{"id":197374,"date":"2022-07-26T16:55:10","date_gmt":"2022-07-26T11:25:10","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=197374"},"modified":"2022-07-26T16:58:22","modified_gmt":"2022-07-26T11:28:22","slug":"globalisation-is-dying-india-needs-sound-industrial-policy","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/globalisation-is-dying-india-needs-sound-industrial-policy\/","title":{"rendered":"Globalisation is dying; India needs sound industrial policy"},"content":{"rendered":"\n<p><b><span data-contrast=\"none\">Source<\/span><\/b><span data-contrast=\"none\">: The post is based on an article <strong>\u201cGlobalization is dying; India needs sound industrial policy\u201d<\/strong> published in the<strong> Live Mint<\/strong> on <strong>26<\/strong><\/span><strong>th<\/strong><span data-contrast=\"none\"><strong> July 2022<\/strong>.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559738&quot;:240,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"none\">Syllabus<\/span><\/b><span data-contrast=\"none\">: GS 3 <\/span><span data-contrast=\"none\">Effects of Liberalization on the Economy, Changes in Industrial Policy and their Effects on Industrial Growth.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559738&quot;:240,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"none\">Relevance<\/span><\/b><span data-contrast=\"none\">: Industrial Policy; Globalization etc.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559738&quot;:240,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"none\">News: In the recent times<\/span><\/b><span data-contrast=\"none\">,<\/span> <span data-contrast=\"none\">the concept of free market globalization, has been exposed due to its inherent shortcomings. <\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559738&quot;:240,&quot;335559739&quot;:0,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">The concept of free market globalization means\u00a0free flow of goods, and knowledge around the world unimpeded by national boundaries. <\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559738&quot;:240,&quot;335559739&quot;:0,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<h5><b><span data-contrast=\"none\">What are the Issues in Free Market globalization?<\/span><\/b><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559738&quot;:240,&quot;335559739&quot;:0,&quot;335559740&quot;:276}\">\u00a0<\/span><\/h5>\n<p><span data-contrast=\"none\">In this, the national governments ceded their powers of governance to international bodies that set the rules of the game.\u00a0<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559738&quot;:240,&quot;335559739&quot;:0,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">The <\/span><b><span data-contrast=\"none\">principle of cumulative causation<\/span><\/b><span data-contrast=\"none\"> suggests those who have more wealth, knowledge and power than others accumulate even more because they have the power to fix the rules.\u00a0 This is exactly what is happening as per this concept. It has led to increase in the inequalities both within and among nations. Beneficiaries will advocate the continuation of this model until they start to face loses. \u00a0some of examples are: <\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559738&quot;:240,&quot;335559739&quot;:0,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"4\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559683&quot;:0,&quot;335559684&quot;:-2,&quot;335559685&quot;:360,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"none\">the US sanction on Russia for the Ukraine War, has disrupted global flows of fuel and food.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559738&quot;:240,&quot;335559739&quot;:0,&quot;335559740&quot;:276}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"4\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559683&quot;:0,&quot;335559684&quot;:-2,&quot;335559685&quot;:360,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Symbol&quot;,&quot;469769242&quot;:[8226],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0b7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"none\">Efforts by western countries when it found its <\/span><b><span data-contrast=\"none\">economic power slipping<\/span><\/b><span data-contrast=\"none\"> to China.\u00a0<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559738&quot;:240,&quot;335559739&quot;:0,&quot;335559740&quot;:276}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><span data-contrast=\"none\">Its weaknesses were exposed during emergencies like the <\/span><b><span data-contrast=\"none\">global covid lock-down<\/span><\/b><span data-contrast=\"none\">, which disrupted the global supply chains of manufactured goods.\u00a0<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559738&quot;:240,&quot;335559739&quot;:0,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">Global trade is also subject to <\/span><b><span data-contrast=\"none\">geopolitical considerations<\/span><\/b><span data-contrast=\"none\">. For example, Citizens of poorer countries in the <\/span><b><span data-contrast=\"none\">global South<\/span><\/b><span data-contrast=\"none\"> and <\/span><b><span data-contrast=\"none\">East<\/span><\/b><span data-contrast=\"none\"> suffer more than the West in case of disruption in global trade flow. For example, the situation at present due to the Ukraine war and sanctions.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559738&quot;:240,&quot;335559739&quot;:0,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">Various Free trade economists criticised\u00a0the <\/span><b><span data-contrast=\"none\">industrial policies<\/span><\/b><span data-contrast=\"none\"> of the developing countries. These policies aim to increase domestic production and competition among domestic producers (and with foreign producers) through adjustment of tariffs and correction in the inverted duties, etc.\u00a0<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559738&quot;:240,&quot;335559739&quot;:0,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">These \u201c<\/span><b><span data-contrast=\"none\">industrial policies<\/span><\/b><span data-contrast=\"none\">\u201d were banned by <\/span><b><span data-contrast=\"none\">Washington Consensus economics, <\/span><\/b><span data-contrast=\"none\">and were labelled as <\/span><b><span data-contrast=\"none\">protectionist measures.