AN IIPM THINK TANK & GREAT INDIAN DREAM FOUNDATION JOURNAL

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Great
R E T H I N K E D I F Y

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DETONATING DRAGON

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What the Liberals tell us about the rise of China
LAGGING LEGITIMACY

16

Indian Dream

Era of Geo-Political to a sustainable Geo Geo-Legal Legal ord order
NUMBER NUMBS

34

Critical failures in statistical statist assessment and how to avoid them in future

D E L I N E A T E

THE POWER PRISM
THE GROWING POLARIZATION OF THE WORLD – THE CAPITALIST BLOCK, THE ISLAMIC BLOCK AND THE COMMUNIST BLOCK

A N A RI N DAM C HAU DH U R I & P L A NMA N ME D IA P R E SE N TATION

Reign of Terror: With the recovery of skeletons near a former minister’s residence, questions about CPM’s murderous ways come to the fore
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IIPM: THE FUTURE IS HERE
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 oversimplification 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.

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 financial 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 reflected 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 field 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 flavour 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.

ACKNOWLEDGEMENTS
The 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.

CREDITS
FOUNDER : Dr. M. K. Chaudhuri EDITOR-IN-CHIEF: Arindam Chaudhuri MANAGING EDITOR: Prasoon.S. Majumdar DEPUTY EDITOR: Sray Agarwal CONSULTING EDITORS: Prashanto Banerji, K K Srivastava ASSISTANT EDITOR: Mrinmoy Dey RESEARCH FELLOWS: Akram Hoque, Mufaddal Poonawala, Amir Hossain, Sayan Ghosh GROUP DESIGN DIRECTOR: Satyajit Datta SENIOR DESIGNER: Shantanu Chatterjee DESIGNER: Karan Singh, Vikas Gulyani SENIOR ILLUSTRATOR: Shantanu Mitra IMAGE EDITING: Vinay Kamboj PRODUCTION MANAGER: Gurudas Mallik Thakur PRODUCTION SUPERVISORS: Digember Singh Chauhan, Soumyajeet Gupta, Satbir Chauhan CHIEF MARKETING ADVISOR: Amit Saxena THE GID ONLINE: Neel Verma, Anil Kumar Sheoran, Christopher Mani PRINCIPAL OFFICES
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(F)ACT SHEET
The Tri-polar World: Paradigm Shift in Economic Systems and the New World Order Prasoon S. Majumdar........................................................................................ The 70mm Revolution Sray Agarwal ...................................................................................................... What the Liberals Tell us about the Rise of China Patrick Corcoran................................................................................................. From Geo-Political to a Geo-Legal Order Rabin Majumder ................................................................................................ How Relevant is Huntington Today? Saumitra Mohan ............................................................................... ................ Rise of South-South Economic Flows Raj Aggarwal ...................................................................................................... Global Polarization and the World Order Anand Teltumbde ........................................................................................... The Shifting Power Blocs: Age of New Empires Abdullah Shahnewaz....................................................................................... Critical Failures in Statistical Assessment Dev Kar................................................................................................................. Offshoring and India’s Export Development in Services Klimis Vogiatzoglou.........................................................................................
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THE INDIA ECONOMY REVIEW

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Turkey is living example that had correctly struck a balance between cultural & religions values and modern businessfriendly environment. the region which was akin to autocracy have been increasingly adopting modernity that were historically and traditionally not part of the lifestyle of the region. Though the idea is to either retain economic supremacy or to attain the same. There is a clear visible and distinct line that has been increasingly evolving between the American. the emerging blocs are also on a perpetual evolution and that too quite radically. even the Americans observed an alienAmerican-concept of their money being used for bailing multi-billion dollar worth companies — a practice that is customary in socialist nations. for that matter. but one thing can be said for sure that the poles are moving.. are not only bringing about a new wave in this region but is also transforming the cultural legacy of this region. what has been happening in China is so non-Chinese. 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. And eventually in 2007. Even couple of decades back it would have been a dichotomous to even think of an socialist America. albeit with Chinese characteristics. the reasons for the ongoing radical transitions could be anything but the agenda is mostly common and that is to consolidate positions in the new world order. Today. In the next phase.Editorial The First Words and The Last Word THE TRI-POLAR WORLD: PARADIGM SHIFT IN ECONOMIC SYSTEMS AND THE NEW WORLD ORDER Prasoon S. Wall Street went through its worst crashes forcing the government to put the economy back on track. Besides. The world today is just not divided on the capitalist and communist blocks. Just like what happened in the United States of America is so non-American. challenging the power equilibrium. the recent uprising in Middle-East has brought a paradigm shift in the region. and spirit of freedom. After decades of market driven prosperity. Amidst all these. Post the 1998 financial crisis. Majumdar. the world has gone through a considerable change. the capitalist mindset. Prasoon S. Best. is a case in point. the Chinese and the Middle East blocks. 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 indoctrinated within the American system. Though it is too early to say. Turkey. Majumdar THE GRE AT INDIAN DRE AM 5 .. The rising new middle class. but it is also impacting bilateral trade and geopolitics to a large extent. but more than that the kind of transformations that has gone about within the champions of either economic systems. Not just the world but for the first time. Happy reading. However. whether it is for good or not so good. is being instrumental in causing this tectonic shift. Managing Editor P ost the end of the cold war of 90s. internet and modern thinking being the cornerstone of the revolution. The very concept of market being able to regulate itself with government’s meddling with it was challenged upside down. in 2006 China lifted its IPO suspension and world’s second largest IPO was offered worth $21 billion by the Industrial Bank of China. China’s market revolution has conceptualised a com- pletely novel model that is a hybrid of socialism and capitalism. With socialnetworking sites. Capitalist China and a capitalist and democratic Middle East. China adopted free market concept to fortify their economy. The new world order or shall I say the three emerging blocks is not only changing the political landscape of the world. Today the private sector owns more than 60 percent of total industrial production. where the State intervenes to support its sick companies through mobilization of financial resources. and the world is becoming increasingly tri-polar. No doubt. the Shanghai Exchange appeared out as the second largest stock exchange. For nations who are not directly a part of this process are increasingly forming strong bilateral allegiance with either of these blocks.

POWER PRISM THE 70MM REV Power blocs have exploited their cinemas to the tee to propagate their supremacy — some did it successfully and some ignored it at a large… 6 THE IIPM THINK TANK .

PATRONISING PROPAGANDAS EVOLUTION THE GRE AT INDIAN DRE AM 7 .

The same is true for almost all their movies and animated series. The movies concluded with a message that at any point of time. were made with heavy anticommunist themes. in those times. novels. not only showed American version of war and terrorism but also received active support and assistance from military and defence experts. entertaining films. to name a few.POWER PRISM SRAY AGARWAL Deputy Editor. Disney for that matter requires special reference here. This entire practice of propagating supremacy touched its height during the heart of the cold war. Movies like “Deterrence” (March 10. The facts get fortified when one watches movies like “Pearl Harbor”. “Bad Company” or “The Recruit”. After Cold war movies made by US were all with an aim to portray a need for unipolar world with power nucleus at US. “I’m just trying to tell a good story and make thought provoking. And this verity gets even more evident after scrutinising the profile of the Board member John E. but even their animation series had pro-American and anti-Arab agendas. All of these movies got huge assistance from the US government. “Black Hawk Down”. and the streets. Tweaking and distorting 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. 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. Not only their movies. Bryson who is also a director of The Boeing Company (one of the US largest defence company) and the Walt Disney Company (one of the biggest movie production house of US). 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. The IIPM Think Tank he motion picture industry is not merely concerned with financial profits and return on investments but is engaged in weaving entertainment to influence public reaction and opinion on vital issues and latently streamline propagandas. all produced under the banner of Walt Disney. the “Iron Man”. Movies like “Rambo II” (and even other Rambo series). The list does not condense here. Boeing got a special mention for its special contribution. I just try and draw upon the great culture we have as a people. US has right to attack any nation (even nuclear attack) as US is supreme and it’s US that will eventually win. Movies on incidents like Pearl Harbor and Vietnam War were scripted in a manner that not only established American supremacy but also made the viewers comprehend the entire episode from America’s perception. Anything that was wrong always had a link with either Middle-East or communist and at the end it was an T American who came for the rescue. Pentagon and the CIA. not only talks about US nuclear supremacy but its one-sided staunch attitude. Hollywood indiscriminately 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. Films.” American film industry has always been a front-runner when it comes to worldclass and technologically advanced movies. a series of seven propaganda films named “Why We Fight” was released by United States government to justify American involvement in the world war II. they also promoted their own agendas. For the beginning. “Top Gun”. from music. The last few decades of Hollywood was a part of larger perception-building exercise of US government that not only focused on establishing US supremacy but also tainted other budding nations and lower the morale of various other noncapitalist economies. were the communist nations. Communist nations also tapped the same media for propagating their supremacy and establishing their polarity over the world. In the same light. Take for instance. “True Lies”. at least in this sphere. Fighting Americans at par. Therefore 8 THE IIPM THINK TANK . The African-American director Spike Lee once said about his films. In credit list of the latest flick. 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. This was in spite of the fact that never had these characters travelled to US or for that matter had nay linked with American culture. Be it cartoon like “Aladdin” or movie like “Finding Nemo”. The motion picture is one of those few medium that can create convergence of various senses and present them to promulgate political or diplomatic agendas in form of art. or shall I say entertainment. and this is evident in their movies as well. the positive character always had American ascent and were white skinned while the negative character had Arabic ascent (although the language was English) and were black skinned. On one hand where they attacked each other’s philosophy then on the other hand. these two nations aped each other in order to prove themselves more powerful. 2000). the movie “Casablanca” which depicted Americans with hitherto unseen bravery and valiant efforts to save hapless Europeans from Nazis and quietly ignored the enormous sacrifices made by the Russians and others.

