would be good to mention that at the time China had started economic reforms there were some set of objective conditions which coincided with the stages of development in Hong Kong, Taiwan and Singapore when they had in fact shifted their economies from labourintensive import-substitution policies to export promotion. Subsequently when Communist China opened its doors, china benefited enormously from Overseas Chinese investors living in Hong Kong, Taiwan and Singapore19 . Due to the globalised economies of the Asian Tigers, a corridor to China was swifly established whereby the latter benefited from technology transfer at a rapid pace.
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Ibid --Indias Economic Prospects 1999 :The Promise of Services Swaminathan S. Anklesaria Aiyar Former Editor,The Economic Times; Financial Express Center for the Advanced Study of India University of Pennsylvania http://www.sas.upenn.edu/casi/ 19 Mahoney et al pp70-82 International Business A managerial Perspective 2001 Pearson Education Australia 14
A comparison of the impact of globalisation on the political economies of China and India
The cultural affinity of the Overseas Chinese network definitely became a strength and according to studies conducted by the Nomura research institute an economic synergy developed as a result of the Chinese overseas Network specially from Hong Kong which for years had been the main investor in China mostly in the manufacturing sector. Sharing a similar language with mainland China very often, training Chinese workers, conducting research and labour management turned out to be fairly straightforward for the overseas Chinese.
While the aim of the Chinese government was to induce linkages in the economy, it inversely used Hong Kong as a middleman between China and the global economy in networking formation in the services sector. Just like in India, the overseas Indian based in America, contributed to considerable extent to the globalisation of the economy, China similarly benefited from overseas Chinese business networks with the exception that this particular link had started much earlier.
It would have been interesting to know whether without this cultural affinity and the objective conditions present at the beginning of the 80s, whether the globalisation of the Chinese economy would have taken place? Had the Asian Tigers been culturally different from China, would they have diverted investment into India had they been offered similar facilities? recently a group of people of Indian Origin around the world have created an organisation known as GOPIO to promote international Business with India and the Indian Government is
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A comparison of the impact of globalisation on the political economies of China and India banking on the Non resident Indian to attract investment into India in a similar way with the Chinese overseas Business network. While the diaspora of Chinese origin people approximate some 55 million, according to GOPIO there are some 21million people of Indian origin residing outside India20 .
Moreover despite the bitterness and sustained political divergence between China and Taiwan, a substantial amount of FDI from the latter, finds its way into China through Hong Kong. Likewise although in general there is a mistrust and animosity between Chinese and Japanese as a result of the Japanese Invasion of China, Japanese are nowadays investing more and more in China given the severe economic climate in Japan and the net advantage of Chinese cost of labour21 . It is not fortuitous, that early this month Prime minister of Japan, Junichiro koizumi visited Beijing and publicly apologised for Japanese aggression against China during World War II.
It can be argued that the policy decision making process is much more complex in India as compared to China and therefore the latter has the advantage of having a strong leadership guiding reforms without meeting much resistance. While this has helped China in achieving
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Global Organisation of People of Indian Origin (GOPIO) http://www.gopio.net/formation_gopio.htm The Economist July 28th 2001 16
A comparison of the impact of globalisation on the political economies of China and India economic progress much faster than India, should the abuse of human rights as an important issue in the context of development and thus globalisation, be neglected?
Sen22 has pointed out that in the terrible history of famine around the world, famines had stopped quite abruptly after the installation of a democracy in India. It is an irony that despite severe criticism of Indian ecomic policies earlier on and its widespread poverty, it somehow avoided famines as compared to Communist China. Chris Patten former Governor of Hong Kong till 1997, argues strongly in favour of India as far as democratic values goes. The theory of Asian Values put forward by Lee kwan Yew, has become handy for China to support some of its brutal repression and atrocities on human rights like the Tiananmen massacre in June 1989 however Patten points out that the argument about Asian Values should not be an excuse for Westerners to close their eyes to abuses of human rights in Asia at a time of fast-changing consumerist global economy23 .
Other arguments favoured by some observers are that economic development if hampered by economic sanctions from the western world would cause chaos in China and that could lead to a tougher stance from the Communist party on freedom and civil liberties. They would favour supporting the policy of reforms undertaken by China which first paves the way to creation of economic wealth and subsequently economic conditions for political democratization described as the Asian path of development24 .
