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Mr. Inder Kr. Gujral

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Mrs. Shiela Gujral

Excerpts from the book "A Foreign Policy for India"

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"SUSTAINABLE ECONOMIC DEVELOPMENT FOR PEACE AND SECURITY"

Address by Mr.I.K. Gujral, M.P. & former Prime Minister of India at the UNDP REGIONAL MILLENNIUM MEETING Seoul, Republic of Korea, 30th October 1998

Mr.Strong, Under Secretary General, Distinguished fellow-panelists,

Ladies and Gentlemen,

As we gather here to address the challenges and uncertainties of the coming new millennium, I must pose to you one fundamental question. Why has the advent of the Twenty First Century not generated the same excitement as the dawn of this the Twentieth Century that is just concluding, did? Rather, the dying embers of this millennium reveal a mood that is sombre, full of self doubt and uncertainty. Humankind is not flush with excitement, as I dare say it was one hundred years ago, when a new society and a new economy were shaped every day in a boundless flood of new ideas and new technologies. There was electricity in the air as new streams of thought and belief competed for the minds of men and women. The idealism of the age generated many new and what were regarded then as subversive ideas - socialism, the abolition of slavery, the vote for women. Every day brought in fresh challenges to the established order as thinkers and politicians dreamed of ways to build the perfect society, liberated from divisions of class, creed and even of national boundaries. Meanwhile, the economy too was being revolutionized as inventions such as the railroad, the internal combustion engine, electric power, telegraphy followed one upon another in a steady, unremitting stream. Everyday, the border dividing the humanly possible from the impossible was shifting, and in favour of the former. Everyday some revolutionaries dreamt of transplanting Utopia and bringing it from heaven to earth. The innocence and vigour of the age was such that one can only quote Byron on the French Revolution, "Blessed was it in that dawn to be alive, but to have been young was very heaven."

Now, in the year of grace 1998 however, the prospect of the new millennium appears by comparison, lacklustre and full of doubts. There is little in terms of excitement or anticipation. The minds are seemingly closed, a counter revolution has overtaken the revolution and a drab orthodoxy has come to prevail. Perhaps this fatigue is itself the result of the stupendous achievements of mankind this past century, one in which man has been to the moon and back, human life expectancy has doubled, and the foundations of world government have been laid. Perhaps these are achievements that cannot be repeated every hundred years, and mankind requires some rest and reflection before moving on. Whatever the reason, the imminent arrival of the new millennium has done little to evoke the prospect of a better world, exploring new frontiers of human capability. The new millennium evokes, if anything, images of depression, conflict, ethnic hatred, fratricide, war. It is a new age to which man proceeds ahead reluctantly. Man is visiting the new century with the same enthusiasm as he would visit the dentist.

This sombre mood is reflected in the economic situation around us. The Asian economic crisis is today very nearly a year and a half old. Thailand was the first to catch the flue, when in June 1997 its foreign exchange reserves evaporated, forcing the authorities to abolish the dollar - Baht peg and leave their currency at the tender mercy of the world’s turbulent financial markets. Till this point of time, Thailand had been the fastest growing economy in the world, with average growth rates in excess of 8% per annum for most the previous decade. This year, in 1998, the Thai economy is expected to display negative growth of 8%. This unprecedented swing, from enjoying the worlds most rapid economic growth to suffering one of the worst rates of contraction, illustrates the dramatic reversal of fortune which to varying degree Asia as a whole has suffered.

Korea, our kind and generous hosts, have also had to suffer this affliction. Few of us could believe that South Korea, just recently admitted into the OECD, with its huge GDP of US$ 480 billion, and matching foreign exchange reserves, is seemingly vulnerable to any such economic decline. All of us know and admire Korea for its stunning economic performance which saw a hungry, war ravaged nation transform itself, in little over a generation, into a full fledged industrialized state. But the force of the economic typhoon was such that in the closing months of 1997, the Korean Government, unable to fully roll over it short term obligations and fend off attacks against the currency, the Won, found itself with no option other than becoming a ward of the IMF.

