Daily Current Affairs – 24th February, 2016Devendra Vishwakarma
Bringing India’s growth online
- On February 29, observers around the world will be watching as India’s government presents its 2016-2017 Budget.
- They will be looking for signs that India, today the world’s fastest expanding major economy, will continue to grow at pace, and help shore up a slowing global economy.
- But until India is more integrated with the global economy, its potential to push up domestic as well as global growth will remain limited.
The case of APEC:
The first and necessary step toward greater Indian participation in Asian and global trade and investment flows is membership in the Asia-Pacific Economic Cooperation (APEC) forum, a step whose time has come, for India, for APEC, and for the international economy.
- Asia-Pacific Economic Cooperation (APEC) is a forum for 21 Pacific Rim member economies that promotes free trade throughout the Asia-Pacific region.
- It was established in 1989 in response to the growing interdependence of Asia-Pacific economies and the advent of regional trade blocs in other parts of the world
Courtesy (image)- https://en.wikipedia.org/wiki/Asia-Pacific_Economic_Cooperation#/media/File:APEC_memberstates(Pacific).svg
Why APEC matters?
- For 26 years, the APEC has served as the key driver of Asian regional economic integration by developing habits of economic dialogue and cooperation and facilitating market opening and trade expansion.
- Today the 21 APEC member economies account for approximately 60 per cent of global GDP and 40 per cent of global trade.
- APEC membership is also a facilitating condition for Trans-Pacific Partnership (TPP) membership.
What TPP can do?
- With the advent of the TPP, the great unfinished task of Asian economic integration is India’s closer involvement.
- The potential gain for the regional and global economies is significant.
- As growth in China and the rest of Asia slows, the Asian region and Western economies are in search of new markets for trade and investment, access to new consumers and workers, and new sources of innovation.
Why the world economy needs India?
- India, today Asia’s third largest economy, is projected by the US Department of Agriculture to be the world’s third largest by 2030.
- Its burgeoning middle class, expected to number 450 million by 2030, will be a major contributor to global demand if it is better connected to other markets.
- India’s rapidly increasing workforce could help offset aging populations and labour shortages in other Asian and developed economies.
- India’s huge infrastructure needs could offer favourable opportunities for international investment if India’s markets are better aligned with global standards.
India gains from APEC:
- India has even more to gain from the APEC, which would help India boost its long-term growth.
- The APEC’s institutional processes of trade facilitation, consultation on standards, and sharing of best practices will help India improve its regulatory regime and business environment.
- This, in turn, helps make India more attractive to investors and more competitive in international markets.
- The APEC would help India access the transnational supply chains that increasingly dominate the global economy, an objective critical for the present Prime Minister’s plan to create 100 million manufacturing jobs by 2022.
- Throughout its history, the APEC has included economies that have varied widely in their size, stage of development, and trade policy orientation.
- China was an APEC member for 10 years before making the reform commitments that brought it into the WTO.
- When Vietnam joined, its economy and policies were very different from those of most APEC members. Now, it is a TPP member.
- One of APEC’s most important contributions has been to assist the gradual opening of emerging economies.
The time to bring India into APEC is now – 2016. For the first time in 20 years, India is actively seeking to join.
The APEC’s major economies – the US, China, Japan and Russia – have all recently welcomed India’s interest in joining APEC.