Later on more animation films followed with bizarre propaganda against capitalists. However. a tortuous hurdle was transpired as Stalin became the general secretary of the central committee and consequently Soviet censorship office came into existence! Thus government control and government trajectory was proving to be HOLLYWOOD INDISCRIMINATELY PORTRAYED WHAT AMERICA WANTED THE WORLD TO READ — IT’S AMERICAN WAY OR IT’S WRONG complete death knell for creative freedom. Nonetheless unlike in Mao’s time they did not demonized Guomindang. another film called “Aftershock” was released showcasing the peasantry life in the pre-earthquake time that struck China in 1976. with films like “Interplanetary Revolution. although the propaganda went on through 1970s and 1980s. art. the leftist evangelists started producing communist-mouthpiece movies like Mlodosc Chopina by Aleksander Ford in 1952. Lenin proclaimed that movies were the most important form of art. These films despised Jazz (an important part of American entertainment). 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. that showed battle between communists and capitalists in spaceships using ray guns. In Hungary. there is a dichotomy in China between Mao’s era and the more progressive era that followed. So. and “Merry-Go-Round” by Körhinta in 1955.PATRONISING PROPAGANDAS creators of theatre. that China refused help from outsiders in the earthquake. 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. literature and other forms of creative pursuits invariably struck a dissonant chord with the authoritarian communist regimes as freedom of expression carries with it the seed of opportunity of dissent and consequently must be leashed. they were at least futuristic like “Soviet Toys” released in 1924 by Dziga Vertov which was the first Soviet animation film and in the same year the same person produced a 58 seconds animation to provide tribute to Lenin. the government doesn’t know what to do with Mao’s image -— if anything they want to alter that! The outlook of Chinese government has changed from Mao’s time. with propaganda movies coming out one after another. and extolled lifestyle of peasants! After Stalin’s death. even though it did not have the required facilities to do it on its own. 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 films produced are “Sunday Romance” by Bakaruhában in 1957. Moreover they smell foul of bourgeois culture that was abhorred by the communists. the quality of Soviet films could not match up with the Americans. though ideological difference was highlighted. after the Communist regime’s usurpation of power in 1948. Even though Soviet Union started churning out propaganda films.that even his workshop was closed down and handed over to the next generation of film makers corresponding to the leftist ideology. In 2010. and was complementary to their cause of disseminating information and molding the perception of the masses. but it is enduring in China. with both framing their plot on class conflict. and the government wants to portray that through their films! In 2009. In Poland too civil rights were restricted after communists took over and they pushed only their own ideology through films. it was not shown. the movie was a relatively new medium at the time most communist regimes came to power. which was attributed in the film. In 1945. The tenor during this period was more resentful as one of the film 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. However. Zenon Komisarenko and Yuri Merkulov. and Stalin coming to power. The communists also pioneered documentary film production that suited their goal of influencing their population at a time when media reach was much lower. every script and finished movies had to pass the acceptance of totally government controlled bureaucracy that continued till early 1990s! Moreover. where communist heroes were blowing up capitalist villains! However with change of guard. the third most THE GRE AT INDIAN DRE AM 9 . To lead the way in propaganda films was Soviet Union. Antoni Bohdziewicz produced a film that was banned because of his rightist inclination. Whatever be the motive of Lenin in promoting film industry. so much so . In 1922. a film called “Founding of Republic” was released that commemorated the birth of People’s Republic and celebrated the victory of civil war by the Communist Party of China. A healthy and peaceful life of peasants and laborers form the cornerstone that epitomizes a typical communist regime.” directed by Nikolai Khodataev. he concentrated on matching American quality in films. and championing his resolve was Ivan Ivanov Vano who produced classics like “The Snow Maiden” in 1952 and “Someone Else’s Voice” in 1949. However.

Every region tries to promote their ideology and culture through different media like cinema and the new Muslim world is no exception. it was a very interesting choice of personality to make a film upon considering he is a prominent figure in three religions — Islam. Solomon came to rid the society of sin and to guide people on to the path of virtue. In the “Kingdom of Heaven” (release 2nd May. Cinemas face resistance from the conservatives as they feel films 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 films in spreading their thought process. 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. defying the odds the trio of Iran. Egypt and Turkey seems to stand out as the most influential countries among all of the middle-east film making nations. Despite the presence of around 48 Muslim majority countries. First of all. Any kind of attack on religion. If they want to promote 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. This kind of atmosphere encourages only pro-Islamic movies. especially when it comes to expressing agendas that are political and diplomatic. movies have emerged as the best tool in its category — especially given its reach and influence. through any form of art. The movie depicted the effect that sin can have on an individual and on society on a whole. is absolutely prohibited. Azeem played by Morgan Freeman was a Muslim who helped Robin Hood fight the evil doers. and Judaism. for their film’s message or content are plenty in these countries. 2005 in UK) — a film made in Muslim minority country and directed by Ridley Scott — faced with Christian aggression. demonstrated enormous tolerance and portrayed Islam as a merciful religion. for all the obvious rea- sons. In “The 13th Warrior” (1999). eventually saving his life. The movie cleverly talked about the good aspect of Islamism and to some extent tried and established the need for global Islamic supremacy. In the French film “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 Message” AKA “Mohammad. Golshifteh Farahani. The Kingdom of Solomon (released on 7th October 2010 in Iran) — an Iranian made film (directed by Shahriar Bahrani) based on certain events in the life of Prophet Solomon — is a perfect exam10 THE IIPM THINK TANK ple of such kind of movies. Messenger of God” (released on 9th March 1977 in New York) — a film based on the life of Prophet Mohammad directed by Moustapha Akkad — showed the origin of Islam. Mohsen Makhmalbaf. And in coming years. Film making in this region is a quite non-conventional career option. Mohammad Nourizad — to name a few. in “Robin Hood: Prince of Thieves” (1991). the film’s Arab leader. who helped a group of Scandinavian adventurers in a battle with a tribe of cannibalistic raiders. The film was highly controversial and faced stiff resistance from the Hollywood and had to go outside US to raise production money which was finally offered by well-known Libyan leader Muammar al-Gaddafi. Sanctions and instability in the region has not allowed this field of art to prosper. Similarly. However. (With reserach assistance from Mrinmoy Dey & Sayan Ghosh of The IIPM Think Tank) . The documentary named “The Muslims I Know” (2008) by Pakistani-American producer/director Mara Ahmed actually depicted good aspects of Muslims and that true Muslims are not like “militant jihadists”. Muslim Cinema (an answer to Hollywood) is still not well known commodity to the rest of the world. Another documentary film 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 filmmaker Julia Bacha told a story of an on-going non-violent protest movement on the West bank of the Palestinian Territories by Palestinians Muslims (who are often portrayed as fanatics by the western media) and created good impression about the Islamism. Christianity. this one medium would play a major rule in streamlining and altering global-perception about power that be.POWER PRISM sought-after bloc — the Islamist bloc — was the only one who relatively failed to exploit this medium of media to popularize their way of governance. being detained in the jail or being attacked by vigilante mobs. But with advent of technology. more so due to stringent laws of the land that are not only staunch but to some extent ironically adverse to freedom of art & expression. The plot was obviously based on the Islamic view of Solomon as a sinless human being which contradicts the views of the other two religions. Saladin. Antonio Banderas played a courageous Arab traveler. Take for instance the cases of well known filmmakers like Jafar Panahi.

THE INDIA ECONOMY REVIEW is now ‘THE GREAT INDIAN DREAM’ TO TAKE FORWARD THE PHILOSOPHY OF COMMITMNET TO OUR GREAT NATION EPITOMISED IN THE PATH BREAKING BOOK ‘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 .

Steinberg. apart from assuming this. and upset the status quo in the region or elsewhere. Liberals claim. And the key to solving it is what I would call strategic reassurance. the Chinese government recently held a press conference. rather than spurn or try to dictate to the Chinese precisely the ways in which we believe the Chinese should be interacting (i. the goals of which was to 12 THE IIPM THINK TANK . As China continues to grow economically and militarily. if China were to make a statement of policy intent.S. Steinberg argued similar policymaking should follow suit for India and Brazil. although distinguishing rhetoric and fact is the most difficult of tasks.e. “while protecting our own national interests.-China Institute in September 2009. Public Affairs Council. This. I believe. Steinberg at the University Of Southern California U. was surmised very effectively by a keynote address given by Deputy Secretary of State James B. the United States should work together with China. Steinberg’s address began by him quoting numerous policy makers and academics that indicated the United States (or any state for that matter) could not confront the challenges of the 21st century single-handedly and both states should embrace the benefits that occur from cooperation. it would probably embrace a benign and partnership-like policy with the United States and the region. To their credit.” The crux of his argument rests on the assumption that China’s continuing rise will not be threatening to the security concerns of other states.POWER PRISM WHAT THE LIBERALS TELL US ABOUT THE RISE OF CHINA United States can’t confront the challenges of the 21st century single-handedly and should work together with China in various global issues PATRICK CORCORAN Research Associate. which I might add is essentially informing the Obama administration’s position on US-China relations. is one of the key strategic challenges of our time. sanctions against Iran or increased pressure on North Korea) within the T international community. also sought some sort of an official Chinese government statement on their policies. Washington he liberal paradigm.

if the United States and Indian will be weakened in any way because of their involvement in South West Asia (causing resources diversion). mainly for oil.” The st conference was not only geared for co the international community. both have w weak records on environmental policy. However. but it th was stated that informing the Chinese w public was just as critical. we have seen China veto resolutions critical of the Sri Lankan government during their Civil War and their reluctance to sign onto sanctions against Iran. Steinberg listed several fo areas in which the United States and ar China could share (or is the United C States trying to move the burden onto St China’s shoulders?) the load. and Chinese overall miliim tary strength was described as being ta exaggerated. However. they will not fr stifle economic growth because of st environmental concerns. i. why would we expect China to discourage that? ANTI-PIRACY EFFORTS OFF THE HORN OF AFRICA China is heavily invested in Africa. In both cases. i. The two pu main issues of military concern adm dressed Japan’s concern of China’s dr expanding naval forces and the USex Taiwan alliance. however. China’s own internal domestic dissent is a much more pressing issue of concern when compared with the stability of Afghanistan.e. using en coal plants and an increased dependco en ence on oil. and other resources. but then again. China has not shown any indication that they will shift their nonalignment policy to one of interventionist. 13 . The C number attached to the point is Steinnu berg’s suggestions. they view it as a problem of the United States.e. The same is true for Pakistan. they have included cutPl ting domestic emissions as part of ti their attempt to mitigate global clith mate change. Both issues were downplayed in sa importance. Can the United States ex expect China to be completely forthex ri right on this issue? Can states afford to accept such a position? Steinberg also indicated that most states worry about the same threats as st others. and because of their detached nonalignment foreign policy theory. particularly arms Ta sales. along m with the United States. China. and ad from what I can infer.DETONATING DRAGON di dispel any notions of poor military transparency. In terrorism alone. m and to help the world better underan stand China’s armed forces. why would China want to involve itself in Pakistan when they know that India will serve as a balance against Pakistani aggression. AFGHANISTAN AND PAKISTAN BORDER SECURITY Afghanistan and Pakistan border security is one more area. using this notion of shared ot burden as another motivating factor bu for cooperation (and more imporfo tantly increasingly unmotivated factors ta for conflict). I have be added my own critique of what he sees ad as burden sharing. They will not sacrifice their investments for human rights. what rising power would? THE GRE AT INDIAN DRE AM ENVIRONMENTAL CONCERNS EN Fo the first time in China’s “Five Year For Plan” history. However. China has shown little intention on trying to disarm the regime in North Korea because it views North Korea as a buffer between the mainland and the west. w China’s growth over the last two decC ades was not “green” in any sense. Chinese military spokestr man Geng Yansheng said at the conm ference. do not interfere in the affairs of another country — most notably in Sudan and Zimbabwe both of which have horrendous human rights records — China continues to strike business deals. “Our press conference aims fe to spread important information about China’s national defense and ab military building in a timely manner. POLICY TOWARDS NORTH KOREA Another areas would be ending their nuclear program and working together for peace between the North and the South. China being one of five bordering countries of Afghanistan.

