Right thinking is
said to be the ultimate human resource of a
nation. Today what we require is a
“well-educated adaptive population” rather
than just educated men. The greatest enemy
of good thinking is, perhaps, complexity and
lack of fair knowledge. It may be recalled
that no society remains completely stagnant
with complete inaction. The dynamics of
growth, visible and invisible takes place in
one way or other. Even though a baby sleeps,
the baby grows. As such one cannot raise the
level of understanding merely by going on
the rut of same beaten track. We educate to
change and produce something new. One has to
accept the emerging imperatives of the fast
changing world.
The world has changed a lot and is going to
change, perhaps, faster under the active and
highly stimulating influence of science and
technology. We have just witnessed the
exciting wave of "Information Revolution"
which produces new urges, new temptations
and new equations. Now the new brave world
is prepared for a bigger drive to maturity.
Interdependence and inter-linkages have now
acquired a new dimension rendering the
dogmatic traditional assertion on prolonged
isolation and insularity, obsolete and
counter-productive. The so-called technology
(technical know-how and specific skill)
which is the kingpin of modern development
and the master key to all forms of human
achievement keeps on changing. One has to
accept the objective message of this
changing wave. New technology makes men
wiser, more alert and responsive to new
challenges. One has to learn more about
increasing returns to scale in "new ways of
doing the same old things".
The question before us is about
globalization. Ever-enlarging circle of
activities is the crux of the global
integration: economic and non-economic. Of
course, this wave carries with itself the
seeds of "opportunities" and "risks". Please
look at your own kitchen, drawing room, bed
room, and reading room where you find color
TVs with multiple channels as a good friend-
as one essential item in the package that is
part of modern life.
We do enjoy global news, global events and
global achievements. BBC gives a global
picture. DDK gives a national perspective.
We get quick communication with a small
mobile phone. Sitting in our small room we
can learn about "others". Here we are in the
process of globalization. How can we stop
our mental temptation of learning about
others? It is surely odd and bad to accept
or reject ideas based on where they come
from.
The message is simple. Where there is more
competition, there is efficiency. Where
there is efficiency, there is strength.
Where there is strength, there is growth.
Competition gives birth to efficiency.
Efficiency is mother of strength. Strength
is pillar of development. It may be suicidal
to think of growth without competitiveness.
In this sense globalization has become a
fact of growing competition beyond
traditional frontiers - rather than an
option. Globalization is a process - not a
particular event at a point of time.
Necessarily, we have today, knowingly or
unknowingly; become a micro unit of greater
global network. Now we have to act on the
"chosen form", prepared and carefully worked
out model, - based on our own ascertained
"core-competencies of marked comparative
advantage". Otherwise, we may consequently
feel simply left out with empty gesture of
defiance and inward disgrace.
The strong domestic economic structure has
now to act as foundation of competitive
partner of global development process. In a
way globalization begins at home.
Availability of opportunity is one and
utilization of that opportunity is another.
Unfortunately at the moment in Manipur one
gets terribly disillusioned and painfully
disappointed to work as Entrepreneur or
bigger scale in the local atmosphere
vitiated, poisoned and considerably
surcharged with vicious circles of
"Unjustified Risks", "Unjustified Costs",
and "Unjustified Barriers". The investment
atmosphere is visibly hostile.
Today in Manipur even elementary justice
seems to be a cry in wilderness. Capable
Governance has, it appears, been buried into
oblivion. The economy is in disarray. The
creative autonomy of intellectual structure
gets disturbed while we require structural
maturity and institutional harmony. Please
remember man wants to invest his labor and
capital only when he feels good, happy and
confident; because investment decision is
always forward looking. At the heart of the
problem lies a basic tension of patriotic
arrogance.
But the hard fact remains clear that the job
of development of Manipur is too big for
Manipur to do alone. Even before any green
signal of FDI is seen, why should we shut
the door? They may refuse to come. The
general atmosphere is largely disturbing.
FDI comes with three distinct advantages,
viz
A) Capital;
B) Better technology and
C) Greater market linkages.
It is not merely a question of planning of
economy but a question of managing the
economy, redesigning the policy settings in
the wake of hard realities of global
linkages. There should not be any area of
confusion between "Preference" and
"Priority". Interestingly Manipur undertakes
"plans" without appropriate "plan
implementation". Challenge is sweet, because
life without new problems becomes
monotonous.
