Provocative economist Lord Meghnad Desai warns against taking Asia’s re-emergence for granted.
Singapore’s Raffles Hotel, an emblem of the country’s British colonial past, was a fitting setting for the occasion. The hotel was named after the man who established a colony here in 1819 and it did not allow Asian hotel guests until the 1930s. It was now the venue for a lecture by an Indian-born professor who had made his mark in London, once the capital of the British Empire. The empire was striking back.
The repartee sparkled like the chandeliers of the ballroom which, although not filled to capacity, held a respectable crowd of luminaries. Singapore’s Foreign Minister George Yeo sat in the front row. Professor Wang Gungwu, CBE; and Mr Lee Bock Guan, the president of the Buddhist Lodge; were there to play an important part in the proceedings as was Ambassador K. Kesavapany, the director of the Institute of South-east Asian Studies. The audience of academics, politicians, students and journos had been invited to the inaugural Nalanda-Sriwijaya Centre Annual Lecture held in August.
Lord Meghdad Desai, 70, a member of the British House of Lords, and Emeritus Professor of Economics at the London School of Economics was speaking on : “The Re-emergence of Asia: The West and Asia in the Post-Vasco da Gama Era.”
He said that Asia had finally come out of 500 years of Western domination in 1999 when Portugal returned Macao to China. Asia had re-emerged as an economic power in the past half century and Asian countries had achieved varying degrees of economic success. Known as a champion of appropriate governance to temper the effects of rapid globalisation, Lord Desai proceeded to hand out brickbats and bouquets.
The room rocked with laughter as Lord Desai fired salvos at different countries and institutions as he famously does.
“South Asia was a laggard. Indians say we have no money but we have soul. Only losers say that.
“Today Japan is like a beached whale, not doing very much. They ‘cheated’ their people by giving them a low interest rate on their savings.
“Being defensive about immigration is a sign of decay. Having open borders is the essence of the role of immigration in innovation.
“Religion has a neutral effect on the economy. There have been terrorists from all religions. ”
Singapore's Foreign Minister George Yeo and Lord Meghnad Desai share an interest in fostering Asian connectivities.
Pitfalls of Expectations
The main thrust of his argument that afternoon was that making predictions about the growth of Asian economies based on current growth is not wise. He laid out the broad sweep of history and pointed out the pitfalls of having great expectations.
“Asian independence from colonial powers did not lead to Asian resurgence,” he stressed. “The Japanese model was well known in East Asia and South-east Asia: land reform, literacy and high savings.” He implied that the model for success was there and yet many Asian countries did not follow it.
Elaborating on this point he said: “It took India 60 years [after independence] to realise the importance of ‘skilling’ the people. Subsidising food grains was wrong. They should have focused on making sure that cheap education was provided so that a high rate of literacy was achieved.” He also warned against counting on the status quo: “So far Asia has grown by taking available technology and developing it at low cost. There is a risk in continuing this trend.” As Lord Desai puts it, “Capital has no loyalty and no nationality. It will go where labour is cheap. As labour costs increase in Asia, it might go to Africa next.”
Capital has no loyalty and no nationality. As labour costs increase in Asia, it might go to Africa next
The Asian resurgence cannot be taken for granted. China’s economy was turned around by Deng Xiaoping who saw how successful Taiwan, one of the “Asian Tiger” economies, was. But China can’t just rely on being a manufacturing powerhouse forever. Lord Desai cautioned: “In 1960, Nikita Khruschev said the Soviet Union would bury the US under a mountain of commodities. The Russian economy came to a standstill 20 years later. They had not gone into IT or plastics. Their economy had stagnated. “
Human Capital, Not Resources
What Asia needs is innovators but Asian education systems do not breed the ethos for challenging the accepted way of doing things, which is what is needed in an innovator, asserted Lord Desai. “We need young people coming out of nowhere inventing something or some service that has never been seen before.”
He gave the example of mobile telephony which was generally unheard of 30 years ago.
He said that Asia needed its own versions of Microsoft co-founder Bill Gates, and Google co-founders Larry Page and Sergey Brin.
Lord Desai said that traditional models of economic growth requiring nearby resources are a thing of the past: “The only thing that matters is human capital. Raw m
aterials can be shipped anywhere.” He agreed with a member of the audience who said that with the Internet, the whole world is your market.
Lord Desai is a member of the Nalanda Mentor Group which is supervising the revived Nalanda University in Bihar, India’s poorest state. When he was asked why he had not touched upon Asian poverty during the lecture he said, “Eradicating poverty does not correlate with economic growth but providing education does.”
As if expecting more verbal sparring after the event, he said: “I believe in leaving my audience troubled and unhappy. I am sure there will be many who disagree with me but that is the fun of life!”
At the end of the inaugural lecture, the president of the Buddhist Lodge handed over a cheque for S$1 million to the Nalanda-Sriwijaya Centre at the Institute of South-east Asian studies. The Nalanda-Sriwijaya Centre was established at the Institute of South-east Asian Studies in Singapore in August 2009. It pursues research on historical interactions among Asian societies and civilisations through religious, cultural and economic exchanges.
One of its other objectives, the development of the “Nalanda Idea” of fostering Asian connectivities and cross-cultural influences and the “Sriwijaya idea” of South-east Asia as a place of mediation and linkages among the great civilisations was certainly achieved.