Thursday, February 16, 2006

Smart Successful Bangalore

28/6/05

Just don't call her backward. Brindi Adige, a strikingly good-looking Indian development economist, with impeccable English, doesn't like being patronised by Western do-gooders. She was part of a panel of politicians and aid workers at a Concern/Make Poverty History debate I chaired at the weekend.
The audience weren't quite sure what to make of her, nor were the panelists. When white people see a non-white face in this kind of context they tend to assume they're looking for hand outs. Far from it. Just because she wears a sari doesn't mean she lives in a mud hut.
India will soon be a net exporter of aid. According to Goldman Sachs, India will be the third largest economy in the world by 2030, out-stripping Britain by 2020. With its 200 million-strong educated middle class, it is rapidly becoming the world's back office and global software centre.
The old North/South divide is already redundant. So is the tripartite division of the world into First (Europe) Second (America) and Third (er, the ones without white faces). The future isn't white, it's brown and yellow.
China is becoming the workshop of the world. It produces ninety percent of the world's toys and seventy percent of the world's clothes. It is moving rapidly into the production of high-end electrical goods like televisions computers and cell phones. Within ten years China is forecast to become the world's biggest volume car manufacturer - partly thanks to Rover selling them their intellectual property.
So, enjoy it while you can, G8, became the writing is on the wall for the old world order. Gleneagles may be one of the last outings for what we used to call the West (when we really meant the white world). In a couple of decades, it could be a new G2 - India and China. Between them, they represent 40 per cent of the worlds population.
They will soon be producing not just thousands of knowledge workers, not just tens of thousands, but millions of them. Smart successful Bangalore is already outstripping Scotland. Soon there'll be conferences in India about what to do with those cold, remote and backward economies of Northern Europe.
No, it's not looking too good for the First and Second Worlds right now. Europe seems to have lost the plot completely, following the EU constitution debacle, and is reverting to a nostalgic Nineteenth Century nationalism. History will not look kindly on the present generation of European leaders, who had the chance to create the greatest economic entity on the planet and decided instead to squabble about agricultural subsidies.
But history will be even harsher on America under Bush. In five years, the neo-con cretins who run the White House have seriously damaged US economic leadership and diplomatic prestige. America is bogged down in debt, dependent on costly foreign oil, and stuck with a war in Iraq that it cannot win.
The US has been cushioned from the economic impact of China because much of China's economic development is - as it were - American. Asia may manufacture the worlds training shoes, but it makes them for American firms like Nike who have out-sourced production. However this is changing.
China is now buying America, or trying to. They've bought IBM's personal computer arm; they're trying to take over the appliance manufacturer, Maytag, and there's been an outcry at Chinese attempts to take over the US energy firm Unacol.
Who do these guys think they are? Don't they know the rules? America is very good at giving the emerging nations lectures about the virtues of free trade and competition, until it starts to work against them. Now they want the Yuan devalued.
The lessons of China and India are sobering ones indeed for both liberals and neo-liberals. The Western model of free-market development came to grief in Russia. After the fall of the Berlin wall, the ex Soviet Union became a playground for US neo-liberal economic missionaries. The result? The Russian economy collapsed, industrial production fell by sixty percent, life-expectancy dropped by a decade and corruption became endemic.
China, by contrast, remained under authoritarian state control by the Communist party. The state mobilised investment and sponsored economic development through nationally-owned companies. They offered cheap, regimented work-forces for Western companies to exploit in special economic zones. It is a form of state capitalism and unfortunately, it seems to work.
I say unfortunately because this is a profoundly undemocratic country. It should be a matter of the profound concern to Western liberals that this sinister and introverted regime, still in thrall to the cult of Mao Zedung, is about to become the guiding economic light of the developing world. China's response to the anti-communist revolutions of 1989 was the brutal repression of student dissidents in Tienanmin Square.
Nor is India exactly a beacon of democracy, having been run by a succession of bureaucratic dynasties with occasional nods in the direction of popular assent. It is a deeply divided society, with half the population economically excluded. Both countries are nuclear powers and China has expansionist ambitions.
Great global shifts in the balance of economic power rarely take place peacefully.
But, where does all this leave Africa and this weekend's Make Poverty History marchers forming a white band around Edinbrugh?. Well, it's nice theatre, but the experience of India and China confirm that, whatever else it does, aid alone cannot generate economic development.
Yes, drop the debt, stop the rot, feed the world. But for Africa to make any kind of serious economic progress it is going to need a political revolution in the continent, or more likely a series of them.
Unlike India or China, Africa is a patchwork of unsustainable nations run by corrupt elites. You can't build companies or run a competent state, when there is no security, law, education, property rights. Until there is stability. and a common economic and political space on the continent, it is unlikely to develop a market big enough for autonomous economic lift-off on the Asian model.
However, that doesn't mean that we can wash our hands of Africa - far from it. We created the states and we handed them over to the corrupt elites when we decoloniseed. If we don't sponsor economic development in Africa, then someone else will. If and when Africa gets off its knees, it is unlikely to look to the American or European democracies, but to state-capitalist authoritarian models.
There is an alternative. If we not only eased the debt burden, but opened up our markets to African goods, mobilised international financial institutions and offered real incentives for good governance, then there is a possibility that there could be sustained development. But somehow, I don't think that's really on offer at Gleneagles.
However, Make Poverty History is a noble cause, and a worthwhile one. It is obscene and unnecessary for children to be dying from malnutrition and preventable diseases. However, we'll only know when Africa is really turning the corner when, like Brindi Adige, they start getting extremely irritated by well-meaning busy bodies offering charity checks.

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