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Globalization And Manipur ‘” Strengthen The Scientific And Human Foundation Of Development And Act Swiftly On Its Core Competencies

Right thinking is said to be the ultimate human resource of a nation. Today what we require is a ‘well-educated adaptive population’ rather than just educated men. The greatest enemy of good thinking is, perhaps, complexity and lack of fair knowledge. It may be recalled that no society remains completely stagnant with complete inaction. The dynamics of growth, visible and invisible takes place in one way or other. Even though a baby sleeps, the baby grows. As such one cannot raise the level of understanding merely by going on the rut of same beaten track. We educate to change and produce something new. One has to accept the emerging imperatives of the fast changing world.

The world has changed a lot and is going to change, perhaps, faster under the active and highly stimulating influence of science and technology. We have just witnessed the exciting wave of “Information Revolution” which produces new urges, new temptations and new equations. Now the new brave world is prepared for a bigger drive to maturity. Interdependence and inter-linkages have now acquired a new dimension rendering the dogmatic traditional assertion on prolonged isolation and insularity, obsolete and counter-productive. The so-called technology (technical know-how and specific skill) which is the kingpin of modern development and the master key to all forms of human achievement keeps on changing. One has to accept the objective message of this changing wave. New technology makes men wiser, more alert and responsive to new challenges. One has to learn more about increasing returns to scale in “new ways of doing the same old things”.

The question before us is about globalization. Ever-enlarging circle of activities is the crux of the global integration: economic and non-economic. Of course, this wave carries with itself the seeds of “opportunities” and “risks”. Please look at your own kitchen, drawing room, bed room, and reading room where you find color TVs with multiple channels as a good friend- as one essential item in the package that is part of modern life.

We do enjoy global news, global events and global achievements. BBC gives a global picture. DDK gives a national perspective. We get quick communication with a small mobile phone. Sitting in our small room we can learn about “others”. Here we are in the process of globalization. How can we stop our mental temptation of learning about others? It is surely odd and bad to accept or reject ideas based on where they come from.

The message is simple. Where there is more competition, there is efficiency. Where there is efficiency, there is strength. Where there is strength, there is growth. Competition gives birth to efficiency. Efficiency is mother of strength. Strength is pillar of development. It may be suicidal to think of growth without competitiveness. In this sense globalization has become a fact of growing competition beyond traditional frontiers – rather than an option. Globalization is a process – not a particular event at a point of time. Necessarily, we have today, knowingly or unknowingly; become a micro unit of greater global network. Now we have to act on the “chosen form”, prepared and carefully worked out model, – based on our own ascertained “core-competencies of marked comparative advantage”. Otherwise, we may consequently feel simply left out with empty gesture of defiance and inward disgrace.

The strong domestic economic structure has now to act as foundation of competitive partner of global development process. In a way globalization begins at home. Availability of opportunity is one and utilization of that opportunity is another. Unfortunately at the moment in Manipur one gets terribly disillusioned and painfully disappointed to work as Entrepreneur or bigger scale in the local atmosphere vitiated, poisoned and considerably surcharged with vicious circles of “Unjustified Risks”, “Unjustified Costs”, and “Unjustified Barriers”. The investment atmosphere is visibly hostile.

Today in Manipur even elementary justice seems to be a cry in wilderness. Capable Governance has, it appears, been buried into oblivion. The economy is in disarray. The creative autonomy of intellectual structure gets disturbed while we require structural maturity and institutional harmony. Please remember man wants to invest his labor and capital only when he feels good, happy and confident; because investment decision is always forward looking. At the heart of the problem lies a basic tension of patriotic arrogance.

But the hard fact remains clear that the job of development of Manipur is too big for Manipur to do alone. Even before any green signal of FDI is seen, why should we shut the door? They may refuse to come. The general atmosphere is largely disturbing. FDI comes with three distinct advantages, viz

A) Capital;

B) Better technology and

C) Greater market linkages.

It is not merely a question of planning of economy but a question of managing the economy, redesigning the policy settings in the wake of hard realities of global linkages. There should not be any area of confusion between “Preference” and “Priority”. Interestingly Manipur undertakes “plans” without appropriate “plan implementation”. Challenge is sweet, because life without new problems becomes monotonous.

