Developing Asia and Nepal

There is now no timeline from the President for consensus but people would not like him to remain a silent spectator, letting these leaders inflict more serious injury on the ailing country/economy. Our leaders, however, need not worry much because N

Jan. 25, 2013, 5:45 p.m. Published in Magazine Issue: Vol: 06 No. -15 Jan 25- 2013 (Magh 12, 2069)

Global economic scenario is not at all encouraging.  The largest economy in the world is still to recover, EU is in recession for the second times in four years and China, second largest economy, and India, another economic power, have both experienced a drop in their growth rates in recent times. It is difficult to predict when the global economy will succeed in regaining, in a durable way, the growth momentum of 2004-2007 when it grew by 4.6 percent in 2005 and 5.4 percent in 2007.World economy started showing some signs of trouble towards the end of 2007 when symptoms of ill health of some financial institutions began to surface in the US, which spread to EU where countries like Greece, Ireland, Portugal, Italy, etc are still facing serious debt crisis. Unlike the belief of some observers, China alone could not arrest the slide into recession of the global economy: side by side with the ailing US economy, world output contracted by 0.6 percent in 2009.Infact, this contraction did affect adversely even countries like China and India, which until then were registering very impressive growth rates. One interesting point to be noted is that Eastern European countries such as Poland are doing quite good even when the entire EU is ailing. It may be mentioned that these countries took advantage of the wind of liberalization that blew across the planet towards the end of 1980s and liberated themselves economically and politically. This wind blew in many Asian countries including Nepal, which succeeded in rehabilitating multi-party parliamentary democracy and opened up the economy in a meaningful way. India also liberalized its economy concretely thereafter. Although political pluralism was introduced and practiced in India ever since the independence` from Britain in 1947, China opened its economy to the outside world much before its neighbor. India did away with the low growth rate of 3 to 3.5 percent, known as the Hindu rate of growth, by doing away with quota and licensing regime.China, following visionary Deng’s approach, liberalized the economy and achieved on average a growth rate of 10 percent per annum  in the last three decades. These two Asian giants, following entirely different political system, managed to get out of the recent recession, helped by strong domestic demand created mainly as a result of their respective fiscal stimulus programs.

It looks like countries practicing pluralism on the political front and openness on the economic front can achieve faster rate of growth than countries without these. Exceptions are countries like China and Vietnam that have liberalized their economies and achieved commendable progress without opening their political system. China seems to have embarked upon a capitalistic method of abundant wealth creation to have its distribution and consumption in a socialistic fashion.  Looking at the progress of countries such as China, India and some Southeast Asian countries, one is tempted to agree with the observations of some analysts from the west that Asia will be above US and EU economically in about two to three decades time. Developing Asia, consisting of 27countries, looks better than other region of the world in that it grew by an encouraging 7.0 percent in 2009 when global output contracted by 0.6 percent.Likewise, this region grew by an impressive 11.4 percent in 2007 when world output grew by 5.4 percent. The case, however, is not the same with each and every country. Another encouraging fact about some Asian countries is that they have agreed not to let ancient rivalry hamper economic cooperation between them. Growing bilateral trade between China and India and recent realization by concerned authorities to increase the currently disappointing level of trade between India and Pakistan adequately manifest the priority accorded by these countries to economic issues. Rather than on the firepower front, China and India, it seems, have quietly decided to engage in a healthy competition on the economic front. They are sniffing around the world for resources to propel their growing economies. Likewise, recent border tension between India and Pakistan is not likely to stand as an impediment to boosting bilateral trade between the two countries.Indeed,countries like Pakistan and Sri Lanka did not let their growth rates drop to a disappointing level even in the face continuous instability in case of former and decades long civil war in case of the latter.Moreover,looking at the very encouraging way that economies in Southeast Asia, with a strong natural resource base, have proceeded in recent years, one would not hesitate much to conclude that Asia, with the solid support of 27 developing Asian countries, will emerge as a very strong global economic power in not too distant a future. There are also places like Hongkong, declared the most liberal economy of the world for the nineteenth time in a row, and countries like South Korea, Singapore and Taiwan that have performed very well, despite lack of natural resources. While these countries have done well even when they have to mostly rely on outside resources needed for their economies, there are countries all over the world that have utterly failed to make use of their strong resource position to pull their people from a state of abject poverty. Oil rich country Sudan, now divided into two after a prolonged civil war is just one of the many African countries whose mineral resources have been used for the betterment of other countries more than their own places and people. In Asia, Nepal could be cited as a case which has failed to achieve anything from growth standpoint, despite having political freedom, liberal economic policies and tremendous potentiality for tourism and hydro power generation, second only to Brazil in terms of potentiality. It may be repeated that this country of mountains and perennial rivers is facing scarcity of both drinking water and electricity and has to beg India, which needs 100,000mw of power if the entire rural area has to be electrified, for electricity. People have started blaming this economic debacle on the vision and integrity less political leaders who are currently divided into two groups, ruling and the opposition, and marching from opposite directions for a head on collusion. President Yadav is sick and tired of the leaders who he could not pursued into forging national consensus, despite repeated extension of the time period, nine times, to do so. In order to calm the disgruntled people, leaders will have to be open to compromises and new ideas. There is now no timeline from the President for consensus but people would not like him to remain a silent spectator, letting these leaders inflict more serious injury on the ailing country/economy. Our leaders, however, need not worry much because Nepal would remain a part of economically very powerful Asia of tomorrow and they will also continue to find a country like Somalia, more corrupt and poorer than their own country, to point to and draw solace from.

Dr. Tilak Rawal

Dr. Tilak Rawal

Dr. Rawal is former governor of NRB.

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