After striking Korea, the virus rapidly spread throughout East and South East Asia with Indonesia, Malaysia, Hong Kong and the Phillipines most severely affected, by an unstoppable, domino like collapse. The Indonesia economy is likely to contract by 16% this year - this is an unprecedented economic meltdown and one which will inevitably leave deep and unhappy scars on Indonesia’s socio-economic fabric. It is only now, late in 1998, that the first welcome signs of stabilization on Asia’s economic front are seen, but even so, no significant economic recovery is visualized until the latter half of 1999.

The Asian economic crisis of 1997-1998 is most starkly symbolized by the re-emergence of the first visible signs of hunger and malnutrition seen in Asia after a long time. One of the proudest of Asia’s achievements was the Green revolution that had abolished food shortages from all but the poorest and least developed of Asia’s regions. This year however, foraging for food have emerged even from middle income countries such as North Korea and Indonesia. The prospect of Asia leading the world into the new millennium has given way to talk of an Asia led, worldwide economic depression.

Why has this happened?

In posing these questions I am highlighting issues that I think are important, I have no desire to dishearten or depress listeners. I am an optimist at heart. Ultimately, the human situation is governed by the human mind, and there are no boundaries on the mind. Technology, a product of human thought, has made the modern world what it us today, with economists such as Robert Solow even putting a number on it and estimating that a full eighty percent of the world’s post-war economic growth was the product of technological development alone, and that only the balance twenty percent of this growth can be attributed to conventional economic inputs viz, land, labour and capital. John Maynard Keynes, the towering figure of economics, has written in his General Theory about how the ideas of economists and political philosophers rule the world. In his typically perceptive manner he has observed - "The difficulty lies not in the new idea, but in escaping from the old one".

The great contribution of the UNDP has been that it has never fought shy of questioning the received wisdom of the age to lay forth new ideas, approaches and thinking. And may I say that we have never been in greater need of new thinking than we are today.

The answer to my questions has something to with do with our forgotten emphasis on the ethical and moral aspects of mans development. The present economic crisis has forced many Asian countries to abandon long held national priorities and policies in order to blindly follow the orthodoxy handed down by Western multilateral lending institutions. The Asian crisis, following upon the collapse of communism, has reinforced the perception that there is only one path of successful economic development, and this is the western liberal model as prescribed by the new classical theoreticians of the Chicago school. Almost every economist today will tell you that a social optimum will be reached from market behaviour, and that individual selfishness, however, narrowly focussed and greedily obsessive it may appear to be will be guided by an invisible but fortuitously benevolent hand to join the bountiful mainstream of the common good.

I, for one, can never subscribe to this orthodoxy for it is clearly negated by the larger sweep of human history. There is never just one path to salvation. Even in economics there are alternatives. Thus we have on the one hand what one may call the Christian capitalism of caring, of compassion, of concern; this is quite different from the predatory capitalism of extortion, of exploitation, of expropriation. It is capitalism, in this predatory avatar that most Third World countries have been exposed to for centuries and we have seen that it leads nowhere.

Human selfishness can never be a secure foundation for human advancement. In the longer run, prosperity derives from what the human enterprise contributes to the world around it, not from what it extracts. It is this lesson that we have learn, understand and propagate if we are serious promoting the human cause.

There is a paradox governing all our lives, which we can often clearly see but perhaps never fully comprehend. The paradox is that human self interest does not really take the human very far rather, it is in giving that we gain, in sharing that we grow and only in serving the common good that we really serve ourselves. It is this paradox that we must come to terms with, as individuals and societies if we are to emerge from the alleys and bylanes of human survival to the open highway of progress. Similarly, as thinkers, leaders and statesmen searching for means to build properly functioning societies, we should stress approaches that address the poorest, most marginalized sections of society, and accommodate the last man. It is a matter of huge satisfaction that this approach has at least been implicitly recognized in the decision of the Nobel Committee to award this years Nobel Prize in economics to Amartya Sen, an Indian economist whose life-long work stresses the philosophy of broad social concern.

Here again I wish to pay a tribute to the UNDP for questioning the received wisdom of the time to focus on the broader issues of development. It is now no longer regarded as heresy to see that peace and development are two sides of the same coin. They are inherently co-related. However, it goes to the credit of UNDP that it has succeeded in giving this ideological premise a concrete manifestation that may help in improving the lives of ordinary people across the world.