and the Renminbi remains inconvertible at too low a valuation. and in some cases. Constructivists discard both the realist and liberal theories: the realist balance of power theory and liberal peace theory are both irrelevant. when combined with strong diplomacy will mitigate any large scale source of conflict between the two states. if existent at all. More specifically.” In other words. others are subsets of larger organizations). “There are many points of tension between the two powers: Taiwan. Neither one of these theories presents any insight on the potential for conflict between the two states and instead argues that “a shared identity will determine whether the two states view each other as threats. And the Chinese population does not yet fully benefit from a greater consumption sustained by Chinese industrial progress. however. if not nonexistent. The participation in these organizations. in the era of globalization (especially between the United States and regional actors) combined with China’s continuing. the results of which would offset any security competition (regardless of their international institutional participation figures) between states involved in the economic relationship. However. and will assumingly continue to work with China on mitigating on. the economic rise of China will not pose a threat to peace. China’s changing domestic landscape (perceived emergence of a middle class through free market principles). the trade imbalance has not been rectified.POWER PRISM TRANSNATIONAL TERRORISM China does not deal with their internal threats. Although the notion of cooperation offers readers a much more positive outlook. China has adapted (and continues to) from an “aggrieved Maoist revolutionary state to a developmental state and a good . “that if marketization and democratization take place in China. it is important to note that cooperation. argue that the economic interdependence. will only develop because of the strain on resources — not because states choose to cooperate for the sake of cooperation alone. And by virtue of what liberals refer to as the democratic peace theory. if it does happen. with a particularly emphasis on Chinese military spending and total technological modernization. particularly those who believe in liberal institutionalism. classical 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.” Also. why should we expect them to waste resources combating transnational threats? These are all lengthy and very complex goals that the United States has (the effectiveness is of which is arguable). increasing participation in international institutions will soon trump any security competition between the two (or others) states. However. theoretically having some impact on the state’s decision making process and informing the dialogue on foreign relations more than China has today. there are varying perspectives within the paradigm itself. Steinberg did argue that there are several areas of concern for the United States. the South China Sea. military arms increases. and differences over nonproliferation issues. In economic terms. In addition. classical liberalism argues. Liberals. will ultimately lead to democratization.” Steinberg presented a large part of the liberal thesis. the prospects 14 THE IIPM THINK TANK for conflict are extremely low. The Untied States and China are both members of approximately 70 different international organizations (some of which they are observer or member status.

Liberals claim these interests will stifle the chances for conflict because China will not rise in a belligerent way. accepts the realist premise that states are important actors and conflict is still theoretically plausible. Both countries. and China. but certainly not least. Although China may perceive itself as a victim of Western domination. China and the United States do not have deeply rooted conflicting interests. between China and the United States over ‘scarce’ oil resources. and ultimately a decider in world affairs. let us not forget the economic relationship the United States and China also enjoy.S. exports was just as hot before it appreciated its currency beginning in 2005. and openness to the growing technologies. This is obviously a very brief. Adding to the security aspects. (PATRICK R. have much more to gain from cooperation. particularly economically. “In reality. mainly the internet and communications. feeding a new scenario for international tension — a competition. exports going to China has been rising steadily. even a clash.” Daniel Yergin wrote in Foreign Policy magazine. from 2. “China’s demand for U. the tremendous economic reliance. Last. which is in- U. Liberals incorporate low politics. Liberals also do not define the state’s role solely through power or high politics. but restrained because of the existence of international institutions and rational decision making processes.6% in 2009.” This point was echoed by soft power scholar Joseph Nye.” Steinberg conceded. it appears to me.” Within the military build-up. after a survey of the literature. an expert from the CATO Institute argued in lieu of the current calls from U. which is very costly. and its capabilities have been extended at sea. but nevertheless cooperation will prevail as the interests are mutual and not unilateral. The views expressed in the article are personal and do not reflect the official policy or position of the organisation. He is also an adjunct consultant with Consultancy Africa Inteland the international relations staff writer forInfluentials Network. along with others. and towards trade. “concluded that conflict was still possible between the U. sort of grand scheme of the major issues that the United States and China are.” The bilateral reliance on oil is only part of the equation.S. but to reiterate its commitment to global security. The share of U. and will have to continue to deal with in the future. but could be averted by progressive and rapid adjustments to each other. along with some sort of societal connection and one’s own perception as a global citizen rather than a nationalist. but they do not define the international community as anarchical. in the air. Griswold argues against their claims. BY WHICH CONFLICT WILL BE AVOIDED BETWEEN THE UNITED STATES AND CHINA global citizen. The liberal position expresses concern about the future potential for conflict but optimistically assume that the economic interdependence. it also perceives itself as a contributor. not global domination. exports to China more than doubled. “twoway trade and investment.7% in 2001 to 6. which means more supplies are needed. congressmen that China should be “punished” for purposely depreciating its currency value. The economic relationship will be the means.S. Dan Griswold.S. “The cost/benefit ratio of fighting a war has been tilted away from war. by which conflict will be avoided between the United States and China. which in the case of US-China appears centered around economics and cooperation on various security issues within Asia and the world (some of which were listed in Steinberg’s assessment). combined with the necessity ( for state’s survival) for burdensharing will redirect the state’s willingness to cooperate. the United States is also urging a transparent build-up.” which. But what about the politics? There the forecasts are murkier. CORCORAN is a research associate at the Public Affairs Council and a research assistant at National Defense University. Liberalism and construtivism offer the international relations community different predictions on how China’s rise will come to fruition.S. assuming not only to know what China’s arsenal is comprised of. From 2001 to 2005. LIBERALISM AND ECONOMIC RELIANCE The liberal theory.” and slowing the demand (and not competing) for global resources will be another area of contention and concern over the next fifty years. that realism offers us the most comprehensive approach for the rise of China over the next generation. I want to first address the how Liberals frame the economic relationship. but nonetheless important for our understanding of the liberal position. creasingly beneficial. “The math is clear: More consumers mean more demand. when the Chinese currency was even more undervalued than it is today.) THE GRE AT INDIAN DRE AM 15 . though its interconnectedness with the international community has accepted the norms and reaps the benefits across the board thereby probably nullifying any future urge for conflict. its military spending has quite naturally increased. working together to improve human rights and civil liberties within China. However.” Liberals claim China’s possible economic domination has to be understood in a different frame. and in space.DETONATING DRAGON THE ECONOMIC RELATIONSHIP WILL BE THE MEANS. “China’s economy has grown and its global interests have expanded.

POWER PRISM FROM GEO-POLITICAL TO A GEO-LEGAL ORDER 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 RABIN MAJUMDER Advocate-on-Record Supreme Court of India .

India needs self-preservation in all spheres of governance with transparency and diplomatic reform to otherwise crippled justice delivery systems which has caused thwarting of justice to the poor. the “Stealth Miracle” is sustainable in India. The legal system was centrally focused and now. It has to make presence felt. It needs to oil its own machines to speed up. It is felt judicial that the attitude o of la lawyers and judges will become serious seriou for addressing future experim experiments ment of geo-legally needed govern governance. geo o-po The modus operandi of globalization globaliz zatio has turned out to be an essential part pa art of o the recent economic reforms made e in India.) THE GRE AT INDIAN DRE AM CONCLUSION It may be safely submitted that globalization has created an economically polarized world that is unsustainable over the long term. would lead to harmonisation of international treaties for the smooth conduct of international trade. it is witnessed that incompa incompatibility atib between demand and su supply upp of laws and legal procedu procedures ures is responsible for the creation n of legal system with S GROWING POLARIZATION HAS DIRECT INFLUENCE ON THE RULE OF LAW THAT CHALLENGES THE GLOBALIZATION totally different standards and values. amongst others. anc All through wo world. alongside much talked about energy security. growing services exports and a more sustainable buoyant manufacturing sector. He is also on panel of United Bank of India. A diplomatic political perspective of the Indian legal systems needs to be studied to coincide with geopolitical requirements of today which would reduce legal conflict due to two culturally different legal procedures. He is also Central Government Counsel in Central Agency Section of the Hon’ble Supreme Court of India. sound financial system. fuelled by achievements in education. And India has emerged front bencher in quick learning this global reality. If India does seriously committed to integrate itself with global economy. thus. the judiciary has to try and adjudicate matters ranging from matrimonial. it has glooming impact of adversely affecting 17 . as said above that Indian legal systems should emerge and not submerge. It appears that growing polarization has direct influence on the rule of law that challenges the globalization. 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. Until not very long ago. The views expressed in the article are personal and do not reflect the official policy or position of the organisation. amongst others. India. India is seen as deep routed culturally reach nation where its’ adoptive legal systems have reached its epitome from where it can look out for a “global tie-up” horizontally. demographic dividend. the appetite of Indian law scholars for understanding 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 jurisprudence evidencing rule of law country. And it is expected that in the process of integration. to my mind. Indian legal systems and its judiciary need to emerge in the globalization and not submerge with international commerce and foreign legal systems. which is a crucial disorder for r seeking see any reform with updated judic cial systems.LAGGING LEGITIMACY ome nerves suggest that due to ever growing knowledge economy. It t is also argued that globalization has p pose posed manifold challenges to the futur future re of o judicial systems in India. both in letter and spirit. (RABIN MAJUMDER is Advocate-onRecord in Hon’ble Supreme Court of India. Globalization in India is seen n in the recent days with companies expa expanding and their horizons to other nations. commercial and other individual issues having cross-border effects. 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. It is often o argued that globalization is seen n as harbinger of inequality and it serves ser rves as a significant limiter of the dominance domi inan of any single nation-state as well as that t although globalization is designed design ned to advance the interests of developed develop ped countries. its exploitative capacity cap is limited by factors that are largely larg gely external to core states. The globalization has necessitated effective and efficient 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. As witnessed that legal inequality has not only been accepted as a byproduct of the current form of globalization. And. 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 Indian legal and judicial systems can assimilate itself with “global” requirements. social and legal handicaps are self reinforcing resulting g in spatially p y concentrated poor and creating a culture cultu ure of poverty which often cause justice e ina inaccessible to the poor and needy. however. 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 system. it has served as a necessary component of the global order. In fact. but it has provided prov p an occasion to challenge the status statu quo. the e age of post-industrial globalization has s br brought significant changes to the relationship relati ions between rich and poor states but t lea leaving a sharp polarization in the geo-politics. However. it will need to have economic policy which will impact on Indian legal systems as well.

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Birbhum.SAUMITRA MOHAN District Magistrate and Collector. West Bengal HOW RELEVANT IS HUNTINGTON There may not be a ‘clash of civilizations’ in the strict sense of the term but there definitely is a ‘clash of ideas’ today TODAY? .

