India’s tax reform: tortoise of regional integration inches ahead

Ajit Ranade in The Hindu
Economist Intelligence Unit
Concerns of India’s manufacturing states – A Sarvar Allam in Economic and Political Weekly

Regional economic integration is something usually associated with international trade blocs – the European Union, ASEAN, and so forth. But two of the most important cases aren’t international – they are happening within India and China. Both countries are more populous than any international “region” (excluding of course regional groupings which include either India or China), and both have had very poorly integrated national markets, for reasons to do both with internal transport infrastructure, and the protection of sub-national markets by various means.

Global economic integration – quick, and institutionally shallow – is the hare; regional integration is the tortoise.

Bi-lateral or regional trade deals?

If your view of international trade is framed by the dichotomy of protected national markets vs. global free trade, then bi-lateral trade agreements and regional trade blocs look pretty much alike: an in-between situtation involving liberalization of trade within small (two or more) groups of countries, beyond whatever has been agreed at the global (WTO) level. Standard trade theory evaluates both by weighing trade creation (within the group) against trade diversion (trade that other countries would have had with members of the group, had the bi-lateral or regional agreement not gone into effect).

If, on the other hand, you see regional blocs in the developing world as instruments for the growth and empowerment of poor countries (h/t Norman Girvan), it’s a difference of night and day.

Are electronic connections more global?

A few years ago, while spending two months in Rome, I had excellent Italian lessons from Cecilia Mancini, who was then just starting out as a teacher. I learned yesterday that she now offers those lessons via Skype. And that brought to mind what I heard at a party in Yokohama a few weeks ago, from a number of foreigners who had initially come to Japan to teach English. Until recently, they said, it was possible to make good money here as a private English teacher, if you were good and marketed yourself well. Today, this is much more difficult, and they blamed the diminished circumstances of expatriate English teachers on cheap overseas competition. One can now get very cheap instruction from the Philippines, they said, via Skype. There was some sniffiness about the fact that their Filipino competitors were not native speakers, but I’m sure that these expatriates would also be undercut by mother-tongue teachers from Pittsburgh or Adelaide who are now able to offer their services to the world without getting dressed, much less bearing the various costs of moving to a foreign country.

Which brings me to two thoughts. One is a resolution to resume Italian lessons. The other is to ask whether the ability to deliver language instruction intercontinentally, via Skype, makes the world more “globalized”, or less. Globalization, by some definitions, means increasing global connectedness; improved electronic communications are often put down as a leading cause of such connectedness. Language instruction via Skype will undoubtably lead to an increase in the number of international connections. But it will also displace some face-to-face connections with electronic ones; the global tide of expatriate ESL teachers that has risen over recent decades may now be falling.

If you are reading this we are both beneficiaries of an electronic connection, and I don’t want to knock it. But face-to-face connections are different. How many people do you know who live in a well-connected electronic cacoon? We’ve all seen couch potatoes become experts on the hunting and mating habits of charismatic macrofauna through watching nature shows; as a result their global connections are in some respects greater than their neighbor who pursued biological knowledge through the alternative path of gardening, and yet the couch potato’s relative loss of connection seems, to me, too obvious to spell out. I would feel much poorer without the political and economic information I am able to find quickly on the Web, but in finding this information I also encounter a lot of little echo chambers in which apparently well-educated and sober people, drawn together across vast distances, engage in discussions whose narrow-mindedness, repetitiveness, vitriol and ignorance would be hard to sustain in the flesh. We all know that e-mail is a dangerous medium, an invitation for mis-understanding and hurt feelings.

The point being simply that electronic communications are different: they go a long way quickly, but they also lose something. So I am not convinced that the displacement of expatriate foreign language teachers by a larger number of Skype teachers – even if that means many more teachers and more people learning foreign languages – will make the world more connected or, if you will, more “global”. It will mean fewer face-to-face connections, more electronic cacoons. I’d write more but I need to see about that Italian lesson.

Regional integration: straws in the wind

Norman Girvan reports

The UWI-CARICOM Institutional Relations Project announces  the launch of  The Integrationist Quarterly (IQ). The magazine will be offered on-line as well as in hard copy. It will dedicate space to accommodating the perspectives of the youth of the Caribbean Community and the diaspora on a range of development and integration issues; providing a forum for expression of thoughts and ideas on issues of interest to the 21st century generation of Caribbean youth…