<\/span><\/b><span data-contrast=\"none\"> It halted the growth in the Indian industries compared\u00a0to China. <\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559738&quot;:240,&quot;335559739&quot;:0,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">But now the same policies are being adopted by the western countries. For example, the<\/span><b><span data-contrast=\"none\"> US government supports<\/span><\/b><span data-contrast=\"none\"> the growth of its defence and technological industries with <\/span><b><span data-contrast=\"none\">large subsidies and preferential treatment.<\/span><\/b><span data-contrast=\"none\"> The US\u2019s CHIPS Act will subsidize domestic production of chips.\u00a0<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559738&quot;:240,&quot;335559739&quot;:0,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<h5><b><span data-contrast=\"none\">How the ban on the Industrial Policy widened gap between India and China?<\/span><\/b><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559738&quot;:240,&quot;335559739&quot;:0,&quot;335559740&quot;:276}\">\u00a0<\/span><\/h5>\n<p><span data-contrast=\"none\">The economies of both China and India, was roughly the similar size around 1990.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559738&quot;:240,&quot;335559739&quot;:0,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">After the 1990s <\/span><b><span data-contrast=\"none\">Indian producers<\/span><\/b><span data-contrast=\"none\"> of power equipment, commercial vehicles, machine tools, etc, were as competent or more than Chinese companies. They built capabilities with technology legally transferred by foreign companies under <\/span><b><span data-contrast=\"none\">\u2018phased manufacturing programmes\u2019<\/span><\/b><span data-contrast=\"none\"> guided by India\u2019s industrial policies.\u00a0<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559738&quot;:240,&quot;335559739&quot;:0,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">Such <\/span><b><span data-contrast=\"none\">phased manufacturing programmes<\/span><\/b><span data-contrast=\"none\"> were explicitly banned under <\/span><b><span data-contrast=\"none\">the World Trade Organization (WTO) regime<\/span><\/b><span data-contrast=\"none\"> post 1990. India complied with its new global rules. But despite the ban on <\/span><b><span data-contrast=\"none\">phased manufacturing programme,<\/span><\/b><span data-contrast=\"none\"> China managed industry and trade in its own way.\u00a0<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559738&quot;:240,&quot;335559739&quot;:0,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">Therefore, the Chinese economy became <\/span><b><span data-contrast=\"none\">six times larger<\/span><\/b><span data-contrast=\"none\"> than the Indian economy, and its manufacturing sector was 12 times larger and its capital goods sector was 50 times larger, by the year 2010.\u00a0<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559738&quot;:240,&quot;335559739&quot;:0,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<h5><b><span data-contrast=\"none\">What should be done?<\/span><\/b><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559738&quot;:240,&quot;335559739&quot;:0,&quot;335559740&quot;:276}\">\u00a0<\/span><\/h5>\n<p><span data-contrast=\"none\">The economic paradigm that frees trade is the only way has passed away. The myth of fair governance of the global economy by institutions controlled by Western powers has been exposed.\u00a0<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559738&quot;:240,&quot;335559739&quot;:0,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">Therefore, India must build more depth into its economy instead of focussing only to increase its size.\u00a0 India\u2019s trade policies must be guided by a sound industrial policy, rather than<\/span><b><span data-contrast=\"none\"> trade policy controlling industry<\/span><\/b><span data-contrast=\"none\">, which has been the paradigm of policymaking since the 1990s\u2019 liberalization of the Indian economy.\u00a0<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559738&quot;:240,&quot;335559739&quot;:0,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">The new paradigm of economic policies demands the countries to adopt what is called as <\/span><b><span data-contrast=\"none\">\u201cproductivism&#8221;<\/span><\/b><span data-contrast=\"none\"> instead of protectionism. India needs <\/span><b><span data-contrast=\"none\">\u2018productive\u2019 economic policies<\/span><\/b><span data-contrast=\"none\"> to increase domestic manufacturing for defence of its national sovereignty and resilience in its economic growth.<\/span><span data-ccp-props=\"{&quot;134233117&quot;:false,&quot;201341983&quot;:0,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559738&quot;:240,&quot;335559739&quot;:0,&quot;335559740&quot;:276}\">\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Source: The post is based on an article \u201cGlobalization is dying; India needs sound industrial policy\u201d published in the Live Mint on 26th July 2022.\u00a0 Syllabus: GS 3 Effects of Liberalization on the Economy, Changes in Industrial Policy and their Effects on Industrial Growth.\u00a0 Relevance: Industrial Policy; Globalization etc.\u00a0 News: In the recent times, the&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/globalisation-is-dying-india-needs-sound-industrial-policy\/\">Continue reading <span class=\"screen-reader-text\">Globalisation is dying; India needs sound industrial policy<\/span><\/a><\/p>\n","protected":false},"author":10308,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216,10501],"class_list":["post-197374","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","tag-live-mint","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/197374","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10308"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=197374"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/197374\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=197374"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=197374"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=197374"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}