1. Razeen Sally European Centre for International Political Economy (ECIPE) London School of Economics (LSE)

2. GLOBALISATION AND INDIA SHINING India at 60 From Gandhian mysticism, economic isolation and social backwardness to globalisation and India Shining

3. GLOBALISATION AND INDIA SHINING a)Snapshot -- Macroeconomic conditions -- Trade and foreign investment (FDI) -- Financial markets -- Domestic business climate -- Politics and the state -- Comparisons with China

4. GLOBALISATION AND INDIA SHINING b) Prospects -- Politics, economic policy, the business climate -- Comparisons with China c) Focus -- States and cities -- Higher education

5. GLOBALISATION AND INDIA SHINING History (1947-91) -- From Fabian socialism to Soviet-style central planning and the ‘license raj’ -- Foreign policy: nationalism, non-alignment and the Soviet Union as First Friend -- The economy: a ‘Hindu equilibrium’

6. GLOBALISATION AND INDIA SHINING Market reforms, 1991- -- Half measures in the 1980s -- The 1991 crisis and ‘big-bang’ reforms (1991-93) -- Gradual, stop-go reforms (1993 to present) -- The state of play

7. Figure 1: Aggregate GDP Source: World Bank, World Development Indicators (WDI)

8. Figure 2: Per-capita GDP Source: World Bank, World Development Indicators (WDI)

9. Figure 3: Poverty as % of Population Source: India 1950-1978 World Bank Poverty in India Dataset Poverty and Human Resources Division Policy, Research Department, The World Bank, Berk Özler, Gaurav Datt, Martin Ravallion. January 1996 (http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTRESEARCH/0,,contentMDK:20699301~pagePK:64214825~piPK:64214943~theSitePK:469382,00.html); India and China 1981-2004 Chan and Ravillion "How have the world's poorest fared since the early 1980s?" The World Bank Research Observer, vol. 19, no. 2 (Fall 2004)

10. Figure 4: Inequality India (GINI) Source: Ozler, Berk, Gaurav Datt and Martin Ravallion. 1996. "A Database on Poverty and Growth in India," mimeo, Policy Research Department, World Bank.

11. Figure 5: Savings/ GDP Source: World Bank, World Development Indicators (WDI)

12. Figure 6: Investment / GDP Source: World Bank, World Development Indicators (WDI)

13. Figure 7: Foreign Exchange Reserves Source: IMF International Financial Statistics (IFS)

14. Figure 8 (i): Share Agriculture in GDP Source: World Bank, World Development Indicators (WDI)

15. Figure 8 (ii): Share of Manufacturing in GDP Source: World Bank, World Development Indicators (WDI)

16. Figure 8 (iii): Share of Services in GDP Source: World Bank, World Development Indicators (WDI)

17. Figure 9: Total Trade (Goods & Services) Source: WTO, International Trade Statistics

18. Figure 10: Trade/ GDP Source: World Bank, World Development Indicators (WDI)

19. Figure 11: Current Account Balance Source: World Bank, World Development Indicators (WDI)

20. Figure 12: Current Account Balance (% of GDP) Source: World Bank, World Development Indicators (WDI)

21. Pie 1 (i): Share of Global Trade (Goods) Source: WTO, International Trade Statistics

22. Pie 1 (ii): Share of Global Trade (Service) Source: WTO, International Trade Statistics

23. Figure 13: Exports of Goods and Service Source: WTO, International Trade Statistics

24. Figure 14: Growth in IT Services/ GDP Source: World Bank, World Development Indicators (WDI)

25. Figure 15: Inward FDI Flows Source: UNCTAD, FDI Key Data

26. Pie 2: Share of Global Inward FDI Stock Source: UNCTAD, FDI Key Data

27. Figure 16: Outward FDI Flows Source: UNCTAD, FDI Key Data

28. Figure 17: Stock Market Capitalisation Source: World Bank, World Development Indicators (WDI)

29. Figure 18: Inward Portfolio Capital Flow Source: World Bank, World Development Indicators (WDI)

30. GLOBALISATION AND INDIA SHINING Reform results -- Massive changes: opening to the world, transformed business landscape, IT powerhouse, emerging world-class firms -- But lopsided growth: benefits urban middle classes but not the vast majority of the poor – unlike China

31. GLOBALISATION AND INDIA SHINING Reform gaps -- Unreformed agriculture -- Lack of labour-intensive manufacturing and throttled labour markets -- Overregulated, underperforming services sectors -- Remaining trade and FDI barriers -- Remaining capital controls -- The unreformed Indian state