Principle and practice of globalization

Now it may be interesting to have a fresh reference to the very concept of globalization. Any exercise or any attempt undertaken keeping in view world standard, worldwide preference and worldwide imperatives: across traditional geographical frontiers speaks of globalization. Growing economic interdependence and ever-enlarging market integration are two basic developments. And now both scale and scope have to be reviewed, revised and redefined in response to new mandates of higher interaction. Outlook, design of organization and model of adjustment need to be scientifically updated.

In other words, the act of globalization is largely forward looking and equally exciting. It is associated with increasing cross-border movement of capital, goods, services, technology, ideas and people. As such at the centre lies tension of adjustment, adaptation and creation. The increasing extent of globalization is reflected in the tremendous growth of trade in goods and services. From 25 percent of World GDP it has become 46 percent in 2003-06. Capital flows amounted to 10 percent of global GDP. It may not be nice to look upon globalization as brakeless train wreaking havoc or a free lunch. Essentially it has developed into a new phenomenon of security of market access.

We come across three waves of globalization the first of which started more than 100 years ago – between 1870 and 1914. During this period exports nearly doubled and foreign investment tripled in Africa, Asia and Latin America. International migration was particularly dramatic with about 10 percent of world’s population moving from Europe to the New World and from China and India to the less populated neighboring countries. However this impressive wave of globalization was virtually reversed during the First World War, the Great Depression and the Second World War.

The second wave of globalization lasted from 1950s to 1980s and involved only developed countries. Trade and investment were growing among European countries, North America and Japan aided by a service of multilateral agreement on trade liberalization under the auspices of the General Agreement on Tariffs and Trade (GATT).

The third and current wave started from 1980s and continues to-day driven by two main factors:

(1) technological advances and

(2) liberalization of trade and capital markets.

More and more Governments of developing countries choose to reduce protection of their economies from foreign competition and influence by lowering import tariffs and minimizing non-tariff barriers such as import quotas, export restraints and legal prohibitions. A number of international institutions established in the wake of the Second World War – including the World Bank, the International monetary Fund and World Trade Organization play important role in promoting global, free trade in place of protectionism. For participating countries the main benefit of free trade stem from the increased access of their producers to larger international market.

For a national economy that access means an opportunity to benefit from international division of labor by moving its resources to the most productive uses, ‘” by specializing in producing and exporting what it can produce best, while importing products utilizing their country’s comparative advantage in the global market more efficiently and their consumers enjoy a wide variety of domestic and imported goods at lower prices. In addition, an actively trading country benefits from new technologies that spill over to it from its trading partners through the knowledge embedded in imported production equipment. These technological spillovers are particularly imported for developing countries because they give them a chance to catch up quickly with developed countries in terms of rising productivity.

But a country joining the global race also faces considerable risk associated with tough international competition. But one can argue that international competition creates the necessary pressures to prevent economic and technological stagnation and to stimulate domestic producers to produce competitive goods at competitive costs. Thus globalization means being able to manufacture in the most cost-effective way possible anywhere in the world. It means being able to produce raw materials and drawing management resources from the cheapest source anywhere in the world. It means having the world as a market; but in real life the physical and human capital in the uncompetitive (sick) industries in underdeveloped areas is not easily transferable to other more productive uses for many reasons ‘” such as lack of additional investment, shortage of information about market behavior and new technologies.

Meanwhile, there is also apprehension of rising unemployment and slow economic growth resulting from these possible changes. Not surprisingly, Government of underdeveloped regions often argues that many of their national industries require temporary protection until they become better established and reasonably competitive and less vulnerable to aggressive foreign competition.

Economists justify protectionist policies mostly as temporary measures. The costs and benefits of participation in global economic activities largely depend on such country-specific factors such as:

(a) the size of a country’s domestic market,

(b) its natural resources and

(c) its geographic location.

Chinese experience:

China opened its economy to global integration in 1978 but with enough caution. The ‘dual-track-system’ followed by the Chinese government allows both state control in key areas and free-market-guidance in some spheres. China achieved overall-total-factor productivity growth of more than 3 percent during 1985-94 ‘” exceptional by international standard. China has developed ‘halfway’ forms of industrial enterprises that are neither state owned in the classic sense, nor privately owned in the capitalist sense. One important configuration is the Township and Village Enterprise (TVE) owned by local government and citizens. These TVEs produce consumer goods for domestic and international markets.

