Day of Empire_ How Hyperpowers Rise to Global Dominance--And Why They Fall - Amy Chua [163]
India's success at the World Economic Forum has added to the growing talk of India as the next potential world superpower. With an annual crop of 400,000 graduates in technology and engineering, a large English-speaking professional base, and an economy booming with an average of 7 percent growth for the past four years running, India, according to many pundits, politicians, and investors, has become the power to watch in the twenty-first century.37
India's economic star began rising in the early 1990s, when finance minister Manmohan Singh slashed government spending and devalued the rupee to prevent the country from defaulting on its international debt. In exchange, Singh, a Cambridge-educated economist, received several billion dollars from the World Bank and the International Monetary Fund. Singh then moved aggressively to eliminate bureaucratic restrictions hampering foreign investment. These moves to liberalize India's economy led to high inflation and an increase in unemployment in the short term. However, within five years, the Indian economy had grown more than it had in the previous forty years. A decade later, Foreign Affairs declared India to be “a roaring capitalist success story.”38
India's success in siphoning off capital and jobs from more developed countries has already begun to rankle Americans. In the 2004 U.S. presidential race, the outsourcing of business and employment to India emerged as a hot-button political issue. Since that time, India has only gotten better at attracting U.S. investment: Today, more than half of the Fortune 500 companies outsource IT work to India. Multinationals such as Intel, IBM, Dell, Motorola, Yahoo!, and AOL all have major operations in India. On average, forty international companies set up business in an Indian city every month. President Bush noted the rise of India and China as new competitors in his 2006 State of the Union address, and in March 2006 he became the fifth U.S. president to pay a state visit to India.39
President Bush's March 2006 visit to India highlighted not only the country's economic strength but also its military power. With approximately two million people in its regular and paramilitary forces, India has one of the largest armies in the world. In 1998, India burst into the ranks of nuclear powers by conducting five nuclear tests, but was promptly slapped with economic sanctions by President Clinton. By contrast, President Bush legitimized India's nuclear program by brokering an agreement in which the United States would sell nuclear fuel and reactor components to India (in exchange for India's opening its civilian facilities to international inspections).
Meanwhile, India continues to make world economic headlines. In July 2006, Lakshmi Mittal, the world's fifth-richest man, took over the European steel giant Arcelor. India's leading business newspaper euphorically proclaimed it “The Global Indian Takeover.”40
Could India become a world-dominant power? I'll begin by making the best case for India within the terms of my thesis. I'll then address some of the major challenges facing the country.
What is genuinely remarkable about India is not its recent economic upturn, however impressive. Comparatively, India's share of the global economy is still quite small. With 17 percent of the world's population, India accounts for just 2 percent of global GDP and 1 percent of world trade. China's economy is more than twice as large as India's, and in 2005, China received about ten times as much foreign direct investment. In 2006 India's GDP per capita was $3,400 compared to China's $6,300 and Japan's $30,700. More generally, the growth that India has experienced, while significant, fails to place India's standard of living