For a step-by-step approach to reforms

Print edition : February 17, 2001

"Although the world has been relieved of the imminent threat of a nuclear war, arsenals remain and a large number of regional, ethnic and civil conflicts continue in many areas. And, an appraisal of global trends and the likely future developments underl ines the increasing threats to peace and security," says United Nations University of Peace Rector Dr. Martin Lees.

M. MOORTHY

A growing world population - largely in the developing countries - means increasing pressures on essential resources, tightening environmental constraints and widespread poverty. The widening gap between the rich and the poor is creating extreme inequal ities in access to, and control of, resources, including knowledge and opportunity. This global trend has compelled the University of Peace, set up in 1980 by Rodrigo Carazo, former President of Costa Rica (a country that abolished its army 50 years ago and has a long tradition of democracy and peace) on the initiative of the United Nations General Assembly to internationalise its activities - an effort in which Dr. Lees is playing a major role.

For the last three decades Dr. Lees has been a prime mover in directing international policies as well as guiding the development strategies of some countries and international organisations. In the early 1970s, in the Organisation for Economic Cooperati on and Development (OECD) he was responsible for directing international cooperation in science; he started a programme, "Innovation in the Procedures and Structures of Governments," to consolidate and exchange practical experience among its member-count ries. Later, he established "The Interfutures Project" to study the future of world economies.

In 1978, he joined the United Nations Development Programme (UNDP), first as Special Adviser to Bradford Morse, the Administrator, on the reform of the organisation and was later made responsible for preparing "the United Nations Financing System for the Development of Science and Technology". He became Assistant Secretary-General of the UNDP in 1984.

In 1988, at the request of Chinese Premier Zhao Xiyang, he initiated a programme, "China and the World in the Nineties", an international consortium of world leaders to advise Chinese leaders on its economy. As part of this effort, Dr. Lees established " The China Council for International Cooperation on Environment and Development".

The success of the Chinese programme received world-wide attention and Dr. Lees was invited by the President of the Union of Soviet Socialist Republics (USSR), Mikhail Gorbachev to help in the economic reforms process. Dr. Lees was also made Director-Gen eral of "The International Committee for Economic Reform and Cooperation", a unique European initiative.

In December 1999, Dr. Lees became Executive Director for programme development of the U.N. University of Peace and its Rector in January 2001.

Recently in Chennai, Dr. Lees spoke to Asha Krishnakumar on ways to tackle rising inequalities among and within nations, the various development strategies, the role in development of factors such as gender, environment and population and the need for a Peace University. Excerpts from the interview:

Now that the Cold War era is over and globalisation and market-centred development are the new rules of the game, what is your assessment of the world today, in terms of equity and justice, particularly given the inherent inequalities among and within countries?

There are two fundamental aspects of justice and equity - within and between countries. We refer to the process of economic growth as gross domestic product per capita. That is, how much a country is producing in regard to the size of its population. The difficulty with that general statistic is that it hides as much or, probably, more than it reveals because some may do very well and make a lot of money while others get less or even lose.

Even in the United States, there is increasing disparity between the rich and the poor.

In India, one part of the economy has been growing reasonably well and, perhaps, 200-300 million people are moving ahead. But there are 700-800 million people who are not participating properly in the growth process.

The most important factor in India is the demographic expansion. The best assessment of India's population growth, 1.5-1.6 billion people in the next 50 years or so, is a tremendous challenge for the government in terms of preparing for the arrival of an other half of the country. If the situation is to remain stable and if living standards are to be decent, the economy has to provide some hope and opportunities to these people. The basic issue here is employment.

India's problem is also one of providing education for all - 40 per cent of its population is illiterate. Even preparing people for employment is an issue here. What do you think is the future of such countries in a globalised world?

It is very strange that a country with so many intelligent people such as India is prepared to accept a situation where vast numbers are not educated at all. All modern economies demonstrate that education is the first step to build the capacity which pe ople can then use.