TVEs are of two types. The first, owned by the local government, act like a holding company to reinvesting profits in the existing or new ventures as well as in local infrastructures. The second, more recently developed type is much closer to private enterprise controlled and owned by an individual. Still they too maintain close fiscal ties to the local Government.

The performance of TVEs has been extraordinary. Their share in GDP rose from 13 percent in 1985 to 31 percent in 1994. Output has grown by about 25 percent a year since mid-1980s. The non-state share of industrial output in China rose from 22 percent in 1978 to a startling 66 percent in 1995. TVEs have created 95 million jobs in the last fifteen years.

The commendable achievement of TVEs is attributed to:

* Strong Kinship (Risk and Reward sharing between entrepreneurs and local Government)

* Decentralization plus Financial Discipline

* Competition

* Market Opportunity and Rural Saving

* Links with State Enterprise Sector.

We can learn good lessons from Chinese TVEs experience about the importance of liberal entry, competing, hard budget constraints, and appropriate fiscal incentives or local Government. Special mention may be made of me fact that strong Kinship – links among Chinese villages encourage responsibility in entrepreneurs. The greatest asset of Chinese society is the state of mind or objectivity, sincerity and discipline. Really right thinking is best asset. Above, all, China adopted a practical strategy which gives them enough strength to absorb the cost of deceleration and loss without fundamentally destabilizing the economy.

General scenario of Manipur

Now from exciting and convincing Chinese experience let us move on to Manipur. The spirit of competitive development is by and large derived from the prevailing socio-economic scenario. To-day either by accident or by design or by ignorance, we are facing 13 problems in the major sectors as shown in Table I:

Now the small economy of Manipur looks sieged. The State suffers visible flight of capital including human capital’” a kind of ‘˜brain-drain’. The net result is, perhaps, the terrible end of socio-economic stagnation vitiated relentlessly by the spiraling process of “easy money” under coercive atmosphere and open threat and defiance. “A failed State mired in conflict will be outstretched in resources and institutional capacity – and able to manage only certain interventions” (WDR, 2004, p-12).

The ‘˜soft State’ like Manipur is plagued with grim issues associated with crimes, corruption and non-compliance leading to a new burden of rising unjustified costs imposed on micro-entrepreneurs. In fact, the additional costs associated with crimes and corruption is another fixed cost. The economic relation has been made so costly and social relation destroyed.

Personal relation has been made the only basis of activities undertaken and to be undertaken. To-day young and promising entrepreneurs start facing a new sense of insecurity and uncertainty. The unjustified “time costs” incurred in the process of meeting the formalities of compliance with regulatory mechanism are examples of corruption which infect the highest level of Government, distort policy making and undermine the credibility of Government. Even a small matter of registration takes more than six months in Manipur while it takes only two days in Australia.

Very unfortunately corruption is subject to increasing returns – an increase in rent seeking activities makes the corrupt devices more attractive. One becomes rich only with “unearned income”. In a predatory state like Manipur, corruption consumes the surplus of the economy.

Today the Government offices have now been treated as Income-Generating Personal Property ‘” not for public services. Everyday is a new day with new income. To-day very few people would like to go to public offices, public hospitals and public secretariat. People feel they will be “stranger” in their own homeland. The growing alienation, the growing gulf and the growing gap between the two entities (Government and people) owe their origin to the colonial heritage of personality-cult and corruption. Growing social alienation weakens the tax base and tax compliance.

We have unduly personalized the official relation so much that it has acquired a new character of “Patron-Clientelism”. A third factor has been created and without the help of these “link-men” (third factor), possibly one cannot look forward to the ready and positive response from the so-called “Income-Generating Personal Properties”. To-day people can get many things done without any labor. Just pay money; prepare Akash Bills, get fake certificates; fake appointments, fake patta, fake ex-gratia payment and fake registration. Really we notice a new parallel black economy and administration. Paper works of contracts and supply in the remote inaccessible hill areas are an attractive part of the zero-game.

As regards the unjustified risks, let us remind ourselves of the advantages of secure property right. Secure property right links “efforts” with “‘˜rewards” assuring all firms and economic players that they will be able to reap the fruits of their investments. “The better these rights, the stronger the link between effort and reward; and the greater the incentive to open new businesses, to invest more in existing ones and simply to work harder” (WDR, 2005, P-79). Secure and clear property rights establishing proper link between effort and reward in Poland, Romania, Slovakia, Russia and Ukraine could increase the reinvestment of profit by 14 – 40 percent.

