Pro­po­nents of iso­la­tion never be­come vic­tors

The Smart Manager - - Cover Story - RAVI CHAUDHRY IS CHAIR­MAN OF CENEXT CON­SULT­ING GROUP AND AUTHOR OF QUEST FOR EX­CEP­TIONAL LEAD­ER­SHIP: MIRAGE TO RE­AL­ITY.

Mul­ti­lat­er­al­ism in the po­lit­i­cal and eco­nomic space has always led to frame­works that fa­vor the mighty. WTO was no ex­cep­tion. With agri­cul­ture kept out of its purview, it could never be­come a truly fair and free trad­ing sys­tem. China was the only large emerg­ing econ­omy that ex­ploited rel­a­tive openness in low-cost man­u­fac­tured goods to take full ad­van­tage of the sys­tem. Other emerg­ing economies could at best garner mi­nor gains.

Now we see an even more bla­tant ex­er­cise of uni­lat­eral author­ity. The Trump trum­pet, an­chored on ‘buy Amer­i­can and hire Amer­i­can’ is pretty much equiv­a­lent to the dec­la­ra­tion of an ‘eco­nomic war’. It is un­cer­tain what types of bat­tles the US will ini­ti­ate, but it is cer­tain that many coun­tries, par­tic­u­larly China and Mex­ico, will re­tal­i­ate in a way that will hurt not only the US, but, through col­lat­eral dam­age, oth­ers as well—in­clud­ing them­selves. His­tory pro­vides sev­eral tes­ti­monies to show that the ini­tia­tors of po­lit­i­cal or eco­nomic ag­gres­sion or even the pro­po­nents of po­lit­i­cal and eco­nomic iso­la­tion never be­come vic­tors.

The con­cur­rent im­pact of tech­nol­ogy (ma­chines re­plac­ing hu­mans), plateau­ing of global de­mand in many in­dus­try seg­ments, forced mi­gra­tions, un­re­lent­ing in­equal­ity, and tan­gi­ble vac­uum of re­spon­si­ble global lead­er­ship—all these fac­tors are con­tribut­ing to mak­ing a bad sit­u­a­tion worse, much worse. The per­sis­tent prob­lems of global job­less­ness and con­tin­u­a­tion of un­war­ranted cor­po­rate in­cen­tives and tax havens can only be dealt with, with the help of a united and col­lec­tive ac­tion, not by build­ing walls and fences.

But this is an­other cyclic wave the world has to live with, till as long as it may take to re­verse the process again.

In such a sce­nario, large emerg­ing economies like In­dia have the good for­tune of ac­ti­vat­ing the enor­mous con­sumer de­mand that lies un­tapped. In­dus­tries that can ex­ploit and cater to this mas­sive po­ten­tial will emerge un­scathed.

Equally sig­nif­i­cant is the new phe­nom­e­non of a new ‘bot­tom of the pyra­mid’ that is emerg­ing in the de­vel­oped world—large pop­u­la­tions look­ing for cheaper goods, but not in­fe­rior in qual­ity. That pro­vides a large space for In­dian com­pa­nies to ap­ply in­no­va­tion and pro­duc­tiv­ity, to start ex­plor­ing this new ex­port mar­ket, by re­plac­ing West­ern brands.

This pro­tec­tion­ist wave is un­likely to last long— but those who can weather it, will emerge as the new cham­pi­ons in the post-pro­tec­tion­ist phase. ■

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.