Economic Times ⁽²¹⁸⁾

When NGOs operatre in their areas of expertise, they can force important policy debates and policy changes in democratic countries in not just developed but also developing countries. Here is a beautiful example from India. Economic Times, August 27, 2003 The ongoing cola controversy offers a fascinating example of a responsible non-governmental organisation (NGO) advancing the cause of public policy in a globalising, democratic, developing country. Begin by considering the broad facts. On August 5, 2003, the New Delhi-based NGO, Centre for Science and Environment (CSE), announced that according to its tests, 12 colas produced by multinationals Coke and Pepsi contained pesticide residues 11 to 70 times as high as the norms prevailing in the European Union (EU). CSE explicitly acknowledged that the colas adhered to the local, Indian norms but argued that the multinationals practised double standard, selling less clean cola in India than in the EU and US. The reaction to the CSE announcement was swift, with three states banning the colas and Parliament banishing them from its cafeterias. CEOs of Coke and Pepsi rushed to the defence…

Given India's success in achieving macroeconomic stability during the last half century, it is ironic that the study of macroeconomics in India has lagged far behind that of microeconomics. For this reason alone, the recent volume Macroeconomics and Monetary Policy: Issues for a Reforming Economy, edited by M. S. Ahluwalia, Y. V. Reddy and S. S. Tarapore, honoring Chakravarti Rangarajan, the first academic economist to serve as the Governor of the Reserve Bank of India and a much-admired figure among Indian economists and policy makers, is a useful addition to literature on economic reforms in India. July 30, 2003 With the combined central and state fiscal deficits having hit the double-digit levels, the question whether another macroeconomic crisis is around the corner has assumed renewed salience. In an important paper in a recently published volume, Macroeconomics and Monetary Policy: Issues for a Reforming Economy, edited by Montek S Ahluwalia, Y V Reddy and S S Tarapore, Ahluwalia offers a careful dissection of this question. He concludes that though poor fiscal performance and incomplete reforms of the banking sector are sources…

The exisitng trade policy commitment in a previous budget speech is to unify tariff rates around two rates of 20 and 10 percent starting 2004-05. But why not adopt a single, uniform rate of 15 percent instead? June 18, 2003 The 2002-03 budget set the goal that by 2004-05, India will have only two tariff rates for non-agricultural goods: 10% covering raw materials, intermediates and components, and 20% for final products. With less than a year left before this goal is translated into policy, it is timely to ask if this is the best course our trade policy can take. Begin by considering the existing tariffs. In spite of the reform and rationalisation of trade policy for more than a decade, our tariff regime remains messy. The 2003-04 budget ostensibly brought the peak tariff on non-agricultural goods down to 25%. But according to Arun Goyal of the Academy of Business Studies, more than 15% of all tariff rates still remain higher than the official peak rate. In terms of the complexity of the tariff structure, the situation is even grimmer: Goyal counts…

Do free-trade skeptics such as Joseph Stiglitz and Dani Rodrik recommend protection? Not really, if you read carefully. Read full article (pdf) Read full article (external link)

So trade openness is not sufficient for growth. But can you do without it? And are there autarkies or near autarkies in the developing world that have rapidly reduced poverty? April 23, 2003 Recent attacks on globalisation have also translated into attacks on the wisdom of outward-oriented trade policies that developing countries have embraced with increasing frequency. Free trade sceptics question the ability of liberal trade policies to stimulate growth. As a corollary, they also blame growth failures on the surge of imports resulting from increased openness. Furthermore, they view outward-oriented trade policies as detrimental to the fate of the poor. Are the sceptics right? The answer is a categorical no. In so far as developing countries are concerned, there is compelling evidence that openness is a necessary condition for rapid growth. There are few developing countries that have grown rapidly on a sustained basis during the post-Second World War era without simultaneously experiencing rapid growth in their exports and imports. Because openness by itself is not sufficient to promote growth — macroeconomic stability, policy credibility and perhaps other policies must…