Now the question is how to protect this right? This calls for a capable administration to proper investment climate and enforce necessary rules and regulations without fear and favor. Because investment is forward-looking. Firms invest to make profit. The decision is affected by the assessment of opportunities, incentives and risks in particular location.

Investment is not merely an act undertaken at a point off time only. It is a continuous process. Based upon the changing perceptions and economic considerations the decision also acquires a character of continuity with change. Failure to raise productivity and adequate resources to meet rising investment requirements and revenue-expenditure implies failure to run the economy. This is the reason why “Resource-Plan” and “Reform-Plan” go together hand in hand in harmony. Manipur, it appears, has neither “Resource-Plan” nor “Reform-Plan” at the moment. This is perhaps, the weakest area in the economic exercise.

Investment is linked not only with physical and market connectivity but also with “security-connectivity”. The solid foundation of efficient infrastructures enriched with stability and sensibility is the springboard for spread -effects of commendable economic initiative. To-day we are required to remember four prerequisites (sine-qua-non) for investments to bear the desired benefits.

SQN 1: The will of the people and their preparedness to make sacrifices for the cause of development.

SQN 2: Political maturity and stability,

SQN 3: Atmosphere of peace and co-operation and above all Meticulous Planning (U.N.)

Managing investment activities is really tough and challenging. It is in a way part of learning-by-doing. The investor observes critically and supervises the behavior of production cycles. At one point of time new excitements and new temptations are generated and the investor is forced to undertake innovative moves to meet emerging concerns. This is a difficult period; but it is a moment of crucial test. Manipur does need large investment from within and outside. Unfortunately the state faces uncommonly high hurdles with very limited resources.

Although North-East is a late comer to development, the region has recently started experiencing new excitements, new temptations and new equations on many fronts. Connectivity has picked up. Disability of occupational multiplicity is getting replaced by better professional pursuits. Poverty is getting reduced from 33.78 percent in 1993-94 to 28.54 per cent in 1999-2000 in Manipur, from 40.87 % to 36 % in Assam and from 37.92 per cent to 33.87 per cent in Meghalaya. However much remains to be done to change the “culture of poverty”.

The incidence of unemployment remains fairly high with 4.6 percent of the labor force being openly unemployed in Assam in 1999-2000 followed by Manipur 3.5 percent. Paradoxically there is enormous amount of work to be done in the region but few jobs, leading to semi-stagnant situation. Both per capita income and per capita consumption expenditure are low. The per capita income of Manipur was only Rs. 16,944 at current prices in 2000-2001 as against Rs. 59,538 of Goa and Rs. 29,544 of Punjab. The per capita monthly consumption expenditure of Manipur was only Rs. 596.36 in 2000, while that of Delhi was Rs. 1316. Assam does badly with only Rs. 473.42. The net result is “welfare loss” resulting from the pattern of meager consumption expenditure on inferior commodities at higher prices. It is a fact that both growthless jobs and jobless growth may burn the two ends of the small open economies of the North-East. The task is really difficult. The diseconomies of being “small”, “rural”, “informal” and “heterogeneous” continue to pose a formidable concern. This is a “development-challenge”. Area-specific model of manpower development and development strategy based on the abject realities and traditional skills may be rewarding.

We talk much of employment but much less of employability. Employment is function of employability and availability of complimentary inputs including “unpaid factors of production” (called physical infrastructures). Creation of employment is one and utilization (realization) of the created opportunity is another.

We cannot force someone to work. Confidence is born largely in the womb of a fair degree of employability duly fostered by durable peace, stability and cordial atmosphere. Today Manipur has become a land of PCOs, NGOs, Self Help Groups, Roadside small hotels and rickshaw pullers. Even a decent self-employment requires four conditions ‘” largely personal. Credit creation is not necessarily confidence building. Confidence goes very close to employability and productivity. Who to look at the time of difficult situation remains to be answered.