As Amartya Sen wrote in 2003. Huntington thesis has been called reductionist. Huntington. Even though George W. the truth remains that today. what do they wish to gain through violence and innocent killings? Be it naxalites or any other terrorist groups.POWER PRISM t was way back in 1993 that Samuel P. 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 History’. their activities have caught us unawares.’ That is why. they should fight a just war in a just manner through just means. has been severely dented. who died on 24th December 2008. There are many groups which continue to terrorise the international civil society for the attainment of an ideational space they call their own. What binds together a globalized force of these extremists from many continents is a united hatred of liberal-democratic I values. shall be a war between civilizations. but cultural. Focusing just on the grand religious classification is not only to miss other significant concerns and ideas that move people. it also makes the world much more flammable. He said. Nazism. Communism or any other ideology. a coalition of all such evil forces seems to be taking shape. reams have been written arguing for and against it. 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 overpowering sovereign. 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. But any claim of a ‘clash of civilizations’ springing from divergent religious beliefs represents an oversimplification of the reality. it definitely warrants that other ideologies need to adapt themselves rather than be confined to a straitjacket. they have all either vanished or accepted the inevitability of the values of liberal democracy. Such means may include participation in electoral politics and subsequent formation of government to implement the ideas they espouse. if only implicitly. Bush said that ‘there is no clash of civilizations and it is only a passing myth of history’. on a choiceless singularity of human identity not only diminishes us all. The insistence. Today. Be it Fascism. whatsoever grievances they may have against the system. had declaimed in ‘Foreign Affairs’ journal that the post-Cold War conflicts would not be ideological or economic. ‘this single-dimensional categorization of human beings and the increasing tendency to overlook the many identities that any human being has trying to classify individuals according to a single pre-eminent religious identity is an intellectual confusion that can animate dangerous divisiveness. a war rages between the forces of ‘good’ and ‘evil’ in one form or the other. Many of these terrorists and terror groups have been functioning with impunity and more often than not. 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. “The local conflicts most likely to escalate into major wars shall be those along the fault lines separating the civilizations from one another. but there definitely is a ‘clash of ideas’ today. he further said. one really fails to gauge the real motive or usefulness of many mindless terrorist killings or the purpose behind them. Huntington also had the effect of generally magnifying the voice of religious authority. See the examples the world over. And. There may not be a ‘clash of civilizations’ in the strict sense of the term as posited by Huntington. over-simplistic and one-sided. 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- 20 THE IIPM THINK TANK . Since Huntington came out with this thesis.” The next world war. After all.

the divergent socio-political values constitute the real clash between the closed and the open societies everywhere. if required. Now that there seems to be a consensus that democracy is the best form of government. while simultaneously trying to continue a dialogue with these forces of revisionism including terrorism. Also. it is an abstract force which moves the world today. with necessary local modifications. the sole problem with the extant world system appears to be the fact that many states continue to be mired in history as pointed out by Francis Fukuyama in his celebrated ‘End of History’ theory. The World Value Survey reveals that at this point in history. Whether you want it or not. Benjamin Barber. the nation-states need to coordinate their actions to fight common evils. Things are seldom wished or directed to occur in a particular fashion. Nevertheless. Although the entire world pays lip service to democracy today. and for many decades. They include separation of religious and secular authority. The victory of the democratic discourse over the forces of darkness is the ultimate Holy Grail to be pursued by us. a political scienctist. Ergo. Waltz.) THE GRE AT INDIAN DRE AM 21 . but not of the labour. The absence of an open society often gives rise to forces whose blinkered vision leads to negative channeling of human energies as experienced in case of terrorism. Before entering the IAS. Today’s global problems warrant a global response. The extent to which a society emphasizes these self-expression values has a surprisingly strong bearing on the emergence and survival of democratic institutions. SAUMITRA MOHAN is a member of the Indian Administrative Service of 2002 batch and belongs to the West Bengal Cadre. We need to ensure that the same becomes the form of government everywhere. it is inter-dependence only in trade which allows mobility of the capital. Be it the operation of the capital market. rule of law and social pluralism. freedom of speech and inter-personal trust — that are crucial to democracy. as a Lecturer in Political Science with Meerut University and as a Journalist with the Press Trust of India. THERE IS STILL NO GLOBAL CONSENSUS ON THE SELF-EXPRESSION VALUES to perish. Such states are those who continue to deny basic freedoms to their citizens. almost two thirds of the countries around the world are now electoral democracies. when fascist regimes won overwhelming mass approval in many societies. the effects of a global warming or the operation of international terrorism. communist regimes had widespread support. Today. militarily there is hardly any interdependence as seen in preWorld War days. You have to join forces with the other members of the comity of nations to survive or be ready ALTHOUGH THE ENTIRE WORLD PAYS LIP SERVICE TO DEMOCRACY TODAY. 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’. 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 exchanging the same in an inter-dependent world. So. they just happen. This is a dramatic change from the 1930s and 1940s. you are affected.CLASH OF CIVILIZATIONS ers if they want it to be effective. he had worked as Assistant Regional Director with Indira Gandhi National Open University. democracy has an overwhelmingly positive image throughout the world. you are affected. Birbhum in West Bengal. gender equality. parliamentary institutions of representative government and protection of individual rights and liberties as the buffer between the citizens and the power of the state. Many of these closed societies lack the core political values which are usually supposed to facilitate a representative democracy. what we need today to secure ourselves against the marauding terrorists and extremists on the loose is a coordinated action among all the members of the Comity of Nations through the agency of a reinvigorated United Nations. He is presently posted as the District Magistrate and Collector. The views expressed in the article are personal and do not reflect the official policy or position of the organisation. (DR. within the doctrinal framework of liberal democracy. Huntington’s relevance shall lie in disproving his thesis. In fact. as observed by Kenneth N. Mind you even in these times of complex inter-dependence. According to the latest Freedom House ranking. there is still no global consensus on the self-expression values — such as social tolerance.

technology. tectonic forces of demographics.POWER PRISM RAJ AGGARWAL Sullivan Professor of International Business and Finance. University of Akron. This process was on the way to achieving a uni-polar integrated global economy with the many attendant economic benefits that arise from an integrated global economy. In recent years. there has been a strong push for multilateral trade and investment agreements to lower barriers to international economic flows. 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. and globalization are forcing obsolesce in developed country business models and simultaneously leading to the emer- . barriers to trade and investment flows globally. Akron. or greatly S lowered in other cases. sustainability. OH RISE OF SOUTH-SOUTH ECONOMIC FLOWS The relative decline of north-south trade and the rise of south-south economic flows seem to be moving the world closer to a multi-polar structure ince the middle of the twentieth century. These agreements have been spectacularly successful and have eliminated in many cases.

The analysis presented here shows that traditional European. THE NEW GLOBAL ECONOMIC STRUCTURE We live in an age of great discontent and important economic disruptions. Finally. technology. Unprecedented tectonic forces of demographics. the former Prime Minister of Britain. it also seems that the rise of new economic powers and of South-South economic flows have to be accommodated by existing economic powers without disruptions.GLOBAL GAPS gence of challengers on the global stage of some large developing economies. India and China) and the associated rise in SouthSouth trade and investment. it will continue to shake the world economy and likely cause additional crises (Brown 2011). and other developed country dominance in trade and investment flows is being significantly supplanted by trade and invest- ment flows among developing countries. Increasingly prevalent technologies of communication and transportation are leading to more frequent national and international clashes between lifestyles and economic classes and between freedom and modernity on the one hand and tradition and poverty on the other. the process of global economic integration has slowed down considerably and seems to have stalled in recent years giving way to many bilateral and regional multilateral trade and investment agreements. each of these forces interact and influence each other in a complex brew specific to each country. There is considerable fear of re-polarization of the global economy with consequent loss of the benefits arising from an integrated global economy. this analysis indicates that the nature of the economic ties in this Southern bloc may be quite different than the traditional trade and investment ties dominated by the developed countries. technology. and globalization are changing the global economy in a number of ways and increasing the importance of the formerly under-developed countries. industry. One possible reason for this re-polarization of the global economy is the rise of new economic powers such as the BRICs (Brazil. and . According to Gordon Brown. Indeed. sustainability. This rapid and significant rise of SouthSouth economic ties is leading to a relative decline in European and US economic hegemony and perhaps the rise of a new Southern economic bloc. and sustainability not only impact each other. FUNDAMENTAL FORCES CHANGING GLOBAL ECONOMICS For some decades now. they are the fundamental drivers of globalization. Consequently. all businesses have been facing and dealing with a number of inter-related forces: demographics. Thus. this article calls for creative solutions in the form of significant and major changes in existing multilateral institutions or the creation of other new institutions to accommodate the rise of the new economic powers on the global stage. further. Further. this rise of the economic south was a basic cause of the 2007-2008 economic crises and. US. Russia. Such accommodations are likely to be challenging especially as existing multi-lateral institutions are inadequate to the task having been structured over seven decades ago when the global economic structure was quite different.

given the automation of most routine work by computers in various forms. technology is changing value chains. While some may argue that this is nothing new. many businesses (like Wal-Mart) and governments (like California). with some previously valuable locations declining in value-added activities while other locations rising in value-added . with the focus is shifting from atoms to electrons and photons. According to Moore’s Law. This essay contends that in dealing with the challenges of globalization. The makeup of our consumption is increasingly lighter and more electronic (intangibles) — all materials are becoming lighter and stronger (e. 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. can be extended and sourced globally. This consumption mix.. In fact. Indeed. that has now held for over a quarter century. Second. population growth is uneven across countries. micro-processor enhanced light weight electric cars. titanium golf clubs) and high value consumption includes large quantities of weightless electrons and photons and consumer electronic products to process them (e. Consumption is de-materializing with ever smaller proportions of income spent on heavy physical objects and ever larger proportions on intangibles. The proportion of the elderly and retired as compared to the young and working age vary greatly across countries.g. this business model is now being extended to a much larger range of goods such as air travel (e. Information and communication technologies are supplemented by new materials and business models that involve the deconstruction of value chains. businesses must understand how globalization is influenced by these three underlying driving forces. e-mail) may be free but the resulting consumer attention and ability to sell them other goods is worth a great deal. technology changes where every business adds value. demographic changes are slow moving but inexorable. music. Further. now the main form of work. it is likely that we have run out of the “lowhanging fruit” (e. are taking the lead in using sustainability and lower carbon footprints to drive innovation and profits. make it increasingly cheaper to ship it long distances and source it globally. mass higher education. Regardless of the few remaining scientific skeptics. This is indeed the business model being used by many of the most successful new age firms such as Google and Facebook. as it is only an update of the old razor and razor blade model invented long time ago by Gillette. While human ingenuity will undoubtedly find new materials and resources as old ones are exhausted.g. there are many changes related to technology. Technology is transforming the way we do business and the nature of the products and services we consume.g. tech breakthroughs) in our quest for economic growth (Cowen 2011). the nature of work itself is changing as it is less physical or observable. computing power continues to double in power and halve in cost every 18 months. First.g. For most developed nations. etc.. movies.e. most businesses face multiple pressures to respond to sustainability and climate change mitigation issues.g. this dependency ratio is increasing rapidly while it is still generally declining in developing countries. and increasingly to physical goods such as print newspapers and magazines (Anderson 2008). Thus..POWER PRISM business. These global and national demographic changes have important implications for fiscal policies and business strategies. Further even though birth rates are declining and life expectancies are rising everywhere. There is strong negative correlation between income and birth rates. Ryanair) and other intangibles. Third.. lighter and more electronic. effective business strategy must reflect and integrate these underlying forces facing businesses. while governments across the world have yet to agree on appropriate joint efforts in response to sustainability and climate change mitigation. businesses face important changes related to sustainability and climate change mitigation. i. we are now tran24 THE IIPM THINK TANK sitioning from the industrial age to the information age. demographics. and sustainability. Human intellectual ability. The pace of technological change is unlikely to slow down. More generally. and iPods. technology.).. It is now possible and will soon be imperative to plan for and provide mass-customization in every business model. free land. While incomes are rising and birth rates declining in most countries.. carbon fiber airplanes. Further. technology and the increasingly electronic nature of goods is reducing marginal costs so they are practically zero — leading to new business models where some goods (e.