Principle and practice
of globalization
Now it may be interesting to have a fresh
reference to the very concept of
globalization. Any exercise or any attempt
undertaken keeping in view world standard,
worldwide preference and worldwide
imperatives: across traditional geographical
frontiers speaks of globalization. Growing
economic interdependence and ever-enlarging
market integration are two basic
developments. And now both scale and scope
have to be reviewed, revised and redefined
in response to new mandates of higher
interaction. Outlook, design of organization
and model of adjustment need to be
scientifically updated.
In other words, the act of globalization is
largely forward looking and equally
exciting. It is associated with increasing
cross-border movement of capital, goods,
services, technology, ideas and people. As
such at the centre lies tension of
adjustment, adaptation and creation. The
increasing extent of globalization is
reflected in the tremendous growth of trade
in goods and services. From 25 percent of
World GDP it has become 46 percent in
2003-06. Capital flows amounted to 10
percent of global GDP. It may not be nice to
look upon globalization as brakeless train
wreaking havoc or a free lunch. Essentially
it has developed into a new phenomenon of
security of market access.
We come across three waves of globalization
the first of which started more than 100
years ago - between 1870 and 1914. During
this period exports nearly doubled and
foreign investment tripled in Africa, Asia
and Latin America. International migration
was particularly dramatic with about 10
percent of world’s population moving from
Europe to the New World and from China and
India to the less populated neighboring
countries. However this impressive wave of
globalization was virtually reversed during
the First World War, the Great Depression
and the Second World War.
The second wave of globalization lasted from
1950s to 1980s and involved only developed
countries. Trade and investment were growing
among European countries, North America and
Japan aided by a service of multilateral
agreement on trade liberalization under the
auspices of the General Agreement on Tariffs
and Trade (GATT).
The third and current wave started from
1980s and continues to-day driven by two
main factors:
(1) technological advances and
(2) liberalization of trade and capital
markets.
More and more Governments of developing
countries choose to reduce protection of
their economies from foreign competition and
influence by lowering import tariffs and
minimizing non-tariff barriers such as
import quotas, export restraints and legal
prohibitions. A number of international
institutions established in the wake of the
Second World War - including the World Bank,
the International monetary Fund and World
Trade Organization play important role in
promoting global, free trade in place of
protectionism. For participating countries
the main benefit of free trade stem from the
increased access of their producers to
larger international market.
For a national economy that access means an
opportunity to benefit from international
division of labor by moving its resources to
the most productive uses, — by specializing
in producing and exporting what it can
produce best, while importing products
utilizing their country’s comparative
advantage in the global market more
efficiently and their consumers enjoy a wide
variety of domestic and imported goods at
lower prices. In addition, an actively
trading country benefits from new
technologies that spill over to it from its
trading partners through the knowledge
embedded in imported production equipment.
These technological spillovers are
particularly imported for developing
countries because they give them a chance to
catch up quickly with developed countries in
terms of rising productivity.
But a country joining the global race also
faces considerable risk associated with
tough international competition. But one can
argue that international competition creates
the necessary pressures to prevent economic
and technological stagnation and to
stimulate domestic producers to produce
competitive goods at competitive costs. Thus
globalization means being able to
manufacture in the most cost-effective way
possible anywhere in the world. It means
being able to produce raw materials and
drawing management resources from the
cheapest source anywhere in the world. It
means having the world as a market; but in
real life the physical and human capital in
the uncompetitive (sick) industries in
underdeveloped areas is not easily
transferable to other more productive uses
for many reasons — such as lack of
additional investment, shortage of
information about market behavior and new
technologies.
Meanwhile, there is also apprehension of
rising unemployment and slow economic growth
resulting from these possible changes. Not
surprisingly, Government of underdeveloped
regions often argues that many of their
national industries require temporary
protection until they become better
established and reasonably competitive and
less vulnerable to aggressive foreign
competition.
Economists justify protectionist policies
mostly as temporary measures. The costs and
benefits of participation in global economic
activities largely depend on such
country-specific factors such as:
(a) the size of a country’s domestic market,
(b) its natural resources and
(c) its geographic location.
Chinese experience:
China opened its economy to global
integration in 1978 but with enough caution.
The “dual-track-system” followed by the
Chinese government allows both state control
in key areas and free-market-guidance in
some spheres. China achieved
overall-total-factor productivity growth of
more than 3 percent during 1985-94 —
exceptional by international standard. China
has developed “halfway” forms of industrial
enterprises that are neither state owned in
the classic sense, nor privately owned in
the capitalist sense. One important
configuration is the Township and Village
Enterprise (TVE) owned by local government
and citizens. These TVEs produce consumer
goods for domestic and international
markets.
