In the interview, Calomiris discusses how India’s growth and potential for growth compares with that of China; the challenges confronting India; and the shifting patterns of labor away from the agriculture and into the IT sector.
Here is an excerpt from the interview in which Calomiris discusses the political and economic impact of globalization on India:
How has India’s place in the global political field changed over the last several decades?
I think that global political economy and India’s ideological predisposition contributed to India’s isolation during the Cold War era. India was opposed to the kinds of things that have proved to be big parts of the solution to its poverty, especially participating in global markets. There was a protectionist view of the local industries and maintaining a commitment to workers’ rights rather than a commitment to creating jobs. If India were a rich country, that would be fine, but poor countries first need to find people jobs. That’s not saying that workers should not have rights, but that there is a need to balance the creation of jobs and the rights of workers who already have them; India’s lack of balance in this regard worked against its growth.
One could argue that part of what inspired India to change was China. When India saw China, the other huge and impoverished economy in the world, its very poor next-door neighbor, start doing great things, it took notice. In Latin America, similarly, the progress of Chile in the 1980s had a similar effect on Argentina in the early 1990s.
Globalization allows countries to learn from each other’s experience: a country can see the visible advantages of orienting itself toward being able to take advantage of participating in global markets to elevate its people out of poverty. Many people were skeptical of this back in the 1950s and the 1960s when socialist, protectionist dogma reigned in many developing economies. Now the successes of China and India make it evident that such skepticism is no longer reasonable. The main contribution of globalization in both countries has been to reduce extreme poverty and to create a burgeoning middle class.