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. sustainability. Tectonic forces of demographics. and perhaps. If we are to avoid a re-polarization of the world economy and the attendant loss of economic welfare. outsourcing other parts of the value chain to where value may be added more efficiently. The views expressed in the article are personal and do not reflect the official policy or position of the organisation. Thus. it is now only 15 years. In recent years. i. THE LIKES OF CHINA IS EXPECTED TO FORM A THIRD POLE finances. and has taught at Harvard. 40-41) the average tenure of a company in the S&P500 is declining. These changes in value chains are transforming whole industries and the international competitiveness of entire countries. Not all businesses prove to be equally adept at developing and implementing new business models to reflect deconstructed value chains. according to Money Magazine (June 2011.g. but it is becoming increasingly cost-effective for physical goods as well (e. For example. pp. and have to reengineer and focus on the new best places to add value. sustainability. 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%). the nature of globalization is heavily influenced by demographics. Not only does technology help globalization by facilitating international communication and transportation. having dropped from 75 years in 1930 at the height of the industrial age-as another measure. and Japan. One of the consequences of these changes is the need to smoothly accommodate the rise of the formerly developing economies and economic flows between them. these forces of demography. This phenomena of mass customization is most easily accomplished for intangible products and services. the Asian pole with China. technology is accelerating globalization and changing the nature of work. China and India rise to become ever larger portions of the global economy. and South Carolina. 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. but globalization makes technology more valuable by providing larger global markets for any new technology.. Indeed.) THE GRE AT INDIAN DRE AM CONCLUSIONS After three-quarters of a century period of unprecedented growth. the global 25 . the developing countries is rising rapidly. every business faces increasing globalization. we must take active steps to combat it. as businesses face these great challenges in the move from the industrial age to the information age. demographic forces are creating global imbalances in worker populations and in government economy is facing significant change. the BMW plant in South Carolina already produces individually customized automobiles cost effectively for shipment to over a hundred countries). Driven by advances in information technology. In addition to North America. 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. technology and globalization form a mutually reinforcing cycle that makes each more pervasive over time. the relative decline of north-south trade and investment and the rise of south-south WE ARE HEADING TOWARDS A MULTIPOLAR WORLD WHERE. and many of those that are slow or incapable will go out of business.GLOBAL GAPS activities. India. (DR. Consequently..e. As noted briefly. Finally. the global economy is being re-oriented as the major emerging economies such as Brazil. In order to understand the full impact of technology. the world economy faces sustainability and climate change challenges. Thus. we are seeing a move towards a multi-polar world economy. IN ADDITION TO US & EU. with the continuing rise of technology and declines in the importance of distance. One aspect of value-chain transformation is the increasing economic possibility of mass customization where it is possible to provide customized products cost-effectively to the masses. It is expected that in the near future these two poles will be supplemented by a third. In fact the proportion of the global economy accounted for by the so called economies of the “South”. These fundamental transformations of value chains and business models are being driven by the continuing drop in information costs and the resulting decline in cross-enterprise transactions costs. technology. economic flows exemplified by increasing Indian OFDI and economic ties with Africa seem to be moving the world closer to a multi-polar structure. and technology. all businesses have to de-construct the value chains of their products and services. sustainability. individual customer preferences and requirements can now be transmitted to production locations to produce output customized to the needs of individual consumers within ever shorter time periods. and technology. Indeed. there is now at least the united EU. 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 developing economies. Others believe that we are headed to a multipolar world economy. Indeed. Michigan. He has received many honors including university-wide distinguished scholar and distinguished faculty awards.

Insofar as polarization in the world has been around for a long time. not mere polarity. 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- P tire planet into the capitalist system”. 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- 26 THE IIPM THINK TANK . Formerly: Managing Director and CEO of Petronet India Limited GL BAL POLARIZATION AND THE WORLD ORDER It is the multi-axiality of polarizations. blacks and white and so on. Whether one subscribed to this Marxist dialectics or not. primarily at the global level and extend the process to the micro levels. It is the process by which a power distribution is altered through alignment and coalition formation. the system (society) undergoes qualitative transformation. either at the global level or at the level of nation state.. e. When the contradiction between these two camps reaches its zenith. which is most important in understanding polarization and its potential towards global change olarization is defined as the tendency towards concentration at two opposing extremes (poles). the peripheries extended to include all of Asia (except Japan) and Africa. non-industrialized. Sociologists are prone to use polarization when describing processes of social change — as. capitalist and workers. there is no such change in sight. polarization is always associated with the threat of change. In the mercantilist capitalism (1500-1800). In the classical form of capitalism that followed mercantilism. after the industrial revolution. rich and poor.POWER PRISM ANAND TELTUMBDE Management Consultant. The polarization between contending social forces is seen as a key cause of the end of many regimes. transforming the capitalist society into a socialist society. and the peripheral zones (the Americas). This paper seeks to trace polarizations in recent history in order to understand the relationship (or absence of it) between polarization and social change. But. in Karl Marx’s account of the polarization of capitalist societies into ‘two great hostile camps’ of bourgeoisie and proletariat. ordinarily it should have led to some kind of qualitative change. This principle of dialectics led Marx to anticipate proletariat revolution. it was in the form of dominant Atlantic centres. and many other decisive breakdowns of political order. for example. which remained rural. POLARIZATION AND POLARITY Samir Amin (1994) has conceptualized how polarization has changed with the evolution of the capitalist mode of production.g. Polarization is a systemic process that divides population into two opposite camps. Polarization subsumes unequal development but is not the same as unequal development.

as Waltz (1975) suggests. These two characteristics gave rise to the ideology of national liberation with the goal of industrialization as synonym for liberating progress and. This remained the dominant characteristic of polarization. Each of these polarizations is further characterized by the number of autonomous centres of power in the international system. this characteristic weakened and commensurately saw progressive dismantling of auto-centric national production systems and then re-composition as constitutive elements of an integrated would production systems. Polarity. PROSPECTS OF WORLD REVOLUTION From the polarization that began hapTHE GRE AT INDIAN DRE AM 27 . Unipolarity is normally associated with the concept of hegemony. the peripheries gaining their political autonomy and achieving some amount of industrialization. which gave rise to two world wars. has been the subject of a great deal of theorizing. Multipolarity is frequently seen as a prerequisite for the operation of a balance of power system. which is a function of the distribution of power only among major actors. taking into account polarized patterns of conflict coexisting with processes of power diffusion. the goal of constructing nation-states inspired by the models of those in the core. The conventional notion of polarity involves an ordinal scale ranging from unipolarity to multipolarity with bipolarity in between.POLITICAL PARIT Y tered systems which paralleled the construction of the national bourgeois state. although that term connotes a form of dominance by a single country which is somewhat less direct than imperial rule. Although. much more so than any other aspect of the distribution of power. which describes the nature of the international system in any given period of time. the concept of polarity has been subject to imprecise and often diverse use. It is usually referred to as polarity. In the post-war period (1945-1990). the deepening of so called globalization. lasted up to the end of the Second World War. it does serve the purpose of depicting international systems in terms of their power dimensions as distinct structural variables.

Vladimir Lenin. in which the division of all territories of the globe among the biggest capitalist powers has been completed. Lenin theorized that intensification of engagement of the capitalist countries with the periphery and the concentration of capital into large financial oligarchies were intrinsically linked. and 5) The territorial division of the whole world among the greatest capitalist powers is completed. France. should tactically shun class struggle and align with their bourgeois nationalist struggle in order to weaken the imperialists. it has under- . of a financial oligarchy. The polarization seemed to confirm to this theorization inasmuch as the first and the second World Wars proved the inter-imperialist rivalry. While the insufficient demand created continual realization crises. while discerning the processes of imperialism. in terms of intensification of engagement of European core with peripheries. The costs and devastation of these wars would weaken core nation-states. on the basis of ‘finance capital’. bribed by the capitalists) should shun their short term interests and fight the capitalists. not only because the losers would find themselves with a diminished capacity to exploit the periphery. 3) The export of capital. but because nationalist movements in the periphery and anti-colonial wars would undermine the capacity of even victorious core nations to exploit the periphery. It assured the world proletariat that their emancipation was imminent. (a section of which he called ‘labour aristocracy’. Once the core lost control over its colonies the imperium would stagnate domestically. thereafter the imperialist camp adjusted itself and freed colonies from political control on their own. which in turn created acute competition between the ‘imperialist’ blocks. The general population could not absorb the mass of commodities produced by higher levels of productive capacity. the Highest Stage of Capitalist Development (19151916) became the most influential theorist of imperialism. However. 2) The merging of bank capital with industrial capital.POWER PRISM pening from the third quarter of the 19th century. His entire book is a study of imperialism as a stage in capitalist development. an Austrian born Marxist economist were to note this phenomenon as imperialism. Lenin saw in the longer term this process undermining imperialism. and new 28 THE IIPM THINK TANK consumer markets. Immediately after the publication of the Lenin’s book. the rising price of raw materials threatened profits further. and the creation. The concentration of capital engendered inequality and loss of purchasing power with masses. He identified five characteristics of imperialism: 1) The concentration of production and capital developed to such a stage that it creates monopolies which play a decisive role in economic life. which would raise the level of antagonisms between the bourgeoisie and the proletariat. Rosa Luxemburg another Marxist to explain imperialism as essentially embedded in the basic process of accumulation. his own Bolshevik comrade. Lenin defined imperialism as: capitalism in that stage of development in which the domination of monopolies and finance capital has established itself. many theorists had developed notion of imperialism. The Leninist theory of imperialism has not only failed to bring about world revolution. but without undermining capitalism in any manner. in his study Imperialism. Lenin developed his theory based on concentration of capital into large monopolistic corporations integrated with and led by a few large financial oligarchies. The resultant situation resembled Kautskian ultra-imperialism than Lenin’s imperialism and even confirmed that Lenin’s criticism of Rosa Luxemburg was somewhat misfounded. in which the export of capital has acquired pronounced importance. The falling rate of profit required economic expansion to open up new regions for investment. sources of raw materials. and to some extent Britain. who heavily relied upon the former two works and disputed the latter. Nikolai Bukharin also published his study. those in periphery. which has become extremely important. 4) The formation of international capitalist monopolies which share the world among themselves. While those in core. leading to a social revolution in the core. with a favorable introduction from Lenin. on the contrary. Imperialism and World Economy (1917). as distinguished from the export of commodities. which had “world economy” as a centrepiece for its analysis. culminating into inter-imperial wars. Germany. The theorization had great strategic significance for the world revolutionary project Lenin conceived. and thereby capitalism in the core through development of nation-state rivalry. which constrained aggregate demand levels in the capitalist core. John Atkinson Hobsoni. Lenin described how highly concentrated ‘finance capital’ had come to dominate and control capitalism by the very late 19th and early 20th centuries in the US. a British fabian socialist and Rudolf Hilferding.