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See artcle of the Herald Tribune, Lets respect both sides of the development Coin by Amartya Sen and James D. Wolfensohn wher they argue in favour of economic freedom from deprivation, social justice and political freedom as well. 23 Patten discusses the issue of Asian Values and Sens defence for democratic values at length in his book East and West published by Mac Millan 1999 although he holds the view that democracy has had a positive effect on the international image of India despite its earlier economic failures and backwardness. 24 See arguments put forth by Susumi Yabuki in Chinas New Political Economy The Giant awakes pp224-226 Westview Press Sanfrancisco 17
A comparison of the impact of globalisation on the political economies of China and India
While for a very long time America had delayed the entry of China into the WTO tying it to human rights issues, Dr. Heling Shi25 , an economist from Monash University is of the view that such an attitude from America was more in relationship with a fear that China has the capacity and potential to become the worlds largest economy by 2020 and that the accession of China to the WTO could accelerate the process to the detriment of America. It should also be mentioned that America has adopted a complete turnaround on this issue and was more interested in securing Chinese support against terrorism at the last APEC summit in China this month, rather than harping on its rhetorical promotion of human rights theories. America is now facilitating matters for Chinese entry to the WTO at the next Summit in Qatar.
Another example which illustrates the difficulty of implementation of policies in India as opposed to China, is the family planning program based on sterilisation launched by Sanjay Ghandi just before Congress got ousted in 1978 following Emergency State imposed by Indira Ghandi. On the other hand the one child policy26 launched by the Chinese government in the 1970s had been successfully implemented and even todate such a policy whereby the State would intervene in the private life of citizens would just be unimaginable in India.
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I have personally had Dr. Shi as my lecturer in international Trade and Investment and have discussed issues relating to China during my preparation in the formulation of this research paper. 26 See Formulation of the One-Child Policy by Susumi Yabuki in Chinas New Political Economy The Giant awakes pp11-12 Westview Press Sanfrancisco 18
A comparison of the impact of globalisation on the political economies of China and India However although there is no direct evidence based on economic modelling demonstrating that for a sustainable growth of GDP in Asia, democracy can be a hindrance27 , the case of India suggests that due to political divergence between policy-makers in successive coalition governments and the swadeshi lobby calling for protection of domestic producers implementation of reforms have been more difficult and that leads to the question as to whether India would have done better with a stronger leadership a la Lee Kwan Yew style?
Finally as a result of globalisation and the access to internet, the politics of corruption in India have recently been exposed at a very low price over the internet but moreover the world had instant access to highly controversial material. Although one could argue that India has a free press, the new element shaping the democratic access to information is that anyone besides the traditional press or TV station can bring to public domain disturbing facts on government or politics and the Tehelka.com case is such an example. On the other hand in a place like China where internet access is controlled (there is a list of forbidden sites) dissident organisations abroad flood Chinese e-mail recipients with information that could not have been possible in the past28 . One can therefore hope that the advent of global communication can also help in pressurising governments into going into more transparent policies as well as helping into the democratisation process of society.
27
Patten discusses the issue of Asian Values and Sens defence for democratic values at length in his book East and West published by Mac Millan 1999 although he holds the view that democracy has had a positive effect on the international image of India despite its earlier economic failures and backwardness. 28 The Economist, Caught in the net march 24th 2001 p24 19
A comparison of the impact of globalisation on the political economies of China and India Given the limitation of this essay, other aspects which are no less important impacting on the respective political economies of China and India like regionalism, international
environmental laws, the effect of terrorism on the Indian economy and the huge military expenditure that mobilise financial resources from these two countries have not been discussed amongst other points.
Accoding to Heling Shi29 , a consultant to the ADB and specialist on the Chinese economy, the great challenges which China will have to face in the coming years are leadership in politics with economic freedom. In addition the government will to adjust to a new macroeconomic environment where both fiscal policies as well as monetary policies will have to be managed effectively but at present the Chinese government are not used to such instruments for policy coordination.
While on the issue of democracy, India is well anchored in that tradition on the other hand it can be said that China is doing economically better than India. However according to the Economist30 , it will have to face the foreseeable demand from the Chinese people for democratic values and a thirst for information specially with the advent of the internet; Chinas communists will have to loosen their political grip or see their authority increasingly challenged, as others have done before them.
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I have personally had Dr. Shi as my lecturer in international Trade and Investment and have discussed issues relating to China during my preparation in the formulation of this research paper. 30 Economist June 30th 2001 p9 20
A comparison of the impact of globalisation on the political economies of China and India Secondly as the Chinese economy get more and more reformed specially after its accession to the WTO, a sizeable number of state Owned enterprises will slowly disappear paving the way for more and more international firms to enter the market and compete openly for projects thus reducing considerably the state power to influence the market while dimishing some sort of shady revenue for corrupt officials and party activists. Both countries will have to reshape governance issues as a result of the globalisation process and their banking sectors will definitely have to be revitalised to face foreign competition as a result of which the productive sectors of their respective economies will greatly benefit.
