“When we look at history, every few decades a new nation rises as an economic powerhouse,” said Maruti Suzuki India MD and CEO Hisashi Takeuchi. Over the past 300 years, the rise of Britain was followed by the bigger rises of the US, other European nations like Germany, Japan and Asian Tigers (Hong Kong, Singapore, South Korea, and Taiwan). “The last three decades have belonged to China, as it became the factory of the world. And now, the next many decades belong to India," added Takeuchi. Amidst the existing volatile, turbulent, uncertain and trying times, there is an excellent opportunity for India to rise like a Phoenix.
However, if we take a closer look at history, there were unique and compelling circumstances, even if they were analysed in retrospect, which led to the rise and rise of these nations, followed by falls and plateaus. Britain gained due to the regular, but smaller, wars in Europe, which pitched it against other competitors. It won military battles, largely because of its naval force, and became a dominant economy. Ironically, the two world wars led to its long dormancy. The two wars in the last century worked in the favour of the US. The interim period between the two wars aided Germany.
Japan gained because of its post-war pacifism, which was forced by the victorious nations after World War II. With no military, and hurt pride, the nation backed its companies and businesses, as Japanese goods, technology and investments conquered the world. China, in some senses, became an economic powerhouse because it eyed neighbouring territories in Tibet, Taiwan and India’s Northeast, which it felt were the nation’s natural and logical boundaries. Business and investments were the dragon’s means to subjugate other nations, including those in Europe and North America. Not to mention the moves to control the seas, especially the Indian Ocean.
Pressures in the boardrooms and corporate headquarters of western multinationals came to the rescue and upliftment of the Asian Tigers. Faced with rising costs, especially labour, the manufacturing giants moved eastwards, even as Taiwan, South Korea and Singapore laid the red-carpet welcome for them. Hong Kong was caught in the middle. Both western and Chinese businesses coveted a presence there, and shadow territorial battles pitched the West against a rising China, which wanted to wrest its centuries-old position as a global political and economic giant. Hundreds of years ago, the Chinese Emperors felt that their empire was the centre of Earth. The Communist leaders wished to regain the past importance.
Large domestic markets helped the UK, the US and China. Although it sounds odd when we talk of a vast market in Britain, do not forget that during the imperialist period, the Commonwealth, which included parts of Africa and Asia, and Australia was its market. It had near-monopoly over the sale of local products across dozens of nations. The US managed to add more states, and its local market became huge after the Civil War ended the divide between the north and south. China, of course, is a known story. More importantly, the three nations protected their businesses in varying forms. Britain and China did not allow foreign competition in their markets. The US provided financial incentives and subsidies. The New Deal enabled it to dig itself out of the Great Depression years.
In the case of the Asian Tigers, the economic booms were led by exports. China, which left the domestic market for the local players, invited foreign investments to become the world’s manufacturing hub, with control over global supply chains across sectors. The mini-booms in the Middle East and Latin America were engineered by energy exports. Russia, as the Soviet Union, sold its products across the conquered and controlled territories, as well as to loyal allies like India. In a globalised world, which turned into an economic village, large companies set up bases across nations, some of which became major players as exporters in the connected world.
India has a large internal market. It enjoys cost advantages that can woo foreign investors. However, these benefits will not last forever. They need to be backed by efficient infrastructure. While India has improved, it is way behind China and the west. As leaders focus on local industry, and talk about making their respective nations great, again or for the first time, the opportunities in export-led growth are waning. The current tariff wars, and trade wars that the US is fighting with China, India and Russia are indicative of this trend. Future wars may not help India, as they may support others.