You cannot solve one problem at a time and worry about the next one some time later. You have to tackle a series of problems together. And you have to look at the economy as a system. And once you start thinking in terms of systems, then you discover tha t things are much more complicated. You have to do several things together in a coherent strategy. And education is the key to tackling many of the problems. But education by itself is not enough. So, all these problems have to be looked at as a package.

The long-term development strategy for India, therefore, depends on a number of factors. If you look at the question of employment, there are serious differences among economists about what we should do. One pattern of growth emphasises capital and inves tment, which is very important but may not be useful if investment reduces employment. This is a real dilemma. Another view is to look explicitly at the development strategy from the point of view of creating employment.

The problem for India, where you have 50-60 per cent of the people still working in agriculture, is that you cannot rely on agriculture to provide jobs for another few hundred million people. The tendency in agriculture, even if output expands, would be to have fewer people as productivity increases. So the real and immediate question is: How will you create employment? In what sectors?

From your experience, is there any model or project that could be a lesson for working out India's development strategy?

I would like to mention the Chinese experience, which is very instructive. Their "Township and Village Enterprises" programme has set up 20 million small enterprises in the countryside, since the beginning of the 1980s. That has provided employment in no n-farm activities. This has two effects: First, it gives jobs to people and, second, it prevents vast migration of people from the rural areas.

What is the role of the New Economy, or the information and communication revolution, in India's development strategy?

India is remarkably strong in some of these areas. For instance, it has developed a huge capacity in software. As many Indians speak English they can float immediately into the world system, which is a huge advantage.

But the proportion of the economy involved in this is still very small. And India has at one level an intellectual elite - brilliant and well-educated youths who can get plugged into the world community remarkably well. But the challenge is, how do you get the benefits of that to filter to the rest of India?

So, what then is the way to go?

The way to go is to build the capacity of the poor, also in all those parts of the country which are not involved significantly in these wonderful new things. This would empower and give people the chance to select what they want to do in order to guide their own lives and not be victims of change. This means a re-orientation in thinking.

What is the role of the government in a globalised world?

Although we all know the importance of markets, it does not mean that governments must just give up and leave everything to the magic of the market place. Any businessman would want stable policies and regulations if he has to invest. Therefore, the gove rnment must provide the framework within which all these things can happen. That is not the same thing as providing public expenditure as we have learnt that vast amounts of public money do not necessarily solve problems. But the government plays an impo rtant role in providing incentives, and the framework to guide the economy in the way society wants to go. It is a perfectly manageable problem.

The Indian government, for example, can work out incentives and set targets for businessmen. This strategy has been used with remarkable effect in Europe and Japan and, now, even in China in trying to improve the environmental performance of the industri al sector.

Another important problem with the market-centred approach is that it is very tempting for businessmen to focus their effort in cities as it is cheaper, quicker and more concentrated, and ignore the countryside due to problems of distance and of putting up small units. Thus, there emerges imbalances between the cities and the rural areas. The government has to play a role in providing incentives for businesses to go to the rural areas.

What problems would arise for a country like India in a globalised world?

As you open up the economy, of course, you get certain benefits - you can export your products more easily. But the converse is that the other parts of the economy, say manufacture of silk saris, are likely to be in deep trouble because of competition fr om other countries. Thus, we come to the simple point that the process of economic growth is not of accumulating more and more, but of transformation. Some industries do well, modernise, make progress and create employment but some others suffer, decline and die. There is nothing good or bad about it. It is part of the process of progress.

Everybody has discovered - which, however, India has not fully accepted - that protection of industries is not a viable strategy in the long run. The protected industries gradually become less efficient. For example, one of the biggest challenges China n ow faces is the reform of state-run industrial enterprises. How they are doing that is another story. But the fact is that it is a very major problem. India must confront it as well.

Some industrialised countries impose quantitative restrictions even as they lobby for their removal by developing countries such as India. For instance, Japan levies 2000 per cent import duty on rice.

