Back in the pre-liberalisation days, India was shunned for not opening its doors to the World Economy. When its own economy collapsed, it was forced to change the way it did business before it received any help. India opened up its markets slowly. We're still a long way away from having free, competitive markets in every field, but we are more connected to the World Economy. What does this mean for everyone involved? At one level, for us, it means that we are more affected (for better or worse) by what the World does. For the rest of the World, it means that they will be affected by what India does, if it makes a big enough impact. almost 2 decades later, when we look back, we can see that the World has worked well for us. Being connected to the World Economy has led us to better and more robust financial sector, more employment and more movement of both goods and people. India and China have (and continue to) reap the benefits of the World Economy.
India was forced to compete with the best across the World and her people did well. Now the World, has to compete with what India produces. The most apparent manifestation of the World Economy, is the USA. Today however, the people of the USA, who not too long ago cried out for liberalisation and integration of India and China into the World Economy, now cry that India and China are the reason for its poor performance. Because of better quality and cheaper manpower, India and China are more favored than the US for many jobs.
It hurts me when I read Americans talk about how India and China are taking their jobs away from them. All I can say to these people is `Welcome to the competitive World Economy'.
The reason for this post can be found in two op-eds by Larry Summers in FT on
April 28 and
May 5. In response to these articles is an
op-ed by Arvind Subramanian, Devesh Kapur and Pratap Bhanu Mehta.
Apart from this, I was upset by a
blogpost on PrawfsBlog a while ago along similar lines.
A good, neutral
counter to this sort of skewed logic is by Alex Tabarrok at Marginal Revolution (link found in comment by James Grimmelman to the Prawfblog post).