With an acceleration of industrialisation and the flow of foreign capital, automatically development will have a spill over effect in the rural areas as the main industrial areas will be too congested and for expansion and also due to higher costs of labour in cities, some industries will have to delocalise while leaving important business areas, to shift into the service sector, a phenomenon already happening in India. Critics of globalisation suggest that an equitable distribution of benefits should become a reality for according to the Economist31 social uprising may be the response if growth in GDPs are not matched by a corresponding sense of well-being and security among ordinary citizens. this argument is applicable to both China and India.
The combination of trade and technology in the integration of world economies follows the flying goose pattern and in such a dynamic environment the development of human resources and training are of paramount importance for these two economies to further their
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A comparison of the impact of globalisation on the political economies of China and India development however much emphasis and effort have to be put in the rural areas as well in order not to increase the existing income disparity but also in preparation for the relocalisation of certain industries in the rural regions.
China is also gearing itself up to take development to the rural regions with its massive plan to develop the Western region. This particular project will be financed by the ADB to the tune of some $20 billion. The important element attached to this financing agreement is that the private sector will have to participate actively while institutional reforms like the modernisation of the government services are also part of the package.
Although India has emerged within the last decade as one of the leaders in the IT world, the effects of computerisation in eradicating poverty and raising the standard of living in typical indian villages is yet to be seen, however since it has a very large population and a consequent business sector which is still in need of modernisation, the potential for further development at an accelerated pace in this sector is quite promising. Indian competitiveness and success has been possible due to the process of globalisation with both mobility of capital and labour illustrating the benefit of forward and backward linkages in variuos areas of the economy not limited to India only.
As compared to China, India does not have enough quality infrastructure and labour productivity but on the other hand it has a good judicial system and that is very important for international investment and also in areas where intellectual property rights are at stake as compared to China. India will find it next to impossible to boot out a multi-national like Coca
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A comparison of the impact of globalisation on the political economies of China and India Cola now, as it had happened some two decades agao under Swadeshi pressure due to international bodies like them WTO. The changes brought by globalisation are now considered to be irreversible in both countries as the process continues to unfold.
(Mr Navind Beeharry has worked mostly at a senior management level in various parastatal bodies. Navind Beeharry is well-versed in general management and project implementation, having worked for two key institutions (IVTB and MIPAM) during the last ten years. He came back to Mauritius in March 2002 after completing a Master of Diplomacy and Trade from Monash University Australia. As Secretary of the Mauritius Institute of Public Administration and Management, apart from servicing the Board he was responsible for PR, Finance, Personnel, Procurement and has acted as Officer In Charge of the Institute. .Navind was involved right from the initial stages of the setting up of the Institute in the design, coordination and implementation of projects financed by the European Development Fund (EDF Project n 7-ACP MAS-016 Technical and financial cooperation under the fourth Lom Convention. Support to the Mauritius Institute of Public Administration and Management (MIPAM) and other international agencies. He has worked on the terms of reference of the various tender dossiers. These projects were in line with the objectives of formulating a corporate strategy for the institute in order to support human resource development in the Civil Service. Included were the transfer of training technology to senior staff with the assistance of experts from IDPM Manchester, and procurement of pedagogical equipment for the whole institute including special software for the resource center to achieve overall capacity building. The worth of the above projects could have been much more had MIPAM been able to function independently under the University of Technology Mauritius after an Act of Parliament in May 2000 changed the course of event. Moreover he had the opportunity to follow a workshop delivered by a Consultant from the European Foundation for Quality Management in September 1999 and was involved in the design and implementation of a series of training programs entitled PSIE (Public Sector Initiative for Excellence). This program was targeted at high level officers in the public sector with a view to not only create a quality culture but also to lead quality improvement teams in various departments. With a strong technical background and specialised in issues of Development Technologies including technology transfer, coupled with managerial experience, Navind has now enlarged his portfolio of competencies with his recent studies in Diplomacy and Trade. He is now well-versed to deal with a wide range issues varying from international cooperation, foreign aid, international business, globalisation, the WTO, regionalisation and international law amongst others. Apart from holding a Master of Diplomacy and Trade from Monash University Australia and a Bachelor of Engineering with specialisation in Production from Delhi University in 1987, he did a Master of Engineering Science with emphasis on the Management of Science and Technology at the University of Melbourne in 1992. He has attended a number of workshops especially in the field of training and contemporary economic and management issues and was a member of the IVTB Technical Advisory Committee (TAC) in management. Contact: Navind Beeharry, 23 Sir Virgil Naz, Rose-Hill, Mauritius; E-mail [email protected])
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