TVEs are of two types. The first, owned by
the local government, act like a holding
company to reinvesting profits in the
existing or new ventures as well as in local
infrastructures. The second, more recently
developed type is much closer to private
enterprise controlled and owned by an
individual. Still they too maintain close
fiscal ties to the local Government.
The performance of TVEs has been
extraordinary. Their share in GDP rose from
13 percent in 1985 to 31 percent in 1994.
Output has grown by about 25 percent a year
since mid-1980s. The non-state share of
industrial output in China rose from 22
percent in 1978 to a startling 66 percent in
1995. TVEs have created 95 million jobs in
the last fifteen years.
The commendable achievement of TVEs is
attributed to:
* Strong Kinship (Risk and Reward sharing
between entrepreneurs and local Government)
* Decentralization plus Financial Discipline
* Competition
* Market Opportunity and Rural Saving
* Links with State Enterprise Sector.
We can learn good lessons from Chinese TVEs
experience about the importance of liberal
entry, competing, hard budget constraints,
and appropriate fiscal incentives or local
Government. Special mention may be made of
me fact that strong Kinship - links among
Chinese villages encourage responsibility in
entrepreneurs. The greatest asset of Chinese
society is the state of mind or objectivity,
sincerity and discipline. Really right
thinking is best asset. Above, all, China
adopted a practical strategy which gives
them enough strength to absorb the cost of
deceleration and loss without fundamentally
destabilizing the economy.
General scenario of
Manipur
Now from exciting and convincing Chinese
experience let us move on to Manipur. The
spirit of competitive development is by and
large derived from the prevailing
socio-economic scenario. To-day either by
accident or by design or by ignorance, we
are facing 13 problems in the major sectors
as shown in Table I:
Now the small economy of Manipur looks
sieged. The State suffers visible flight of
capital including human capital— a kind of
‘brain-drain’. The net result is, perhaps,
the terrible end of socio-economic
stagnation vitiated relentlessly by the
spiraling process of "easy money" under
coercive atmosphere and open threat and
defiance. "A failed State mired in conflict
will be outstretched in resources and
institutional capacity - and able to manage
only certain interventions" (WDR, 2004,
p-12).
The ‘soft State’ like Manipur is plagued
with grim issues associated with crimes,
corruption and non-compliance leading to a
new burden of rising unjustified costs
imposed on micro-entrepreneurs. In fact, the
additional costs associated with crimes and
corruption is another fixed cost. The
economic relation has been made so costly
and social relation destroyed.
Personal relation has been made the only
basis of activities undertaken and to be
undertaken. To-day young and promising
entrepreneurs start facing a new sense of
insecurity and uncertainty. The unjustified
"time costs" incurred in the process of
meeting the formalities of compliance with
regulatory mechanism are examples of
corruption which infect the highest level of
Government, distort policy making and
undermine the credibility of Government.
Even a small matter of registration takes
more than six months in Manipur while it
takes only two days in Australia.
Very unfortunately corruption is subject to
increasing returns - an increase in rent
seeking activities makes the corrupt devices
more attractive. One becomes rich only with
"unearned income". In a predatory state like
Manipur, corruption consumes the surplus of
the economy.
Today the Government offices have now been
treated as Income-Generating Personal
Property — not for public services. Everyday
is a new day with new income. To-day very
few people would like to go to public
offices, public hospitals and public
secretariat. People feel they will be
"stranger" in their own homeland. The
growing alienation, the growing gulf and the
growing gap between the two entities
(Government and people) owe their origin to
the colonial heritage of personality-cult
and corruption. Growing social alienation
weakens the tax base and tax compliance.
We have unduly personalized the official
relation so much that it has acquired a new
character of "Patron-Clientelism". A third
factor has been created and without the help
of these "link-men" (third factor), possibly
one cannot look forward to the ready and
positive response from the so-called
"Income-Generating Personal Properties".
To-day people can get many things done
without any labor. Just pay money; prepare
Akash Bills, get fake certificates; fake
appointments, fake patta, fake ex-gratia
payment and fake registration. Really we
notice a new parallel black economy and
administration. Paper works of contracts and
supply in the remote inaccessible hill areas
are an attractive part of the zero-game.
As regards the unjustified risks, let us
remind ourselves of the advantages of secure
property right. Secure property right links
"efforts" with "‘rewards" assuring all firms
and economic players that they will be able
to reap the fruits of their investments.
