Increasing consumption in the developing and emerging markets, including India and the African countries, will provide tremendous opportunities for boosting trade and investment.
It’s time for India and other developing economies to re-balance their strategies so as to reduce their reliance on the crisis-ridden US and euro zone and thereby increase trade and investment opportunities among themselves. The emerging economies can further strengthen cooperation in order to meet the ever-increasing demand and consumption.
Further, trade among emerging markets is increasing rapidly and becoming a vital driver of global economic growth. This was the unanimous view that emerged during the session on “Trading for Aiding the Global Economy,” at the Summit.
The participants argued that increasing consumption in the developing and emerging countries including India and Africa would provide tremendous opportunities for boosting trade and investments. They also noted that mere financial restructuring would not be enough to effectively tackle the present crisis, what is needed is structural reform especially in the US and the euro zone.
Commerce and Industry Minister Anand Sharma said even though India has initiated several policies to boost its trade and investments in Africa, South Asia and developing countries, it was open to initiating a few more. “If consumption in the US and Europe is going to increase, it will rise manifold in India and also in China and other emerging countries. India and developing countries can benefit from this development,” he noted.
Of the $600 billion trade, India’s trade with the developing countries as on date was of the order of $350 billion. “There is a shift taking place. More and more is coming from developing countries. But we are not going to Africa just to remove raw materials and take them home. We are there to participate in the growth of those countries. There has to be a win-win approach.” Declared Sharma: “Our philosophy is to be a true friend and partner in Africa’s progress.”
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B Muthuraman, vice-chairman, Tata Steel, said, “Europe and US will need to change consumer behaviour. You cannot consume more than the wealth you create. The developed countries lack competitiveness compared to developing and emerging economies. The latter have an edge.” The recent trade figures show that the trade between developing countries was increasing faster.
Muthuraman, who is also president of the Confederation of Indian Industry (CII), observed, “The Western world is gradually becoming uncompetitive in many products, and developing countries have over the last 10-15 years become centres of consumption. New commercial corridors are linking emerging markets in Asia, Africa and Latin America, spurred largely by the rising demand in fast-growing China and India for raw materials and energy to fuel development. “There will be increased South-South trade and investment,” he noted.
Africa is lagging behind other regions not because it is not trading, argued Mary Michael Nagu, Tanzania’s minister of state for investment and empowerment. “Africa is lagging because it is mainly trading commodities in raw form with low technology use and very little value addition. Africa has to pull up its socks and see to it that we add more value to products before export.” She welcomed the growth of Asia-Africa trade, noting the cultural affinities between countries on both continents. “Trading is partnership and partnership is easy for cultures that are not very different.”
Nagu called for increased South-South cooperation in investment, particularly in sectors such as natural resources that could then lead to more trade.
However, these changes would give tremendous opportunities for Indian MNCs to increase their investments in such economies, opined Anil Gupta, Michael Dingman Chair in global strategy and entrepreneurship, University of Maryland. “In terms of South-South trade, we should not just be looking at trade but also investment,” Gupta said.
Further, José Pacheco, Mozambique’s minister of agriculture, argued that developing economies must also deepen regional integration to strengthen comparative advantages. “Africa has to build a team to come together to share views and to overcome our problems so we can compete in international markets as one,” reckoned Pacheco. According to the minister, African countries could work together to increase the productivity of farmers through better access to technology and more efficient use of water resources.
Anoop Singh, director, Asia and Pacific department, International Monetary Fund, drew a parallel between India and China. He said that India was currently going through a demographic transition alike China. “During its transition, China went for encouraging labour-intensive export-oriented industries in order to take care of the job needs of its rising population. India is now passing through a similar phase, especially when there will be a younger population and work force. India can benefit in its demographic transition.”