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Political Science
POLS 3560
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The Global South: Politics, Policy & Development POLS 3560 – Fall/Winter 2011/2012 – Ananya Mukherjee-Reed Lecture 8 – India’s Political Economy – Nov 8 The ‘Standard’ Storyline - 1950 – 1980 o Low economic growth. o Big state and state interventionism. o State protectionism. o No corporate growth, low corporate profitability. o No global role. - 1980 – present o ‘Miracle’ rates of growth (9-7%). o Less rate. o High corporate growth and profitability. o Spectacular global role. o Foreign exchange reserves at 279 billion USD. o Foreign companies. India Now - The top 40’s worth is 243 billion, up from 229 billion a year ago, but still shy of the 351 billion records in 2007. Indian Companies on the Forbes Global 2008 - 47 Indian companies are on Forbes Global 2000. - Of the top 50 economic entities in the country, 30 are companies (by sales). - The sale of Tata Steels is about the size of Kerala, and Reliance sales is about $2 billion larger than Kerala. - WIPRO is about 5 times the SDP of Manipur and INFOSYS about 4 times. - Sales of Reliance and Tata Steel are each equal to the GDPs of the poorest 12 states. Global Comparisons - The aggregate sales of the top 50 corporation’s amount to $8 trillion – double the GDP of China and 8 times the GDP of India. - Wal-Mart’s revenues were about 5 times the GDP of Bangladesh; Vodafone is bigger than Ecuador; Exxon was almost 14 times Kenya, etc. - The aggregate sales of the top 3 companies, Royal Dutch Shell, Exxon Mobil and Wal-Mart exceed the GDP of the entire African continent ($1.289 trillion and $1.281 trillion for 2008 respectively). Poverty and Hunger - Under $1 a day – 34.3% - Under $2 a day – 80.4% - Under national poverty line – 37.2% - Ranks 67 out of 88 on the Hunger Index; worse than Nepal, Pakistan, China, Sudan. - Farmer suicides – close to 200,000 suicides between 1997-2005 (one suicide every 30 minutes). Two Questions and Standard Answers - Why this miracle? o ‘Freedom’ from the state. o Less regulation. o High consumption. o Globalization – free trade, more foreign investments, more active stock market. - Why such inequality? o Still a lot of regulation. o High dependence on agriculture. o Not enough skills. o Bad governance. o ‘People are not able to take advantage of globalization’. Big Business in Independent India - State-business collaboration. - Cheap inputs provided by the state for development of business. - Nationalized banking gave control over the savings of the common person to the government which could then be channeled to big business. - Protectionist: similar to ISI model. Big Business 1950 – 1985 - General feature: high corporate profits but low output, low growth. - Large oligopolies. - No domestic competition. - No global competition. Since 1980: Globalization - Rajiv Gandhi, the PM, and a number of other politicians and business leader see opp
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