"The better these rights, the stronger the
link between effort and reward; and the
greater the incentive to open new
businesses, to invest more in existing ones
and simply to work harder" (WDR, 2005,
P-79). Secure and clear property rights
establishing proper link between effort and
reward in Poland, Romania, Slovakia, Russia
and Ukraine could increase the reinvestment
of profit by 14 - 40 percent.
Now the question is how to protect this
right? This calls for a capable
administration to proper investment climate
and enforce necessary rules and regulations
without fear and favor. Because investment
is forward-looking. Firms invest to make
profit. The decision is affected by the
assessment of opportunities, incentives and
risks in particular location.
Investment is not merely an act undertaken
at a point off time only. It is a continuous
process. Based upon the changing perceptions
and economic considerations the decision
also acquires a character of continuity with
change. Failure to raise productivity and
adequate resources to meet rising investment
requirements and revenue-expenditure implies
failure to run the economy. This is the
reason why "Resource-Plan" and "Reform-Plan"
go together hand in hand in harmony.
Manipur, it appears, has neither
"Resource-Plan" nor "Reform-Plan" at the
moment. This is perhaps, the weakest area in
the economic exercise.
Investment is linked not only with physical
and market connectivity but also with
"security-connectivity". The solid
foundation of efficient infrastructures
enriched with stability and sensibility is
the springboard for spread -effects of
commendable economic initiative. To-day we
are required to remember four prerequisites
(sine-qua-non) for investments to bear the
desired benefits.
SQN 1: The will of the people and their
preparedness to make sacrifices for the
cause of development.
SQN 2: Political maturity and stability,
SQN 3: Atmosphere of peace and co-operation
and above all Meticulous Planning (U.N.)
Managing investment activities is really
tough and challenging. It is in a way part
of learning-by-doing. The investor observes
critically and supervises the behavior of
production cycles. At one point of time new
excitements and new temptations are
generated and the investor is forced to
undertake innovative moves to meet emerging
concerns. This is a difficult period; but it
is a moment of crucial test. Manipur does
need large investment from within and
outside. Unfortunately the state faces
uncommonly high hurdles with very limited
resources.
Although North-East is a late comer to
development, the region has recently started
experiencing new excitements, new
temptations and new equations on many
fronts. Connectivity has picked up.
Disability of occupational multiplicity is
getting replaced by better professional
pursuits. Poverty is getting reduced from
33.78 percent in 1993-94 to 28.54 per cent
in 1999-2000 in Manipur, from 40.87 % to 36
% in Assam and from 37.92 per cent to 33.87
per cent in Meghalaya. However much remains
to be done to change the "culture of
poverty".
The incidence of unemployment remains fairly
high with 4.6 percent of the labor force
being openly unemployed in Assam in
1999-2000 followed by Manipur 3.5 percent.
Paradoxically there is enormous amount of
work to be done in the region but few jobs,
leading to semi-stagnant situation. Both per
capita income and per capita consumption
expenditure are low. The per capita income
of Manipur was only Rs. 16,944 at current
prices in 2000-2001 as against Rs. 59,538 of
Goa and Rs. 29,544 of Punjab. The per capita
monthly consumption expenditure of Manipur
was only Rs. 596.36 in 2000, while that of
Delhi was Rs. 1316. Assam does badly with
only Rs. 473.42. The net result is "welfare
loss" resulting from the pattern of meager
consumption expenditure on inferior
commodities at higher prices. It is a fact
that both growthless jobs and jobless growth
may burn the two ends of the small open
economies of the North-East. The task is
really difficult. The diseconomies of being
"small", "rural", "informal" and
"heterogeneous" continue to pose a
formidable concern. This is a
"development-challenge". Area-specific model
of manpower development and development
strategy based on the abject realities and
traditional skills may be rewarding.
We talk much of employment but much less of
employability. Employment is function of
employability and availability of
complimentary inputs including "unpaid
factors of production" (called physical
infrastructures). Creation of employment is
one and utilization (realization) of the
created opportunity is another.
We cannot force someone to work. Confidence
is born largely in the womb of a fair degree
of employability duly fostered by durable
peace, stability and cordial atmosphere.
Today Manipur has become a land of PCOs,
NGOs, Self Help Groups, Roadside small
hotels and rickshaw pullers. Even a decent
self-employment requires four conditions —
largely personal. Credit creation is not
necessarily confidence building. Confidence
goes very close to employability and
productivity. Who to look at the time of
difficult situation remains to be answered.
