The Hindu Business Line : `Development is not just about GDP'

What does an author feel when someone asks him to write a preface for a pirated version of his book. Or, in the era of intellectual property protection, hopes that his ideas are needed enough to be pirated and not ignored.

Professor Joseph Stiglitz, Nobel Prize-winning economist and author of Making Globalisation Work, would rather write the preface to a pirated edition of his book; would prefer to see an unauthorised copy in a Taiwanese bookstore if it means his ideas spread and benefit a few.

At a lecture organised by The Hindu here on Thursday, Prof. Stiglitz narrated the anecdotes to drive home the point that countries need to keep in mind the vision of development that is sustainable, equitable and democratic. It is not just about GDP in the modern era of globalisation, he said.

Referring to the prescriptions he has suggested in his book Making Globalisation Work, Prof. Stiglitz said that the objective was to make globalisation live up to the promises made by its advocates 15-20 years ago.

Intellectual property protection is about incentive for innovation but the version sold to other countries by the US may not be the ideal as it stifles innovation. In its present form, it distorts economies by creating monopolies and developing countries bear the cost without the benefits, he said.

Developing countries need to take full advantage of the flexibilities provided in the TRIPs (Trade Related Intellectual Property Rights) to ensure that their interests are protected. But not many can exercise the option, as they cannot resist the pressure of advanced countries such as the US. Countries such as Brazil and India can resist such pressures. Brazil, which has committed to support its AIDS-affected with the lifesaving drugs is going bankrupt as intellectual property protection has driven up the costs of medicines several-fold. It should take advantage of the compulsory licensing for life-saving drugs provided under TRIPs.

His book, he said, picks out many aspects of globalisation that have not worked or shown results that have not been predicted in standard economic theory.

Globalisation, in its present form, has increased the divide between the rich and the poor. It is an important factor that has contributed to doubling the numbers of poor in Africa in the last 25 years.

The reasons: Economic globalisation has outpaced political globalisation. Countries are increasingly interdependent and need to collaborate but institutions to do that effectively are lacking. "The notion of fairness stops at the border," he said as countries put self interest ahead of common good.

Also, there was too much faith in the rhetoric that globalisation would benefit all. Economic theory never said all would win but that winners `could' — `not would,' he stressed — compensate the losers. Advanced countries have failed to recognise the adverse impact of globalisation on the poor.

Another gap was the `enormous democratic deficit' in international institutions that manage globalisation. Democratic process has tempered market economies but has not learned to temper globalisation. Democratisation of international institutions is a key factor. Countries like India need to respond. Countries that have gained from globalisation are those that have taken it on their own terms, he said.

It is important that India ensures that the gains from globalisation benefit more people. This calls for social security, strengthening the education system and rural development programmes.

There is a need for a balanced role between the markets and the State. The Government needs to play a larger role in some areas even as it retreats from some.

Mr N. Ram, Editor-in-Chief, The Hindu, in his welcome address said that the public lecture is a part of the newspaper's commitment to the core values of serious, quality journalism. The core values being truth telling, freedom and independence, justice, humaneness, and contributing to the social good. Promoting such values necessarily involves a commitment to promoting informed public discussion of issues that matter, he said.

Mr N. Ravi, Editor, The Hindu, introducing Prof Stiglitz, said that as an economist he has helped create a whole new branch, the economics of information. Inequality of income and wealth remained a prime focus, and his area included growth, technical change and income distribution.

Prof. Stiglitz's ideas have challenged the general belief that free markets lead to efficient outcomes "as if by an invisible hand" and that the role of Governments should be limited.

After a three-year stint as Vice-President and Chief Economist of the World Bank from 1997, he has emerged an outspoken critic of the World Bank and the International Monetary Fund. He was particularly critical of the IMF for forcing a one-size-fits-all policy for privatisation, expenditure cuts and credit tightening on countries in trouble.

Prof Stiglitz is an advocate of justice among and within nations, the voice of conscience that speaks with the authority of solid, Nobel Prize winning research, he said.

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