Friday, July 20, 2007

Turning of tables

Nayan Chanda, the author of Bound Together, argues in this Tehelka interview that the story of globalization has come full circle for India.

If you look at the history of how the world has been connected since the Tigris-Euphrates and Indus valley civilisations, India was at the heart of globalisation in the first 2,000 years of history. It was the first to develop the use of cotton and was the only exporter of cotton textile for centuries. Then Indian artisans developed the skill of turning hard matter into beautiful jewellery, which was exported to Mesopotamia. Even in the 11th century, European and Arab traders collected ivory from East Africa and shipped it to India to be transformed into artefacts before shipping it to Europe — it was being outsourced. Then Indians learned to turn sugarcane juice into granular sugar and India was the world’s only supplier of sugar till it was taken to the Carribean islands. This dominance persisted till the Industrial Revolution knocked India off the pedestal — which was propelled to a large degree by the British desire not to spend silver bullion buying Indian cotton textiles. They tried weaving their own cloth, but couldn’t match India’s cheap labour. This pushed them to invent labour-saving devices and steam power and textile mills, which rang the death-knell of Indian weavers. William Bentinck — Governor General of India in 1835 — wrote a confidential memo to London in which he said, “The Indian plains are bleached white with the bones of weavers.” These were victims of globalisation in the mid-19th century. But they recovered. Indian weavers learnt to dye and print beautiful designs. By the end of the 19th century, India had climbed back to being the number two producer of textile.

The astute Chanda, who is editor of YaleGlobal online, carries on his argument in this essay in The Outlook:

If the 'discovery' of the monsoon wind by traders brought an increasing number of buyers for Indian spices and textiles, a new monsoon wind in the shape of fibre-optic cables opened the pathway for exporting Indian brainware and services. The collapsing cost of transportation and communication has also enabled US corporations to cut costs by offshoring production to China and outsourcing backoffice functions, say, to India. While offshoring of production has forced thousands of blue-collar jobs to switch to other lower-paid jobs without too much protest, outsourcing of a much smaller number of white-collar jobs abroad has produced a disproportionately stronger reaction. In fact, the word outsourcing has replaced 'globalisation' as a fearful term for an influential US middle class. Not surprisingly, outsourcing will be a hot button issue in the 2008 presidential campaign.

So, what are the implications of this globalization for Asia and the West, in a scenario in which the West is aging fast and young talents from Asia are flooding its job market, the dollar's value is dipping, and a war on terror is bleeding America and others. Here's Chanda's take:

Unlike Indian weavers in the nineteenth century who suffered silently, out of sight of the world, those affected by globalisation today can lobby their parliamentary representatives and go on television. A globalised media has become a dandy tool to denounce globalisation. The time when winners could ignore losers in the globalisation process is gone forever.

In less eloquent terms, what does it mean? Confrontation between the once rich West and fast getting-rich Asia? I posed this question to Professor S L Rao. This is his take on this subject:

Regarding outsourcing, the idea is that technological prowess will keep pushing the developed economies to greater heights. As people are displaced, the services sector will boom and that will keep people happily employed. The menial;work of manufacturing simple products and giving low level services will come to the developing countries. The catch is if developing countries can develop technologically and move speedily up the value chain in both products and services like Japan, South Korea and Taiwan have done. That will force the present developed countries to think again. In any case I see the future years narrowing differentials between countries.

What's your take on this issue?

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