Prof D Mukherjee
In the latter half of the 20th century, South Korea, Taiwan, and Singapore underwent remarkable transformations, transitioning from low-skilled labour-intensive economies to capital-intensive manufacturing powerhouses with high per capita GDP. This transition was not accidental but was meticulously orchestrated through the adoption of contemporary technology and strategic industrial policies, propelling them to become world manufacturing hubs. Their journey offers invaluable lessons for India as it aspires to become a fast-growing industrial nation. The socioeconomic developmental journey from low skilled labour-intensive to high-techsavvy manpower evolved east Asian economies of the Republic Korea, Taiwan and Singapore is quite likely to become ‘push forward approach’ for India. At the heart of their success, lies the astute management of industrial policies, guided by a vision to harness the potential of modern technologies. Dr. Nathaniel Lane, Associate Professor in Economics at Oxford University, underscores the significance of this approach in his research. According to Dr. Lane, the adoption of technology-driven industrial policies played a pivotal role in the economic transformation of these nations.
One key aspect of their industrial policies was the prioritization of investment in education and skills development. Recognizing the importance of human capital, they invested heavily in education, ensuring a skilled workforce capable of adapting to technological advancements. This emphasis on education laid the foundation for their transition to technology-intensive industries. Moreover, these nations pursued proactive measures to attract foreign direct investment (FDI) and foster a conducive business environment. They offered incentives such as tax breaks, infrastructure development, and streamlined regulatory processes to lure multinational corporations (MNCs) to set up manufacturing facilities. By leveraging FDI, they gained access to advanced technologies and managerial expertise, accelerating their industrial growth.
Furthermore, the government played a pivotal role in facilitating research and development (R&D) activities and fostering innovation ecosystems. Policies supporting R&D investments, collaboration between academia and industry, and the protection of intellectual property rights spurred innovation and technological advancement. As a result, these nations were able to move up the value chain and compete globally in high-tech industries. Additionally, strategic planning and coordination between the public and private sectors were instrumental in shaping industrial policies. Governments acted as facilitators, providing infrastructure, funding, and incentives, while the private sector drove innovation and competitiveness. This synergy between the two sectors propelled industrial growth and fostered a culture of entrepreneurship.
The success of South Korea, Taiwan, and Singapore serves as a compelling model for India’s industrial development strategy. To emulate their achievements, India should prioritize investment in education and skills training to build a capable workforce. It should also create an attractive business environment to attract FDI and foster innovation-led growth. Moreover, India needs to invest in R&D and create robust innovation ecosystems to drive technological advancement. Collaboration between the government, academia, and industry is essential to translate research into commercial applications and spur industrial growth. The transformation of South Korea, Taiwan, and Singapore from labour-intensive to technology-driven economies offers valuable insights for India’s industrial development journey. By adopting contemporary technology and implementing strategic industrial policies, India can position herself as a fast-growing industrial powerhouse on the global stage, driving economic prosperity and raising living standards for her citizens.
As India embarks on her journey towards rapid economic development, the strategic utilization of capital expenditure and the attraction of foreign direct investment (FDI) emerge as critical imperatives. In the contemporary global landscape, India stands as a welcoming nation among its counterparts, offering a conducive environment for foreign investors. Leveraging this favourable climate, coupled with transformative initiatives such as the recent Chabahar Port deal with the Islamic Republic of Iran like situations, India can propel her industrial infrastructure and international trade to unprecedented heights. Foreign direct investment serves as a catalyst for economic growth, injecting capital, technology, and expertise into domestic industries. By wooing foreign investors, India can access the substantial resources needed to upgrade its industrial infrastructure swiftly. Capital expenditure directed towards infrastructure development, technology adoption, and skill enhancement will lay the groundwork for sustainable economic expansion .India’s status as a welcoming nation is underscored by its proactive measures to attract foreign investors. The implementation of investor-friendly policies, such as liberalized FDI norms across various sectors, tax incentives, and expedited approval processes, has positioned India as an attractive destination for global capital. Additionally, initiatives like the Make in India campaign and Digital India program signal India’s commitment to fostering a business-friendly environment conducive to foreign investment. The Chabahar Port deal holds immense promise as a strategic gateway for India’s international trade and commerce. Situated in Iran, the Chabahar Port provides India with direct access to Afghanistan, Central Asia, and beyond, bypassing Pakistan. This geopolitical advantage not only enhances India’s connectivity with key markets but also reduces transportation costs and transit times, thereby bolstering trade efficiency. Moreover, the Chabahar Port deal opens avenues for enhanced economic cooperation and regional integration. By leveraging its stake in the port, India can facilitate greater trade flows, attract investment in port-related infrastructure, and foster economic development in the region. The port’s strategic significance extends beyond trade facilitation, serving as a linchpin for India’s broader geopolitical objectives in the Indo-Pacific region.
