By Vishnu Makhijani, IANS,
New Delhi : Promising demographics, freedom of speech and respect for investor rights make India one of the most appealing growth venues, says a leading American B-school head while advising that the country must “truly” integrate into the global economy – despite the risks – to be a world leader.
“India represents one of the most appealing growth venues in the world today. The reasons for this are its geopolitical setting and the respect for investor rights,” Robert F. Bruner, dean of the Darden Graduate School of Business Administration at the University of Virginia, told IANS in an interview.
In the robust and large emerging economies that have the potential to stimulate growth in the rest of the world, India “represents one of the bright spots in the global economic scene”, said Bruner, who has authored seminal works on mergers and acquisitions and the US stock market crash of 1907.
India’s growth rate during the 2010-11 fiscal ended March 31 was 8.5 percent.
Noting that India is one of the few economies that is “growing robustly” and had diversified the basis for growth, he said: “It has one of the most promising demographics of any large country in the world. This means that the growth is probably sustainable in the later stage of the century.”
“And then, there is the freedom of speech, respect for the right of the property holders and rule of law, to mention just a few,” said the head of Darden, which Forbes has ranked ninth in its list of top US B-schools.
Bruner, who joined Darden in 1982, became its dean in 2005. He was on his seventh visit to India, which boasts of a vibrant alumni association of the B-school.
Stressing the need for greater globalisation, Bruner disagreed that the checks and balances in place in spite of the liberalisation process that began in 1991 were responsible for India remaining immune to the East Asian meltdown of the mid-1990s and emerging relatively unscathed from the global meltdown of 2008.
“You can build a wall around the country that excludes the impact of foreign influences, panics and crashes, and there are always elements in society that are used for that. Certainly we have it in the United States, it’s there in Germany and in Japan, but that comes at a cost,” Bruner maintained.
He enumerated the cost as very slow transfer of technology, of best practices and even of capital.
“The question that India must ask itself is can it strike a balance between the benefits of more openness with the potential costs and risks?”
Saying this is “possible”, Bruner said: “Indeed, my counsel to India would be that India will never attain a role of true global leadership, to which its size and dynamism might entitle it to, unless it becomes truly integrated into the global economy.”
“If that happens then India will be vulnerable to periodic crashes and panics, market upsets and reversals,” he added.
What then would be the benefits of greater globalisation?
I’ve looked into the flows of capital in and out of India: they have become more amplified and extreme in the past five years. This is just a small manifestation of the means to be more integrated into the global economy,” Bruner said.
Admitting that there is “no perfect system” in the world, he added: “You have a choice between pretty good or not so good. Given the huge welfare implications to the millions of citizens of India I’d say put your bets on the integration in the global economy.”
Speaking about the global economy in the context of the Indian experience, Bruner said developed economies “are struggling even to grow at all”.
“Japan is still contracting, Europe is on the brink of either success or potential collapse of the European Union, the US continues to struggle with relatively high rates of unemployment and stubborn reluctance on the part of companies to invest,” he said.
(Vishnu Makhijani can be contacted at [email protected])