Despite China’s view of its own size and connectedness as a compelling argument for the leading role in the region, it will have to get used to the fact that India, while much less integrated, is and will be of vast size as well. An implicit goal of Asia’s regional organizations is to attract the giants to cooperate in the production of regional public goods that help secure global economic stability. Fostering deeper integration through trade and investment ties raises the costs of aggressive military or political behavior.
The second significant aspect of India’s potential APEC membership is that it has reached out to integrate with the Asian economies despite the fact that its domestic economy is less open and faces huge legacy problems left over from its socialist past. India has joined the race towards sub-regional trade agreements with ASEAN, Singapore and others — and has even considered a bilateral free trade agreement with China. India needs the peer pressure and encouragement of APEC’s variable-speed liberalization processes to undertake reforms that could allow it to be a new hub in the region’s production networks in which it does not yet participate to any great extent.
India has much to gain by joining APEC but what could it contribute? There is little evidence yet that it has a world view or an Asia-Pacific view. Much of the hype on India’s economy is based on hope that Indians will gain confidence to compete in world markets, and that the central government, handed a mandate to govern in the May 2009 elections, will tackle the binding constraints on India’s long term growth: a population that is only 60 percent literate; persistent government deficits; restrictions on land, labor and finance and abysmal physical infrastructure. Infrastructure bottlenecks are being cleared, the private sector is helping address illiteracy and restrictions on FDI inflows are being dismantled as Indian corporations gain confidence. But farmers and others still lack confidence to reduce outdated trade barriers.
APEC is at a ‘hinge’ in its history. Beginning with the Singapore meeting APEC has a five-year window when it could make major strides forward on economic integration and political dialogue as Japan takes the chair in 2010, followed by the United States in 2011 and Indonesia in 2013. Its unique potential relative to the many ASEAN-linked regional forums is to be a channel for deeper trans-Pacific ties including US engagement in regional projects.
India will be a positive contributor to APEC if it balances APEC’s goals with its own domestic preoccupations and security challenges. India’s recent agreement with China on combating climate change is a step forward in bilateral cooperation. With India a member, APEC should set up a steering group consisting of the four giants and G20 members (Australia, Canada, Indonesia, South Korea, Mexico and Russia) to develop a strategic agenda for regional initiatives while ensuring their coherence and linkage with global priorities.
Wendy Dobson is former associate deputy minister of finance in Ottawa and professor at the Rotman School of Management, University of Toronto. She is author of ‘Gravity Shift: How Asia’s New Economic Powerhouses will Shape the 21st Century’.
India is unlikely to push for itself to join APEC which is abody that had its genesis in China but found expression in the labour party of Australia under Hawke and Keating.
China’s ‘progress’ is the result of an extrfeme form of Thatcherism. Thatcher found allies in extreme Arab and African resource rich countries that defied economic fundamentsl through their Ayn Rand forms of capitalism. Slavery and forced cheap labour being two of the critical components of succh forms of capitalism.
When China introduced the cultural revolution it dispensed with up to 30 million dissidents, recalcitrants and reactionaries. The Saudis and Apartheid South Africa applied similar principles and made an economic success of their regimes.
India on the other hand has a need to balance the benefits of economic gains with its inherent desire for intellectual and personal advances of its diverse population through debate, liberalism and the rights to disagree. China does not. And neither do many of its Sinophile neighbours who maintain totalitarian ruthless dictatorships under the thin veneer of ‘ Asian democracy’ and ‘Asian values’ to enforce harsh labour conditions on its masses so that their balance sheets look good.
It is a shame that the US and Australia have now lost the moral high ground and leadership role in the developing world where once the poor people of Asia’s sweat shops saw hope and an example to emulate.
Suresh