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Context: India in the emerging international trading system.
A three day event, rechristened as Asia Economic Dialogue held at Pune International Centre (PIC) from February 28 to March 1, 2020.
This brings us to the questions of Asia, especially India emerging as a driving force in the new trade order. In this article, we will explain the below:
# What is Asia Economic Dialogue?
# What does Asian economies hold?
# What is the current global economic climate?
# What India can do emerge as a driving force in new trade order?
What is Asia Economic Dialogue?
- Asia Economic Dialogue is a unique dialogue based in India where Asia gets together to talk trade, finance, and business opportunities.
- The event seeks to serve as a platform for influential political and business leaders and policy makers to showcase and talk about the developments in Asian countries that are now driving the global economy.
- The theme of the event was Asia and the Emerging International Trading System.
- The theme of the geo-economic conference centres around the fact that Asia is home to more than half of world’s population and 21 of the world’s largest 30 cities are in Asia.
- The conference runs in partnership between the Ministry of External Affairs and the Pune International Centre. It is an effort by the government to go beyond the narrow confines of the New Delhi on such issues.
- The Asia Economic Dialogue (AED) is one of the three main national dialogues organised/supported by the ministry of external affairs. It focuses on India and Asia’s rise as an economic powerhouse and also the region’s aspirations to get a proportionate share in leading world forums.
What do Asian economies hold?
- According to the International Monetary Fund (IMF), by 2030, Asians would have bought as many vehicles as rest of the world combined.
- As per projections, the Asian economies are set to emerge larger than the rest of the world combined by the end of 2020. This growth needs to be seen in the perspective where as late as 2000, Asia accounted only for a third of world’s output. It was highlighted that the rise of smaller economies such as Bangladesh wasn’t properly documented.
- As per IMF, Asian economies would be larger than the rest of the world by 2020, and beyond China and India, countries like Bangladesh, Indonesia, and Vietnam are setting the pace.
- While over 60 per cent of the world’s GDP comes from Asia, the global trading system is dominated by the Organisation for Economic Cooperation and Development (OECD) thinking.
What is the current global economic climate?
- The global economy is already flooded with liquidity with debt-to-GDP ratio now at an all-time high of 250 per cent.
- Also, more than $11 trillion of debt currently earns negative yields.
- The current global economic climate is full of severe uncertainty and unpredictability is amply evident today. The combined negative impact of Covid 19 and collapse of global oil prices on top of rising protectionist tendencies can be traumatic for the world economy.
- The OECD says global GDP growth could plunge this year to as little as 1.5%, almost half the 2.9% rate it had previously forecast.
- The West seeking to close the door for developing countries those want to replicate the success of China. The US steps, which have led to the appellate body of the World Trade Organisation (WTO) coming to a grinding halt, are only part of a series of measures aimed at not only containing China, but also countries like India, Brazil, Indonesia and South Africa.
What India can do emerge as a driving force in new trade order?
Given the dynamism of Asian economies and their rising share in global economic activity, it is imperative that they play a predominant role in any effort for putting in place a new global economic architecture.
- To emerge as a global hub, India needs to make its industry competitive, bring down tariffs, and build upon steps it has taken on the ease of doing business and improving its logistics performance.
- It needed to move away from protectionism and pursue the reform of multilateralism.
- India will have to firmly establish its credentials as an open economy that is eager to connect with global and regional value chains and enlarge its share in global trade flows.
- In fact, the key to increasing India’s stagnant manufacturing exports is to integrate manufacturing into global production networks. There is emerging importance of getting small and medium enterprises (SMEs) to participate in global value chains, something that India had failed to do because of its poor understanding of how these work.
- India should try and bring its tariffs to global average levels. To achieve this India will have to sharply focus on improving trade facilitation and logistics and removing unnecessary impediments for its exporters.
- India more actively needs to engage with all the plurilateral negotiations that are currently going on within the WTO. India has to participate in these negotiations because that will ensure that India earns the needed legitimacy and the recognition to be within the vanguard group for redesigning the global trade architecture.
There is no shortage of ideas on ways India can move ahead and indeed, ‘pole-vault’ into the ranks of leading nations. But the bottom line remains that India cannot escape from the systematic challenge of large-scale reforms in investment policy, labour, tariff and non-tariff measures, connectivity and above all, on the need to promote political stability.