The Indo-Myanmar Border Trade, 1994-95 generated a new wave of excitement. In spite of a number of teething problems such as lack of adequate institutional response, knocking barter component, difficult physical connectivity, weak banking facilities, rising threat of insurgency (new economics of insurgency), long chain of authorized and unauthorized check posts (68 check posts within a distance of 210 kms. From Moreh, Manipur to Dimapur, Nagaland), there are convincing evidences of increase. Shop establishments recorded annual percentage increase of 11.48 during 2000-2005 (till date). Direct employment also recorded the annual percentage increase of 11.61.

The other side of the coin is really uneasy. The strong rather ‘” rising tendency for “big and immediate gains” from “small deals” (drugs and guns) may be counter productive in the long run in the border region. The geo-politics, it appears, has got mixed up with “trade activities”.

What to do now?

Now, it is fairly clear that the North Eastern Region including Manipur has to go with the process of globalization otherwise crippling inefficiencies of prolonged isolation may intensify the long shadow of pre-mature future of this small open economy of Manipur. Given the hard fact of a new reality that globalization is a visible process of new equations of productive forces, it may be highly imperative for us to equip the State with a thoroughly redesigned policy initiatives and policy coordination; ‘” with the new mandates of root and branch transformation, ‘” duly inspired by a New Socio-Economic Vision of its own ‘” say Economic Freedom of Manipur by 2020 or New Millennium Goals of Manipur, ‘” not necessarily a mere extension of national exercise. The Vision may go a long way in addressing the old age concern of over taxation of inconsistencies suffered by us.

What is required is a clear understanding of rationality of Vision and Unity of Approach ‘” not merely rationality of plan and market. We must be fully aware of the costs of leaving things as they are. We have to navigate the direction of change. We may now hopefully suggest a two-pronged strategy for a science-based knowledge linked economy so that we can participate in the global competition with confidence.

A. Short-Term initiatives such as:

A1: Tackling of supply-bottlenecks and cost overrun etc

A2: Setting up of Economic Zones

A3: Improving connectivity

B. Long-Term policy steps such as:

B1: Addressing the institutional weaknesses and redressing of institutional strength.

B2: Improving’ Neighborhood-factor’.

B3: Improving physical and human resources

B4: Initiating structural change.

B5: Optimizing the utilization of:

> Land resources

> Hydro resources

> Bio- resources/herbal resources through intensive molecular research and extension (Ref: Core Competencies)

> Food processing industries

B6: Scientific documentation of traditional techniques and system of Manipur

B7: Strengthening of scientific foundation of development

B8: Expanding global market linkage

B9: Strengthening of Governance

Role of Government:

It may be equally interesting to have a fresh reference to the changing roles of government at different stages of development. Every sensible government takes care of five fundamental tasks:

A: Establishing foundation of law

B: Maintaining non-distortionary policy environment

C: Investing in basic social services and infrastructures

D: Protecting the vulnerable

E: Protecting environment

Globalization does not rule out the defined responsibility of Government in these five core areas. The vital challenge is to build a home-grown-commitment mechanism rooted in the domestic institution.

Every stage of development needs proper parenting. Enforcement of the Rule of Public Law is very important without which the community gets into the deep trap of Lawlessness Syndrome negating the productive process. Hence, good Government is a vital necessity for development. Enabling institutional environment which can be ensured by a committed Government is the foundation for better performance.

It may be exciting to note the steady steps undertaken by West Bengal and Kerala – two Communist ruled States – to prepare for a more effective State. In West Bengal, under the leadership of Buddhadev Bhattacharya, even administration of tourist hotels has been liberalized and negotiations has been made with FDI. Government steps in where market fails; and market steps in where Government fails. This is what West Bengal follows.

While West Bengal has taken a wise giant step to reap the multi-dimensional benefits of liberal opportunities of globalization, Manipur has yet to learn the basics of maintaining the Gandhi Memorial Hall and also of maintaining one lake ‘Loktak’ and one dam (Singda). The issue of Tipaimukh Dam could be settled in the larger perspective of global competitiveness. Now the State Government should be geared up to produce dramatic effects through a small change born out of dynamism of global competition. We do certainly need stronger Government with clear vision and understanding. Manipur has to go ahead with stronger ‘reform measures’ to take fuller advantage of globalization and at the same time to avoid tantalizing impacts. Because growth comes out of advanced steps. A change of guard for a change in the economy is the need of the hour.

*The article is written by Prof Mohendro Singh

(Courtesy: The Sangai Express)

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