Cornia with Kiiskii studied the trends in within-country income inequality in 73 countries from 1950s to the mid 1990s. particularly the CIS. the forces that could bring it about are the weakest. one finds polarizations along religious. many parts of Sub-Saharan Africa and some countries in Latin America and the Caribbean experienced economic stagnation. Income surveys suggest that global inequality increased between 1987 and 1998. Take for instance. They escape attention of the polariza- tion discourse. Thus it is the multi-axiality of polarizations. it is 13. MBA (IIM. Only in nine small and medium-sized countries (such as Honduras. the economic polarization all over the world is pervasive.Presently he operates as free lance management consultant. They found that in several countries inequality declined during the first 20-25 years of the post World War II period following a decline in unemployment. frequent reversals in national inequality trends were observed in the OECD countries (beginning with the USA and UK) and the Latin American nations.9 times Africa’s. This brief summary suggests that the declines in income inequality observed (with some exceptions) during the Golden Age were reversed over the last two decades. As a result. But this does not seem happening. but there are many other axes. Some studies suggested that global individual incomes were converging until 1970 but thereafter they began increasing and returned in 1995 to the level of 1950. Starting from the mid 1970s. but many transition countries in Central and Eastern Europe. columnist and a management professional based in Mumbai.POLITICAL PARIT Y mined the class struggle. he is well known in the activist circle as civil rights activist with rich contribution in that sphere. However. Countries with the highest per capita incomes in the early 1800s are still today’s richest countries. It has unintendedly extended the lease of life to the capitalist system. and invention of Islamic terror. the ‘clash of civilizations’ thesis of Huntington proffered at the time when economic polarization was reversing its historical trend for the worse. has been increasing with unprecedented pace. along with the stark economic polarization. the polarization into Islamic and nonIslamic worlds is a more dominant discourse than the economic polarization.2 times. stable earnings inequality and growing redistribution in the OECD and socialist countries and the introduction of programmes of land reform. Jamaica. This extreme economic polarization that is characterizing the present global order would ordinarily lead to breaking the ties that bind the social poles together and create the ideological foundations of revolution. It only indicates that polarization or its polarity is important in consideration of preservation of world orders but inconsequential to changing it. particularly identitarian axes. language. and Malaysia) is there evidence of a decline in inequality over time. national. as country after country experienced an upsurge in income inequality. France. which had almost dominated the polarization discourse for almost a decade. In the 1990s per capita incomes increased slowly but steadily in high income OECD countries. educational enlargement and some redistribution in developing countries. The views expressed in the article are personal and do not reflect the official policy or position of the organisation. Besides his professional career.) THE GRE AT INDIAN DRE AM EXTREME ECONOMIC POLARIZATION WOULD BREAK THE TIES THAT BIND THE SOCIAL POLES TOGETHER AND CREATE IDEOLOGICAL REVOLUTION 29 . indicating persistence in the structure of international inequality. Indeed. where class polarization is weakened by the polarization along identarian axes such as caste. The forces of status quo have long recognized this principle and have successfully strategized to stave off the prochange forces. Rather these identitarian axes are known to cross the material axes most times and weaken them. Ph D (Cybernetics) and over 25 research publications to his credit. community. the trend of the domestic Gini coefficients has taken a more or less pronounced U-shape. In 1820 Western Europe’s per capita income was 2. which is most important in understanding polarization and its potential towards global change. as well as in countries for which data from 1995 to 1999 show a perceptible deterioration of their inequality trend. The reason for this may be found in the assumption that polarizations along various dimensions necessarily cohere. not mere polarity. those who needed to know it most do not seem to comprehend it. He has BE (Mech). region and so on. whether it is at the global level or at the local level. (DR. and thereby prolonged the suffering of people. This has been the main reason for the paradoxical finding that when the necessity of change in global order is felt most. with the turn-around year placed most commonly between 1980 and 1990. in 1992. ANAND TELTUMBDE is a writer. the prescribed instrument for it. After 9/11. At the global level. ethnic and other identities. A). generally measured by comparing national per capita incomes. he has been Managing Director and CEO of Petronet India Limited till recently. and increasingly so since the early 1980s. International inequality. Inequality remained constant in 16 countries including Germany. This trend towards lower inequality came gradually to a halt in many countries. With over 30 years of rich experience in oil industry. which may not cohere with the former. While it is true that economics induced polarization gets reflected in political polarization. This is equally valid at the level of a nation.

The majority of the world’s population now live in cities and work for wages. Economic inequality and environmental degradation worsen. The United States has dramatically ruptured the post-Cold War order by brazenly trying to assert itself as the single and undisputed world power. but most spectacularly so in the underdeveloped countries. indeed. Global economic and cultural interdependence grow year by year. On the contrary. as we move into the new millennium. Its bid for imperial dominance is being contested by rival states and regions in Europe and Asia. Bangladesh Institute of Law and International Affairs (BILIA) THE SHIFTING POWER BLOCS: AGE OF NEW EMPIRES The non-polar world — dominated not by one or two or even several states but rather by dozens of actors — possesses plethora of power he end of the cold war has not brought the end of history. and its own internal social and economic weakness.POWER PRISM ABDULLAH SHAHNEWAZ Research Intern. Definitions of the family and. Economic expansion and the spread of industrialization continue. worldwide popular opposition. ethnic. and religious authorities desperately attempt to reassert control. while in other places tribal. the tempo of change is quickening. China and the rest T 30 THE IIPM THINK TANK . Women increasingly are freeing themselves from patriarchal control. Representative democracy and capitalism are apparently dominant everywhere and everywhere are being questioned as never before. gender are being transformed in some countries.

they only serve their own interests.S. in the Bretton Woods City of USA. 1995). One important question arises here: what the future of an alternative 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 support: the communist revolutionary challenge is exhausted (Halliday. and some recommended that the United States used its atomic arsenal to check Soviet aggression. 2004). the political supremacy of Europe and United States.POLITICAL PARIT Y of the Asia have begun to rival the economic and. Indeed. the World Bank. or the passing of a particular period of postwar history. the clandestine U. From Wallerestein’s perspective. in fact. Common sense and most academic thinking argue that a hegemon’s prime objective should seek to maintain the prevailing international system. disagreed. “what we may be witnessing is not just the end of the Cold War. but that is not the world in which we live today. In the name of trade liberalization. the hegemon should want to maintain and solidify it. the whole international economic system was captured by a few powerful capitalist countries. The United States had not shared its secret of the new weapon. However. less certain. Advisers to U. History clearly has not ended. . 1992). Vietnam. THE TRIUMPH OF CAPITALISM It 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 finally been vindicated. Members of Manhattan Project. the political movement of communism survived the fall of the Soviet Union and the Eastern Bloc. if not liberalism and the remaining communist states (Cuba. Wallerestein defi nes the world economy as capitalist in form. the future has never been of greater concern to humanity. Vietnam. but the end of history as such: that is. Positioned at the top of the hierarchy. Measured in any conceivable way. the world trade Organization (WTO). The current inTHE GRE AT INDIAN DRE AM 31 . through the establishment of World Bank Group. nuclear monopoly in only four years and Oppenheimer was right. But. developed world established the international Monitory Fund (IMF). Francis Fukuyama described the fall of communism in the Soviet Union as the end of history (Little. President Harry Truman believed that the Soviet Union was a decade away from constructing its own atomic bomb. neither can be seen to have precipitated any dramatic change in the structure of the world economy. and more pregnant with change than ever.S. THE BONE OF CONTENTION: THE ATOMIC BOMB The sudden detonation of two atomic bombs over Japan by the United States in August 1945 raised Soviet suspicions. Wallerestein is acutely conscious of the oppression which exists in the prevailing system and seeks to identify anti-systematic forces which will help to move the world on to another phase beyond capitalism (Little. Robert Oppenheimer’s opinion that the Soviets would end the U. But he does accept that the demise of communism will have an effect on the world economy. 1995). The demise of communism is a phenomenon confined to Europe: but the trend within China would seem to indicate a move towards capitalism. increasingly.S.British nuclear monopoly eroded whatever goodwill there had been. Of the five remaining communist states. Most of the developing countries can improve their poor economic conditions a few through the policies given by these organizations.S. By contrast. As he observes. and the U. Moreover the powerful. In 1944. China. he tends to see capitalism and world economies as ‘obverse sides of the same coin’. and Laos have moved toward market economies but without major privatization of the state sector. the General Agreement on Trades and Tariffs (GATT). It was J. 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 rational working out of historical forces. 1995). the United States has a greater share of world power than any other country in history. the world communist movement was arguably weakened. and North Korea) are unable to provide an international alternative. the end point of mankind’s ideological evolution and the universalization of Western liberal democracy as the final form of human government” (Fukuyama. and yet it appears more confusing. 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. the North American Free Trade Agreement (NAFTA) etc. In 1949 the Soviets detonated their first nuclear weapon (Wenger & Zimmermann. nuclear program that had developed the bombs deployed in Japan. After the fall of the Communist states in the Eastern Bloc. the demise of communism cannot be construed in terms of the triumph of capitalism.