You can argue by economic logic that globalisation must proceed with this transformation. But the point you are making is absolutely right. When countries start getting hurt they try to protect themselves. If you are an optimist you say that they protect themselves during a transition period and that is provided for under trade legislation, which is perfectly legitimate. But where protection is permanent, it amounts to tariff and non-tariff barriers against more competitive products. Unfortunately, this is very common in the real world. The purpose of the WTO (World Trade Organisation) is precisely to reduce it.

This contradiction is especially true in the food sector where the policies some countries follow cannot be justified in terms of economic rationality. There is no easy solution for this except to participate in the international process and advocate as strongly as you can your own interest.

It is a good time for India to think of mobilising consensus among the intellectuals in developing strategies that recognises the international dimensions but focusses heavily on providing a better future for its own people.

What are India's strengths and weaknesses?

One of its greatest strengths is its people, the best guarantee for the future. You are also a country with a long tradition of trading all over the world. You also have a culture different from the Western simplistic consumer culture. This is a great op portunity for India to build on its strengths without getting mesmerised by the approach some Western countries have adopted in their rush for increased wealth.

In terms of modern economics, your culture can also be a source of weakness. I cannot comment on the caste system as an outsider but it is a problem in terms of mobilising the Indian public in terms of economic progress.

Other aspects to concentrate on are gender inequity and environmental degradation. As the economy and population grow, the pressure on the environment increases. The issue is how you balance the need to raise living standards and press ahead with the eco nomy and keep the environmental damage within acceptable limits and, hopefully, improve it.

There is a major conflict between development and environment. How does one view this contradiction and integrate the two in the process of growth?

The fundamental point about dealing with environment is that you should not view it as a contradiction or a threat to growth. As I said about employment, you can choose a growth path for environment. One path is to grow like mad and then worry about envi ronment later when we are rich, or to say environment is so fundamental that we should develop an approach which minimises damage to the environment. And a lot of experiments prove that you can combine environmental responsibilities with economic growth.

What is your assessment of the growth path India is pursuing?

If India is growing at, say, 5-6 per cent per annum, it means that over 10-15 years you would double the size of the Indian economy. The question the policy-makers must consider is on what basis is this new economy created? If it is created the same way as that of the present, then you have a lot of problems.

With my experience in China, I can say you should not try to reform everything immediately, because it cannot be done. It is too complicated and one thing depends on another. You should take a step-by-step approach in the context of a long-term strategy, particularly for a big and complicated country like India.

Is the University of Peace a utopian concept in the context of the inherent conflicts in a globalised world? Where is peace and equity in this kind of a world?

Extending the logic of our discussion, the economic and social problems of a country are fundamental to internal and external peace. History has demonstrated that everywhere. Peace is not an abstract, utopian idea. It is a consequence of the way people b ehave, their attitudes and so on. And if you have permanent inequity and no hope of employment, then you are not likely to accept the system and you start getting perturbed, aggressive and confrontational. And rightly so.

There are enormously important linkages between the success of the government or the country in providing hope and prospects to its people, meeting their aspirations, the internal stability and their attitudes towards other countries. So, peace is not a separate question. It is endemic to all that we try to do. And, probably, one of the biggest guarantees of peace is economic progress and democracy. If you can sustain the economic progress then the internal stability of the country will be strengthened and the prospects for peace outside will also improve.

We need to think carefully of practical suggestions to guide the world economy in a certain direction. Some may not agree with me if I say "guide the world economy". They may say, leave it to the market forces. But increasingly there is a concern that ma rket, left to its own devices, is not ready to produce a future which anybody particularly wants to see, whether in the North or the South.

So, if you look ahead 20 years and ask what would be the threats to peace in the world and what we can do now to tackle them, then clearly you need a large number of people who understand these problems. Hence, an educational institution focussing on the area of peace, I believe, is of fundamental importance.

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