As the world stands on the threshold of a new millennium, the time has come for us to take stock of what has been achieved, and how much still remains to be done. In drawing up this balance sheet, the Asia-Pacific region is, without doubt, perhaps the most accurate barometer. Its geographical expanse is a true laboratory to test the effectiveness of some of the policies and premises, investments and dividends of the global economic policies and prejudices we have pursued so far.

There is a reason why I say this. The Asia-Pacific region contains the largest segment of the world population. It consists of the two most populous nations in the world. It has countries which have the highest rates of economic growth and consumption, and countries which are still living at the very edge of survival. It is an area which has seen the very successful regional grouping in the developing world and it is an arena which has seen the most long drawn-out war in the last five decades. It is also a region which has displayed the most remarkable adaptability to changing circumstances. At the same time, I am dismayed as I have said, to see that the cherished Asian dream is endangered. As we have seen, country after country of the region is catching what is called the Asian flu. I hope it is valid for me to seek for a credible explanation for this malady.

One of the many contradictions with which humankind has to live with is that there is now a world market but there is no world community. We still live under the conflicting pulls of nations and nationalisms. Although there are multiple sources of power : economic power, technological power, information power and political power - in the interplay of the forces that is shaping the fate of humankind since the military power is still predominant, the developing countries continue to place their confidence in guns and armaments for their security. This calls for us to look at late Mahboob ul Haq’s perception of security. He said, "We need to fashion today a new concept of human security that is reflected in lives of our people, not in the weapons." From this he had proceeded to devote his life and time to legate to us a cogent, and persuasive framework of ideas and perceptions emphasizing one basic principle that economic development would be unsustainable without a matching social change. This also showed with great clarity the fact that the indices of measuring economic prosperity cannot merely be such mechanical variables as GDP, GNP or per capita income.

Fifty years of economic experience has led me to believe that there is an urgent need to go behind mere statistical data. We have to see if the economic prosperity, at the macro level, has made actual difference to the lives of ordinary people. Do they eat well? Do they have access to better health care? Are more people literate? Has economic growth translated itself into equal opportunity? To what extent has economic growth made a real dent in poverty alleviation? Have the economic benefits really percolated down, even if the statistics indicate that growth has gone up? The one reality that emerges quite clearly is that progress is a composite process. It must effect the lives of people and not merely as unrelated statistical data.

The very approach also brings into question - and for some this may be considered blasphemy - the efficacy of the Bretton Wood institutions. Despite the lingering doubts many in the developing world and in the Asia-Pacific region were forced to build their economic policy infrastructures under the shadow of the powerful international financial institutions such as the International Monetary Fund and the World Bank. It is not my intention to doubt their intentions or bonafides. It is however my intention to question if some of the formulas which we were asked to accept as gospel truths, have indeed proved themselves to be so? I do notice now that even within the IMF and he World Bank, there is some degree of introspection. This is a welcome development, but allow me to say that for many countries it is a case of a doctor without a valid degree accepting his guilt after the patient is dead.

We are belatedly realizing that the most important challenge in the coming decades for the Asia-Pacific region is to focus on the human development factors. Global economic approaches and thinking which ignores this factor risks its relevance. I take this opportunity to pay my homage to a man, who is no more with us, but who devoted his entire life to the elaboration of such a concept; Ladies and Gentlemen, I refer to Dr. Mahbub-ul-Haq whom we all miss today. This year’s Nobel prize for Economics has gone to Dr. Amartya Sen who shared Mahboob’s beliefs. He has devoted his life to argue that there is more to economic growth and change, than merely economic statistics at the macro level. I take this opportunity to pay tribute to these two stalwarts and to express the hope that their ideas will guide the emerging economic edifice of the Asia-Pacific region in the 21st century.

In today’s world globalisation is accepted, and indeed it is a reality. But I do not believe that the world has yet fully understood how to cope with all the consequences of globalisation. The world may have shrunk to become a village for international financial players, but national priorities have not become uniform or homogenous. Consumption may have grown at an unprecedented pace in this century but, as the latest Human Development report says this growth has not yet yielded the needed benefits. I am tempted here to quote from this report for its simply stated truths.

