Tuesday, May 26, 2015

The Path to Development

In an insightful article in Strategy and Business, John Jullens present a view on How Emerging Markets Can Finally Arrive. This is required reading for anyone who cares about emerging markets, if only for going beyond the orthodoxy of free trade and flexible labour market. The broader point - that every market needs its own strategy and that the strategy may vary from stage to stage of development - is also extremely valuable, as this is usually overlooked in any politically tinted discussion about development. 

At the core of it, this article has a China theory at its core. China is affecting a transformation of its economy, and it may just pull it off. While some commentators in the United States would say that China can not be a model for most other countries, just because of its political structure, it is becoming a model for many countries, including, for India, the alternate that these commentators would love to highlight. China has proved the naysayers wrong several times - The Coming Collapse of China still sits on my bookshelf after 10 years - and it seems to be going through another extraordinary transformation right now. China is also a great example of the development of domestic businesses as an essential ingredient of development strategy, and it has done so through a mixture of direct and indirect protection. One may not agree with its strategies - and developed countries indeed do not - but one must remember that the strategies that England, France, Germany, or United States followed in their path to progress was no more moral than what China does now. If you are complaining about China's approach to intellectual property, check on how the United States treated such issues in the late Nineteenth century. 

Indeed, the lesson here is not to be like China, but each country mapping its own path, rather than following any orthodoxy preached over our heads by magazines like The Economist (which I stopped reading because I got so tired of its right wing crusade, after more than a decade of loyal readership!). To develop a country, its government needs to be responsive to its ground realities and play on its strengths, rather than following models of another nation and formula thought up by armchair theorists. 

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