In light of the recent Indo-Iranian friendly and understanding negotiations and foreign diplomacy may be adopted as a role model for dealing with other nations across the globe. This deal characterized by evolving geopolitical dynamics and shifting global alliances, India’s strategic investments in infrastructure and international trade assume heightened importance. The ability to navigate complex geopolitical landscapes and capitalize on emerging opportunities is paramount for India’s economic resilience and growth. Besides, India’s participation in initiatives such as the International North-South Transport Corridor (INSTC) and the Ashgabat Agreement underscores her commitment to enhancing regional connectivity and trade facilitation. By leveraging these multilateral frameworks, India can diversify her trade routes, reduce dependence on traditional transit corridors, and mitigate geopolitical risks. India’s pursuit of rapid economic development necessitates a strategic focus on capital expenditure and foreign direct investment. By capitalizing on her welcoming stance towards foreign investors and leveraging transformative initiatives like the Chabahar Port deal, India can fortify its industrial infrastructure, expand her international trade footprint, and emerge as a formidable player on the global stage. This proactive approach not only accelerates India’s economic growth trajectory but also positions her as a key driver of regional prosperity and stability.
India must enhance its strategic industrial policy to reduce dependency on China and emerge as an alternative manufacturing hub for essential medical and electronic products. Amid evolving geopolitical dynamics, this policy gains significance. India can lessen reliance on Chinese imports and become a manufacturing hub for neighbouring South and Southeast Asian nations. Key pillars of this policy should include incentivizing domestic manufacturing in electronics, pharmaceuticals, automotive, and textiles. Tax breaks, subsidies, and infrastructure development can support this. Initiatives like Amenabar Bharat and ‘Make in India’ aim to bolster domestic production and reduce dependency on Chinese imports. Prioritizing domestic supply chains, backward integration, and technology transfer is crucial. Enhancing competitiveness through skill development, technology adoption, and regulatory reforms is vital. Investing in R&D, innovation ecosystems, and quality standards can improve product quality and cost-effectiveness, making Indian goods competitive globally. Facilitating trade with neighbouring countries is essential.
A robust strategic industrial policy leveraging geographic proximity to South and Southeast Asian countries can foster economic cooperation. By producing goods and services at competitive costs, India can strengthen its position in regional and global markets. She has full potential to emerge as a viable alternative to China for neighbouring countries seeking to diversify supply chains and reduce reliance on Chinese imports. Initiatives like the Act East Policy and RCEP foster economic integration. Infrastructure development, a Government priority, is pivotal for industrial growth and trade facilitation. Investments in transportation, energy, and digital infrastructure will bolster connectivity and reduce supply chain costs. Strengthening infrastructure networks leverages India’s geographic advantage, positioning it as a preferred trading partner in South and Southeast Asia.
A strategic industrial policy promoting domestic manufacturing, reducing dependency on Chinese imports, and enhancing competitiveness reinforces India’s position. Improving education and skill development is crucial, as India lags in quality compared to regional peers. The gap between academia and industry must narrow to support rapid economic development effectively. India should concentrate on improving deliver of higher education including technology and professional education as contemporary training and skill enhancement through quality imparting quality education is still lag to be at part that of the nations mentioned above. Eye-catching gap between the campus and corporate is visible and India’s effort for rapid economic development may certainly be constrained because of education, training and skill imparted by Indian universities including so called top-notch institutions of higher learning may not be fructified. By addressing these challenges, India can bolster economic resilience, foster regional cooperation, and contribute to shared prosperity in South and Southeast Asia.
(The author is a Bangalore based Educationist and Management Scientist)
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