By Mukul Gulati
Readers of a certain age will remember the Bombay Club. No, the Bombay Club wasn’t an exclusive social venue in Colaba, but a reference to a group of industrialists opposed to the economic reforms of 1991. These industrialists were worried about foreign competition and lobbied with the government to keep imports and foreign firms away. Foreign competition came anyway. In response, the domestic industry became more efficient, consumption and exports grew, and members of the Bombay Club benefitted from access to foreign capital and global markets.
The global pandemic is being blamed on capitalism and globalization, accompanied by the usual crowd of mercantilists and isolationists calling for protectionism. The tragedy for many poor countries is that they still have a long way to go in realizing the income and productivity benefits of global economic integration. Globalization has not yet reached its full potential.
In the absence of American leadership, India and other developing countries need to champion the cause of WTO and global trade. By integrating with the global economy, India has helped move 300 million people moving out of abject poverty. Not to mention the added advantage of getting rid of clunky Ambassador cars.
The persistent failures of India’s import substitution policy are well documented. Just look at the anemic GDP growth from 1960 to 1990 highlighted by an inefficient domestic industry and shoddy consumer products. Some of our policy makers and business leaders seem to like exports and hate imports, but