the United States has justified the use of force by arguing that even though Saddam Hussein did not have weapons of mass destruction (WMD) programs. policy. As Islam believes in sacrifices it does not allow reckless consumption thus Islamic force stands against market expansion viz.S. on the one hand. Huntington Argued …For forty-five years the Iron Curtain was the central dividing line in Europe. 1996). is certainly satisfactory. ethnicity and social class. preaching hatred and even killing one another. it might be willing to live in a mixed world if it were a safe one. First. and are active citizens in very different national contexts. and tyrannies will inflict misery abroad as well as at home. No state can have a greater stake in the prevailing order than the hegemon. We can easily trace that Islamic force was to occupy the vacuum space after the demise of communism as an anti-West entity. the fact 32 THE IIPM THINK TANK that the United States is a hegemon feeds its revolutionary impulse. The “Muslim world” denotes both Muslim majority countries and a transnational Muslim community that includes growing minorities within Western and other countries. the contrast between the two is actually quite severe. partly because the United States has played such a large role in establishing it. others more secular — differ by race. In extreme cases such as Iraq. such safety could not be guaranteed because nondemocracies will always threaten the United States. from Muslim and Orthodox peoples on the other” (Huntington. Second. however differently understood and lived (World Economic Forum. 2006). although not necessarily perfect. And in this broad debate two important elements are pivotal i) development through consumption ii) development through sacrifice. capitalist market economy. including preventive war. he would have developed them when conditions were propitious. It was better for the United States to act rather than wait for this to occur (Jervis. a vital instrument to preserve world order is what the administration calls preemption but is actually prevention. To make itself secure. ISLAMIC BLOC: SEARCHING FOR UNITY Islamic bloc to play a major part in world affairs is still beyond reality. Despite the intrinsic value it places on democracy. and the revelation of the Qur’an. foreign policy had little place in the draft document almost a decade earlier. Huntington’s provocative and controversial thesis of ‘The Clash of Civilizations’.S. Muslims — some more pious. when the United States and the Soviet Union were mutually threatening and threatened because their contrasting ideologies and domestic regimes made each an inherent menace to the other. Because a country’s foreign policy reflects the nature of its domestic regime. Muslims are making false claims against one another. current doctrine emphasizes that peace and cooperation can exist only when all important states are democratic. The ummah is in a desperate situation and in dire need . Hope as well as fear. it must impinge on the security of nondemocracies.POWER PRISM ternational system. states that rule by law and express the interests of their people will conduct benign foreign policies. Although the 1992 Defense Guidance was drafted by neoconservatives and is often seen as foreshadowing current U. This transnational community is incredibly diverse. That line has moved several hundred miles east. The United States believes itself caught in a version of the familiar security dilemma. the situation resembles that of the Cold War. What binds a diverse Muslim world together is a shared religious identity based on monotheism. 2008). Although the current world system is unipolar. nor can any state have greater power to maintain the system. And this debate further got momentum by Samuel P. Yet. Few interlinked elements that have become central to contemporary U. Ironically. creating hostility. It is now the line separating peoples of Western Christianity. The disunity within the ummah is very apparent for all to see. opportunity as well as threat are at work. the prophethood of Muhammad.

Islam as an institution an ideology and a way of life. no power dominates. This is why we see Muslims under attack in their own countries across the globe. great wealth. Besides these powers shifting questions there are some other fundamental changes in world politics. which really is not very long at all (Layne. bipolarity gave way to unipolarity — an international system dominated by one power. revolving around a balance of power. These includes: A shift in power to global “South” (China.POLITICAL PARIT Y of reform. Then. despite the 57-member Organization of the Islamic Conference. and large numbers. Brazil and other nations). a bipolar system emerged. when the balance breaks down. This represents a tectonic shift from the past. and realistic Muslim responses led to the debate of Muslim disunity. Evolving norms of sovereignty and intervention. Brooks and Wohlforth actually concede that uni-polarity is not likely to last more than another 20 years. The specter of weak and failing states. Such issues. or the system will become unipolar. But after almost 50 years. 2009) is a forcefully argued rebuttal to arguments that American hegemony is waning and that unipolarity provokes other states to check US power. even assuming the form of a concert of powers. and the resurgence of Russia — have raised questions about the decline of America’s relative power. Indeed. The proliferations of various terrorist groups. Islamophobia. His fields of interests are Conflict Analysis and Conflict Resolution Procedures & Human Security. The rise of transnational threats. The views expressed in the article are personal and do not reflect the official policy or position of the organisation. He has completed both Honors and Masters in Peace and Conflict Studies from the University of Dhaka. In contrast to multipolarity — which involves several distinct poles or concentrations of power — a nonpolar international system is characterized by numerous centres with meaningful power. the validity of the “clash of civilizations” thesis. The Muslim world remains embroiled in a whole host of religious. Moreover. In a multipolar system. The spread of regional and subregional organizations etc. India. and the resurgence of Russia — have raised questions about the decline of America’s relative power. Hass. as well as questions of media bias. two world wars. and the onset of nonpolarity raises a number of important questions. 2009). From Wallerstein’s perspective the demise of communism cannot be construed in terms of the triumph of capitalism and he further argued that the future remains open and he identified the emergence of ‘antisystemic movements’. These doubts found official expression in the National Intelligence Council’s (2008) Global Trends 2025 report (Layne. In the wake of the current global political climate. and many smaller conflicts. The current state of disunity has weakened the ummah and left it in a vulnerable position. with the end of the Cold War and the demise of the Soviet Union. 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. or conflictual. Multipolar systems can be cooperative. political. CONCLUSION History clearly has not ended. the financial and economic crisis that hit the US economy beginning in Fall 2007 — coupled with the rise of new great powers like China and India. (ABDULLAH SHAHNEWAZ is a Research Intern at Bangladesh Institute of Law and International Affairs (BILIA).) THE GRE AT INDIAN DRE AM RISE OF GREAT NEW POWERS LIKE CHINA AND INDIA HAVE RAISED QUESTIONS ABOUT THE DECLINE OF AMERICA’S RELATIVE POWER 33 . Nor do concentrations of power revolve around two positions. Without any real international influence. fundamentally and irreversibly. They can also be more competitive. And certainly these elements will influence to form the future world governance system. Muslims are mere spectators in world politics. is being attacked. notwithstanding their claim that unipolarity is robust and US hegemony will endure well into the future. But today power is diffuse. The mounting influence of non-state actors. The twentieth century started out distinctly multipolar. in this case the United States. Wallerestein has insisted that we are now moving into an ‘era of disintegration of the capitalist world-economy’ in which ‘the final collapse of liberalism as a hegemonic ideology’ (Little 1995). a strong case can be made that the early twentyfirst century will witness the decline of US hegemony. and Muslims are often labeled as terrorists. Islam is synonymous with extremism. THE AGE OF NONPOLARITY The principal characteristic of twentyfirst-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. The occurrence of Islamophobia is rising and Muslims are finding it hard to fight back due to the lack of a unified and cohesive Muslim front. 2008) More recently. 2009). social. and cultural disputes. The world of 1945 has evolved dramatically. in which a few major powers work together on setting the rules of the game and disciplining those who violate them. economic. World Out of Balance (Layne. the economic 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. Contrary to the argument in World Out of Balance. or the system will become bipolar.

POLICY PO OLI LICY CY PERSPECTIVE PER ERSP SPEC SP EC ECTI CTIV VE V E CRITICAL FAILURES IN STATISTICAL ASSESSMENT Correct and well-balanced assessments are essential as external creditors rely upon the quality. and integrity of official data in order to accurately price sovereign risks in lending to the country 34 3 4 THE IIPM THINK TANK . timeliness.

A THE GRE AT INDIAN DRE AM 35 5 . Washington. U.NUMBER NUMBS DEV KAR Lead Economist. Global Financial Integrity (GFI).S.

To the extent there is a failure to assess statistical systems correctly. GDP figures have also been subjected to 36 THE IIPM THINK TANK significant revisions in the past. the European statistical agency.0% figure was published and validated by Eurostat in April 2009. Eurostat found out that the Greek authorities were overestimating tax revenues by recording uncollected taxes that were much higher than assumed.g. published a report in early 2003 which provided an “in-depth assessment of the quality of Greece’s national ac- counts. . which almost all members with relatively advanced statistical systems subscribe to.POLICY PERSPECTIVE his article brings out the gaps in the assessment of Greek official statistics and suggests a way forward in avoiding such mistakes in the future. to lend to the country) are reliable. The assessment was carried out against the IMF’s SDDS. T WARNINGS IGNORED AND OPPORTUNITIES MISSED In a report dated January 2010. and balance of payments statistics”. As a result. Given the pervasive problems with Greek data. and timeliness of the data. Revisions of the fiscal gap of this magnitude are undoubtedly sharp and according to the Commission. the Commission opined that the governance and institutional setup related to Greek statistics needs to be analyzed in depth. Also. The Commission noted the 5. and for advance release calendars.7% of GDP. the Commission noted that Eurostat has “consistently contested” the quality of Greek fiscal statistics for several years. producer price index. consumer price index. This recommendation was never carried out. The Commission acknowledged that the Greek authorities would need to rectify the methodological weaknesses 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 confidence in the reliability of Greek statistics. monetary statistics. the European Commission noted that in October 2009. The number and frequency of these reservations was much more than they were for other member states of the EU. periodicity. For instance.. Eurostat asked the Greek authorities to switch to a method of recording tax revenues based on another. Based on the information at hand. 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 timeliness of data which are eagerly sought by external creditors. accurate and reliable assignment of ratings under statistical assessments is critical for markets to assess sovereign risks and to price government bonds accordingly. including the lack of independence of the national statistical agency and the General Accounting Office from the Ministry of Finance. it seems that there were two main reasons for the frequent and large revisions to the government deficit — weaknesses in methodology and “failures of the relevant Greek institutions in a broad sense”. The quality of fiscal data is not the only problem related to Greek statistics — national accounts data are not much better. the Greek authorities misreported fiscal data in no less than 11 separate instances. An IMF Data ROSC team that visited Athens in late 2002. Such a subscriber must meet SDDS specifications for coverage. that failure has adverse implications for the formulation of policy. This exacerbates the risk of a financial crisis. In fact. While much of the above analysis in 2009 benefits from hindsight. However. The Data ROSC is supposed to provide a review of a country’s data dissemination practices against the IMF’s standards. government finance. Hence. although a member may use the “flexibility options” on up to two data categories that are not met at the time of subscription. The IMF’s statistical assessment system called the Report on the Observance of Standards and Codes (ROSC) Data Module (henceforth Data ROSC) did not fare much better. 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. extremely rare in other EU member states. in 2003. all external creditors bear a loss while governments are lulled into believing that they can keep on borrowing at unrealistically low rates. that the government deficit for 2008 was revised upwards from 5. more reliable and internationally approved method called “time-adjusted cash”. such revisions to Greek fiscal data have taken place at different times — in the years prior to 2004. Greece informed Eurostat.0% to 7. 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.

