Where would Apple, IBM, Cisco be if they'd not sourced talent, asks RBI Guv

Share prices of the most efficient corporations are where they are because of global supply chains

Cautioning against protectionism, RBI Governor Urjit Patel on Monday said where would giant American corporations like Apple, Cisco and IBM be if they had not sourced the best products and talent from across the world. 

“I don’t think that we have heard the last word on US policy talk about this because there is a push back internationally that the world has benefited from an open trading system,” the Reserve Bank of India (RBI) governor said after delivering a lecture in New York.

 He made the remarks in response to a question on the rise of protectionist tendencies in major world economies after he delivered the Third Kotak Family Distinguished Lecture, sponsored by the Raj Center on Indian Economic Policies at the Columbia University’s School of International and Public Affairs.

He said the share prices of the most efficient corporations in the world, including in the US, are where they are because of the global supply chains.

Patel said the calls for protectionism in the US were on account of equity and domestic distribution issues which “textbook economics tells us should be addressed through domestic fiscal policy” such as taxation and income transfers. He noted that using trade instruments for protectionism may take a nation on a trajectory different from that of growth. 

He ascribed the calls for protectionism in the US to income inequality and said they "should be addressed through domestic fiscal policies, in other words, taxation and income transfers."

"Using trade instruments like customs duty, border tax, etc. is not the most efficient way. In fact could end up somewhere else."

Trump, who ran for President on a platform of "Buy American, Hire American", has called for restricting the H1-B visas for professionals to higher-level technical positions paying higher wages and for bringing back manufacturing to the US.