32. Table 1: Ease of Doing Business Table 1: World ranking in ease of doing business 2006* Country/ Economy Ease of Doing Busine ss Starting a Business Dealing with Licenses Employin g Workers Registeri ng Property Gettin g Credit Protectin g Investors Payin g Taxes Trading Across Borders Enforcing Contracts Closing a Business Singapore 11183127284232 Hong Kong 5564166023511014 Japan 1118236391312981951 Thailand 18283461833 571034438 Korea 231162811067216048281711 Malaysia 257113738663449468151 Taiwan 47941481542448607842624 Pakistan 7454891266865191409816346 Bangladesh 8868677516748157213417493 Sri Lanka 8944719812510160157999059 China 93128153782110183168386375 Vietnam 104972510434831701207594116 Philippines 126108113118981011511066359147 India 134881551121106533158139173133 Indonesia 135161131140120836013360145136 *The numbers correspond to each country’s aggregate ranking on the ease of doing business and on each of the ten topics that comprise the overall ranking. Source: The World Bank Doing Business Database

33. Table 2: Trading Across the Border Indicators for Trading Across Borders (2006)* Country/ Economy Ease of Trading Across Borders (World Rankings) Documents for export (number) Time for export (days) Cost to export (US$ per container) Documents for import (number) Time for import (days) Cost to import (US$ per container) Hong Kong 12542525 Singapore 45638263333 Japan 19511789711847 Korea 285127808121.04 China 386183351222375 Taiwan 42814747814747 Malaysia 466204811222428 Indonesia 607255461030675 Philippines 636181.3367201.336 Vietnam 75635701936887 Pakistan 9882499612191.005 Sri Lanka 998257971327789 Thailand 10392484812221.042 Bangladesh 13473590216571.287 India 139102786415411.244 Source: The World Bank Doing Business Database

34. Table 3: Governance Indicators Percentile world rank of governance indictors for Asian countries 2005* Voice and Accountability Political Stability/ No Violence Government Effectiveness Regulatory Quality Rule of Law Control of Corruption Singapore 38.284.099.5 95.799.0 Hong Kong 52.289.692.8100.091.392.1 Japan 74.980.284.785.689.485.2 Malaysia 34.362.380.466.866.264.5 Taiwan 69.164.283.779.778.770.9 Korea 68.160.878.971.872.569 India 55.622.251.741.15646.8 Thailand 49.329.26663.956.551.2 China 6.375.952.244.640.630.5 Vietnam 7.7594525.74226.6 Indonesia 40.6937.336.620.321.2 Sri Lanka 39.610.840.75054.147.3 Philippines 47.817.555.55238.637.4 Bangladesh 31.46.621.114.919.87.9 Pakistan 12.65.73427.724.215.8 Source: The World Bank Doing Business Database

35. GLOBALISATION AND INDIA SHINING Politics -- The most difficult country to govern: vast, hugely diverse, split so many different ways -- Messy democratic politics: multi-party coalitions at the centre; kaleidoscope of musical-chair politics in the states -- But advantages (compared with China): unity and stability; checks and balances; British-endowed liberal institutions; the English language; political and civic freedoms

36. GLOBALISATION AND INDIA SHINING Focus (1) -- The states in a federal system -- Growth engines in the south and west (with outliers) -- Policy reforms and business transformation: e.g. Tamil Nadu, Karnataka, Andhra Pradesh, Maharashtra, Gujarat, Punjab, Haryana -- Key sectors, NRIs and FDI -- Transformation of India: a bottom-up, not a top-down story

37. GLOBALISATION AND INDIA SHINING Focus (2) -- India’s expanding demand for higher (and lower) education: insufficient, low-quality supply; foreign investment prospects; reform hurdles

38. GLOBALISATION AND INDIA SHINING Prospects -- The big picture: the new Asian Drama -- Asia’s transformation of the world economy: much more competition; gains for the West and the Rest; but more difficult adaptation required; wider inequalities; the middle-class squeeze; the middle-income trap -- Role of India in the new Asian Drama

39. Figure 19: Share of Global GDP (i) Source: Agnus Maddison

40. Figure 19: Share of Global GDP (ii) Source: Agnus Maddison

41. GLOBALISATION AND INDIA SHINING Prospects (cont.) -- Lou Dobbs is wrong: stupid economics; bad business logic; noxious politics -- Lessons for policy: contain protectionism; constructive economic engagement; strategic foreign-policy partnership