the users’ survey provided a clue to the serious problems affecting the quality of Greek fiscal data. Data ROSCs are typically not discussed with the regional statistical agencies such as Eurostat. on government accounts which caused so much angst among creditors and international organizations such as Eurostat and the EU. Correct and well-balanced assessments are important because external creditors depend upon the quality. Only two elements of fiscal data compilation got poor marks (LNO=Practice Largely Not Observed): the resources devoted to compilation and the accessibility to methodological notes on those accounts. Dev was also a Senior Economist at the International Monetary Fund (IMF). raised no flags in the 2005 Data ROSC update. 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 financial institutions that participate in the government bond markets. The highest rating should be awarded sparingly and only after extensive discussion within the IMF and with other relevant international organizations.NUMBER NUMBS 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. For one. the Data ROSC team must subject key balance of payments. Second. accuracy and reliability or in the subsequent update to that report in February 2005. As noted at the outset. the fact that Eurostat found serious problems with the recording of tax revenues back in 2003. the IMF’s Data ROSC teams rely too much on information provided by government statisticians. there were at least 11 separate instances in the years prior to 2004 when the Greek authorities misreported fiscal data. Moreover. it represented another missed opportunity to flag serious breaches of methodology and the prerequisites of quality. The users’ survey of the 2003 Data ROSC notes that the 17 users of fiscal data questioned the underlying methodology and wanted more detailed data on a timely basis. As it turned out. For instance. As far as this author is aware based on his experience at the IMF. the Data ROSC should assign a high priority to garnering the maximum feedback from both domestic and external users of the statistics. 37 . The area departments of international organizations — the departments that are directly involved in policy discussions with the authorities — must take the lead in ensuring that the statistical system is internally consistent. In fact. The lesson here is that much better coordination among relevant international organizations responsible for statistical assessments needs to be implemented as a matter of the highest priority. and ethical standards) got the highest ratings. monetary. Users not only need to see a frank discussion of outstanding issues but they need to be assured that the criteria underlying the ratings have been tightened greatly. and fiscal data to rigorous consistency checks. these assessments were widely off the mark and failed to capture the essential problems with the unreliable and misleading Greek fiscal data. (DEV KAR is the Lead Economist at Global Financial Integrity (GFI). Finally. there seems to be a lack of coordination among them in overall assessments and in the assignment of ratings. This mindset needs to change. the IMF report awarded the highest ratings (O=Practice Observed and LO=Practice Largely Observed) to almost all elements of data compilation. While IMF assessments of statistical system serve many useful purposes. In short. The views expressed in the article are personal and do not reflect the official policy or position of the organisation. integrity of data compilation (covering such elements as professionalism. the overall tenor of the update was quite bland. this simple fact was not reflected either in the Data ROSC’s strong ratings (O and LO) for data integrity. national accounts. In the author’s experience. and integrity of official data in order to accurately price sovereign risks in lending to the country. In fact. Indeed. For instance. The article suggests measures that can be implemented to reduce such negative externalities. Washington DC. Yet. large revisions in the fiscal deficit must be consistent with the monetary and balance of payments accounts. The checks are particularly important for any country that subjects its macroeconomic data to frequent and significant revisions. Ratings in other areas of statistics such as national accounts were also misleadingly generous. methodological soundness. Third. In hindsight. timeliness. CONCLUSION There is an urgent need to improve the statistical assessment systems of the IMF as they are important to investors to accurately price sovereign risks. investors need to be aware that such assessments cannot always be perfect which calls for strong inhouse research to carry out in-depth analysis of the risks associated with sovereign lending. IMF Data ROSC assessments tend to shy away from critical commentary. the reports would be stronger if they were more forthright in their assessments even in the face of sharp dissention by the agencies assessed.) THE GRE AT INDIAN DRE AM A WAY FORWARD The Greek case highlights certain weaknesses in the current system of statistical assessments carried out by international organizations such as the IMF and Eurostat. The negative externality associated with faulty assessment systems translates into a larger risk for banks and other financial institutions that decide to lend debtor countries based on misleading data. transparency.

2008). automobile. However. open trade relations. China has increasingly been involved in (inward) offshoring activities. and there is evidence suggesting that this involvement has played a key role in China’s export development (e. and new production technologies which allow the production process to be fragmented.. substantial cross-country wage differentials.and extra-regional production sharing networks in SouthEast Asia have been formed and expanded (e. Those are most importantly found in the clothing.POLICY PERSPECTIVE KLIMIS VOGIATZOGLOU Research Fellow. as well as in the service sector. Indeed. 2007. offshoring has grown substantially in recent years also in other manufacturing industries. Lemoine and Unal-Kesenci. As a matter of fact. Hiratsuka. are combined in the last stage to pro- D duce the fi nal good or service. Offshoring 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. Greece OFFSHORING AND INDIA’S EXPORT DEVELOPMENT IN SERVICES 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 uring the last twenty years global economic integration has proceeded with accelerating steps and moved beyond simple trade relations among countries. and electronics sectors (Lall et al. This deeper form of globalization has with increasing intensity interconnected national economies and has created a global production and supply chain.g. Foreign-owned fi rms have relocated the labour-intensive pro- 38 THE IIPM THINK TANK . This strategic option is aided by low tariffs. In the literature as well as in the business world this phenomenon is known as offshoring and international production sharing.g. Here international trade in intermediate inputs is an integral part of the overall production process. 2001). resulting from each production stage at a different location. Particularly for the case of the South and East Asian region. 2004). 2004). Offshoring results from a fi rm’s (whether multinational or not) strategy with respect to the organization of production with the goal of minimizing overall costs. There is a considerable amount of accumulated evidence showing an increasing importance of offshoring activities (e. Machikita and Ueki. 2010. 2010. The various intermediate inputs-business activities. large intra. low transport costs. Bridgman. the existence of the above conditions is crucial for offshoring to take place. Centre of Planning and Economic Research.g.. Athens. Arndt and Kierzkowski. Molnar et al.

.

Banik. Bussiere and Mehl. More recently. Hong-Kong and Japan con- OFFSHORING DEVELOPMENTS IN INDIA Given the importance of the subject matter. the offshoring in the manufacturing sector is examined. China. India is increasingly becoming an international centre of IT-related research and development activities (e. We obtain information on the offshoring activities of India’s major trade partners from the OECD’s international trade in intermediate inputs inputoutput (IO) database for manufacturing goods and services. 2008. and in other business services. that is. In addition. which resembles China in terms of country size.POLICY PERSPECTIVE duction activities (such as assembly of the components) to China. Altenburg et al.g. India. More specifically. Patibandla and Petersen. offshoring in India occurs from the European Union (EU ). and export their goods to the western markets from there.g. 2007 ). we examine the trends in the fi nance and insurance service sector. the reasoning behind this is that the source country (the country that relocates the given business activity/production stage that belongs to a specific industry to the host country) exports the intermediate 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. has emerged in the global Information Technology (IT ) services sector as one of the major exporter of IT services in the world (e. and the USA. India’s most important export destination of manufacturing goods is the EU followed by the United States. 2007. the supply and use sectors are the same) that India imports and uses in a given sector as an input from each source country. In particular. We calculate from this database the intra-industry intermediate inputs (those that occur in the same 40 THE IIPM THINK TANK . INDIA’S EXPORTS AND THE EFFECT OF OFFSHORING Exports of manufactures show a significant rise in all partner countries. Meyer. we analyze the development of offshoring activities in India (originating from several source countries) and its impact on India’s export growth over the 2000-2010 period. This indicates the extent of offshoring/ production sharing that occurs between the source/supply country and India (the host country).. 2010. Most importantly. It is also evident that offshoring in services occurs mainly from the EU and the USA. The offshoring related imported intermediate goods of India have risen significantly during 20002010. Kuruvilla and Ranganathan. 2008. Most importantly. The relatively little empirical evidence that exists seems to indicate that offshoring in India’s service sector has increased. Switzerland. and have in recent years become equally important. 2002). It is found that offshoring activities exhibit an upward trend in all service sectors. Offshoring is particularly pronounced in fi nance and insurance services. sector. China has been transformed to a production. and export platform for foreign fi rms. Thus. Banga and Kumar. assembly. First. the computer and information services sector. 2008).g. but computer and information services have increased significantly over the 2000-2010 period. other economies such as India and several South Asian countries have also achieved a significant opening-up of their economy and improved their export performance. 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.

indicate that there is a statistically significant positive correlation between manufacturing exports and offshoring in that sector.OFF TO THE SIDE stitute also important export markets for India. there is some evidence suggesting that developing countries that have become hosts of offshoring activities have witnessed to some extent a technological upgrade. the export growth that has been achieved over 2000-2008 (latest available year for services) is even more impressive. an important policy implication seems to be hinted by our results coupled with some of the literature’s fi ndings. Greece. Meyer. 2007 ). and India’s overall education and technology policy. Thus. Thus. Gaulier et al. this prospect may heavily depend on the type of offshoring. Kuruvilla and Ranganathan. 2005. in addition to these he has also wrote articles for various journals. With regard to India. but are much less significant. Thus. 2008. The results. Athens. 2007 ) and other economies (e.g. He was also a Visiting Lecturer of Political Economics at the University of Continental Greece (fall semester 2007) and Visiting Professor of Economics at Seoul National University (academic year 2006-2007). The USA is clearly the most important export destination followed by the EU. 41 . On the other hand the positive correlation between service exports and service offshoring is highly statistically significant and also extremely strong (there is almost perfect correlation with a coefficient of 0. KLIMIS VOGIATZOGLOU is a Research Fellow at the Centre of Planning and Economic Research. In the case of China. He did his Masters in Economics from University of Manchester (2002) and did PhD in International Business & Economics. Vogiatzoglou. economic geography. 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. His research interests lies mainly within the fields of International Economics and Aplied Economics.) THE GRE AT INDIAN DRE AM CONCLUDING REMARKS AND POLICY IMPLICATIONS Our fi nding of offshoring constituting an important determinant of India’s export development is in line with the empirical literature for both India (e. there is also evidence indicating that international technological spillovers may occur to the domestic economy arising from industrial linkages with technologically advanced economies (Lopez-Pueyo et al. (DR.. this correlation is not strong ( for 2010 the Pearson coefficient is about 0. whether the countries that engage more in offshoring in India are those that import more from India (and thus constitute India’s most important export destinations). we fi rst conduct Pearson correlation analyses using cross-country observations on India’s offshoring source countries and India’s export partner countries for the years 2000. More generally. This analysis is performed for both the manufacturing sector (correlating manufacturing exports and offshoring in manufactures) and the service sector (correlating service exports and offshoring in services).. University of Patras (2005). industrial specialisation. It is interesting to examine the relation between India’s inward offshoring activities (originating from several OECD and other countries) and India’s exports. Regarding exports in services. the technological advancement that has been achieved in the Information and Communication Technology sector (Fan. However.48). Policies that promote a more extensive involvement in IT-related and other hightech offshoring activities (originating from advanced economies) may prove to be particularly beneficial for the local technological capacity and export performance of India in the long-run. 2009). The views expressed in the article are personal and do not reflect the official policy or position of the organisation. we fi nd evidence that the extent of offshoring and India’s export level move in the same direction. Japan and Hong-Kong follow the list. 2008). we estimate an appro- THE POSITIVE CORRELATION BETWEEN SERVICE EXPORTS AND SERVICE OFFSHORING IS HIGHLY STATISTICALLY SIGNIFICANT AND EXTREMELY STRONG priate panel-econometric model. 2011). or stated alternatively. the general macroeconomic conditions. and include issues in international trade. it has been found that there are signs of an improvement in the country’s innovation capability (Fan.g. 2008) seems to have been particularly facilitated by the country’s extensive participation in offshoring (e. 1987 ). FDI.g. 2003).96 in 2008). Furthermore. The estimable equation is based on and derived from the ChamberlinHeckscher-Ohlin theoretical framework of international trade with vertical multinationals fi rms that engage in offshoring (Helpman and Krugman. Moreover. and 2010. globalization and regional economic integration. This examination reveals whether or not India’s exports are greater to those countries from which India “receives” a greater amount of offshoring activities. In order to examine this further and quantify the effect of offshoring. the established international industrial linkages. However.

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