"Poor people and poor countries need to accelerate the growth of their consumption, but they need not follow the path trodden by the rich and high-growth economies. Production techniques can be made more environmentally friendly. Environmental damage can be reversed. The global burden of reducing environmental damage and underdevelopment can be shared more equitably. And patterns of consumption that harm society and reinforce inequalities and poverty can be changed. Above all, we must make a determined effort to eradicate poverty and expand the consumption of the more than one billion desperately poor people who have been left out of the global growth in consumption."

There is also a problem created by the sheer mobility of finance. Trillions of dollars can move from one part of the globe to the another in the fraction of a minute. Volatile capital flows have indeed been held responsible for Asia’s current economic predicament. Several governments in this region are trying to find the needed mechanisms to cope with unprecedented degree of volatility generated by short term profit seeking sentiment. Somewhere amidst the hot house growth of global finance people tend to forget that they are dealing with real people, with real problems and varying priorities. We cannot have a situation where certain elites in the developing world continue to be globalised while large chunks of the population continue to remain marginalised.

Those who deal with global economic policies, especially in the developed countries, must understand the policies that they espouse must have a human face, or otherwise their policies can never achieve the desired impact. It is becoming increasingly clear that in order to achieve sustained and enduring economic growth at a global level there is a great need to invest in such basics as primary education, basic health care and poverty alleviation. Let us recognize that an educated and healthy population is an economic sine qua non for enduring economic growth. The time has come for us all to consider whether the GDH - Gross Domestic Happiness - is as important, if not more, as the GDP - Gross Domestic Product.

It would be a grievous fault on our part if in the coming years we do not change the track followed so far and let the massive poverty continue to haunt us. It’s a matter of regret that development is still more talked about than acted upon. The poor nations expect the rich nations to devote a larger portion of their wealth for the development of the poor nations. But the rich nations wish to give as little as they must and taking from the poor nations as much as they can. This is the tragic core of the prevailing global economy.

However, our own default is horrendous. We ourselves have failed to do what we should have done for our development. Many nations, India is one of them, fought for many years with their colonial masters to gain independence. But soon after achieving it. We have failed to devote the better part of our resources for developing the societies and the people. The models of development have been drafted in the rich countries for the poor countries. Sometime these models have been willingly accepted by the leaders of the poor countries. More often the leaders of the poor countries have been compelled to accept such models. What is tragic is that these compulsions have been created in most cases by the failures of the leaderships of the developing nations.

The leadership in most cases have opted for vertical rather than horizontal development. The rich have become richer, the poor poorer. What is astounding is that unequal and uneven development has received the stamp of approval of powerful nations and international institutions. The World Bank and the IMF have systematically discouraged investments in social sectors.

On our own part we must plead guilty for the massive poverty that haunts South Asia, the state of very slow and for decades negative growth in the continent of Africa, for the plight of millions in Latin America. Our failures have been in three areas – lack of enlightened leaderships, pervasive cronyism, equally pervasive corruption, the failure to build strong institutions in our political economies, and a poor will to encourage economic and political co-operation among ourselves.

The United Nations which has long stood as a symbol of ‘one world’, has however failed to give this symbolism any real shape or substance in times of hardship and governance. Perhaps the UN cannot be a world government until there is an all inclusive world community mature enough to feel the need for and will to work for a world government. Hopefully this will come in the 21st century when the world will be woven together.

Despite several handicaps and the unhelpful hegemony of the P-5, the United Nations is doing a lot of good work in many fields in countries all over the world specially developing countries. Peace keeping may be getting more publicity, but in my view the UNDP is playing a very important role. With rather modest budgets it is persistently focusing on development of human resources in the developing world. It’s Annual report on human development pricks a grim reminder to the conscience of humankind reminding of how very much remains to be done. These Annual reports persist in drawing the world’s attention to the crucial fact that without developing human resources, without education, health, sanitation, pure drinking water and habitation for the great masses of mankind there can be no real development of the world’s political economy. These remain unfinished or partly finished tasks of this century that must not be transported to the next millennium. I hope our deliberations here will prove helpful in seeking the passage to next millennium more clearly.

Thanks

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Bio-Profile :
Mr. Inder Kr. Gujral

Bio-Profile :
Mrs. Shiela Gujral

Excerpts from the book "A Foreign Policy for India"

Selected Speeches

Latest Articles