The Indo-Myanmar Border Trade, 1994-95
generated a new wave of excitement. In spite
of a number of teething problems such as
lack of adequate institutional response,
knocking barter component, difficult
physical connectivity, weak banking
facilities, rising threat of insurgency (new
economics of insurgency), long chain of
authorized and unauthorized check posts (68
check posts within a distance of 210 kms.
From Moreh, Manipur to Dimapur, Nagaland),
there are convincing evidences of increase.
Shop establishments recorded annual
percentage increase of 11.48 during
2000-2005 (till date). Direct employment
also recorded the annual percentage increase
of 11.61.
The other side of the coin is really uneasy.
The strong rather — rising tendency for "big
and immediate gains" from "small deals"
(drugs and guns) may be counter productive
in the long run in the border region. The
geo-politics, it appears, has got mixed up
with "trade activities".
What to do now?
Now, it is fairly clear that the North
Eastern Region including Manipur has to go
with the process of globalization otherwise
crippling inefficiencies of prolonged
isolation may intensify the long shadow of
pre-mature future of this small open economy
of Manipur. Given the hard fact of a new
reality that globalization is a visible
process of new equations of productive
forces, it may be highly imperative for us
to equip the State with a thoroughly
redesigned policy initiatives and policy
coordination; — with the new mandates of
root and branch transformation, — duly
inspired by a New Socio-Economic Vision of
its own — say Economic Freedom of Manipur by
2020 or New Millennium Goals of Manipur, —
not necessarily a mere extension of national
exercise. The Vision may go a long way in
addressing the old age concern of over
taxation of inconsistencies suffered by us.
What is required is a clear understanding of
rationality of Vision and Unity of Approach
— not merely rationality of plan and market.
We must be fully aware of the costs of
leaving things as they are. We have to
navigate the direction of change. We may now
hopefully suggest a two-pronged strategy for
a science-based knowledge linked economy so
that we can participate in the global
competition with confidence.
A. Short-Term initiatives such as:
A1: Tackling of supply-bottlenecks and cost
overrun etc
A2: Setting up of Economic Zones
A3: Improving connectivity
B. Long-Term policy steps such as:
B1: Addressing the institutional weaknesses
and redressing of institutional strength.
B2: Improving” Neighborhood-factor”.
B3: Improving physical and human resources
B4: Initiating structural change.
B5: Optimizing the utilization of:
> Land resources
> Hydro resources
> Bio- resources/herbal resources through
intensive molecular research and extension
(Ref: Core Competencies)
> Food processing industries
B6: Scientific documentation of traditional
techniques and system of Manipur
B7: Strengthening of scientific foundation
of development
B8: Expanding global market linkage
B9: Strengthening of Governance
Role of Government:
It may be equally interesting to have a
fresh reference to the changing roles of
government at different stages of
development. Every sensible government takes
care of five fundamental tasks:
A: Establishing foundation of law
B: Maintaining non-distortionary policy
environment
C: Investing in basic social services and
infrastructures
D: Protecting the vulnerable
E: Protecting environment
Globalization does not rule out the defined
responsibility of Government in these five
core areas. The vital challenge is to build
a home-grown-commitment mechanism rooted in
the domestic institution.
Every stage of development needs proper
parenting. Enforcement of the Rule of Public
Law is very important without which the
community gets into the deep trap of
Lawlessness Syndrome negating the productive
process. Hence, good Government is a vital
necessity for development. Enabling
institutional environment which can be
ensured by a committed Government is the
foundation for better performance.
It may be exciting to note the steady steps
undertaken by West Bengal and Kerala - two
Communist ruled States - to prepare for a
more effective State. In West Bengal, under
the leadership of Buddhadev Bhattacharya,
even administration of tourist hotels has
been liberalized and negotiations has been
made with FDI. Government steps in where
market fails; and market steps in where
Government fails. This is what West Bengal
follows.
While West
Bengal has taken a wise giant step to reap
the multi-dimensional benefits of liberal
opportunities of globalization, Manipur has
yet to learn the basics of maintaining the
Gandhi Memorial Hall and also of maintaining
one lake “Loktak” and one dam (Singda). The
issue of Tipaimukh Dam could be settled in
the larger perspective of global
competitiveness. Now the State Government
should be geared up to produce dramatic
effects through a small change born out of
dynamism of global competition. We do
certainly need stronger Government with
clear vision and understanding. Manipur has
to go ahead with stronger “reform measures”
to take fuller advantage of globalization
and at the same time to avoid tantalizing
impacts. Because growth comes out of
advanced steps. A change of guard for a
change in the economy is the need of the
hour. |
