Gulliver's Effect
Thanks to the slowly brewing post-Washington consensus that makes the case for a more tailor-made approach to boost export competitiveness through a mix of supply side policies and institutions, one sees on the horizon an active economic strategy that departs from a faceless wave of deregulation to lend itself to the neoclassicism of comparative advantage.
Until now, when it comes to our industrial growth model, our imagination has always turned to our neighbours. Nearly everything we have thought, strategised and done – the selection of industries, business environment and the mix of micro and meso policies – have been the result of observing and studying the experiences of our giant neighbours if not the hearsays from the distant West. But a minority of thinkers and doers have recently recovered the ground to make the case for a deliberate differentiation to accommodate the so-called “Gulliver’s effect”.
The Ranas set up the first tier of our modern industries in the 1940s by issuing a pragyapan patra requesting the East India Company to lend us some fifty ethnic Marwaris to help the ruling elites of Nepal set up their businesses. The waves of protectionism and economic liberalisation that followed in the 1970s and the 1990s were more the tracing of our neighbours’ footmarks. What this suggests is that our economic history shows some degree of aping rather than carving out of a niche for ourselves in the regional dabalee.
Thanks to the slowly brewing post-Washington consensus that makes the case for a more tailor-made approach to boost export competitiveness through a mix of supply side policies and institutions, one sees on the horizon an active economic strategy that departs from a faceless wave of deregulation to lend itself to the neoclassicism of comparative advantage.
India and China might come across as the obvious Gullivers of the region, but even a minor player like Bangladesh makes the point well. Nepal and Bangladesh are an antithesis: One ascends high to touch the sky, the other spreads thin to embrace the ocean. In fact, the hundred and fifty thousand square kilometres of land that the two mighty rivers Ganga and Brahmaputra circumambulate parting their ways marks the Nepali territory - the same size of territory where they embrace each other is Bangladesh . Not to mention the irony that Nepal aspires to grow on the heels of its hydropower while Bangladesh nurtures the dreams of its under-earth natural gas. The industrial trajectories each can and should pursue must echo their geographic antithesis.
And this has been seen in the past few decades of its economic history. Bangladesh hails the success of its people’s power – the entrepreneurial microcredit programme; one of the few success stories from Nepal have had more to do with nature’s child – community forestry. Both set feet into the infant garment industry post-Multi Fibre Agreement in 1974. When the MFA concluded after three decades, the contrast was more than clear: Bangladesh competes well in terms of cheap manufacturing costs, Nepal doesn’t. The chosen few that have survived have set the example that Nepal will do better in niche and not mass manufacturing.
There will be other lessons to learn soon. These should remind us how steadily our knowledge of the possibilities of the economic trajectories has deepened as experience has led us towards complementing from competing. The stronger the forces of globalisation emerge, the real and immediate become the need to notice our differences.
And it will require a rethinking of everything we assume we know about the industrial policies and institutions we need for our economic survival, especially in the age of globalisation.
