United Nations: Top Indian economist Arvind Panagariya has told the United Nations that the world export market worth nearly $22 trillion is extremely large to have any adverse impact of protectionism.
In a keynote address on Monday to the Second Committee of the UN General Assembly, Panagariya, 65, also played down the fears that automation would kill jobs.
Panagariya, who stepped down as the NITI Ayog vice chairman recently, is now back in the US as Professor of Economics and Jagdish Bhagwati Professor of Indian Political Economy at Columbia University.
"My own personal view on this (automation) is that we often overstate, because we can see what jobs automation we destroy. But we cannot see what jobs automation will actually create," he said, arguing that never in the history technological advancement has actually ended up cutting jobs.
"It has made us all get busier and busier and where automation is the most, in industrialised countries, people are busier," he said and added: "so historically, automation has never been able to made people less busy or labour markets more slack."
To a question on the issue of rising protectionist threat, Panagariya said his own take is that the global market is extremely large.
For instance, he said, the merchandise export market is $17 trillion, and another $5-6 trillion is the services export market, thus a total $22 trillion worth of market is the global market.
What happens tomorrow to the size of this market — it becomes $22 trillion or $25 trillion of $20 trillion — is much of less valance than what individual countries can do to get a larger share, he noted.
India's is a prime example as its share in merchandise exports is just 1.7 per cent. So any drop in the size of such a market is of far less relevance to India, than whether India is able to raise its share from 1.7 per cent to four or five per cent, he argued.
"That is where the real action is. That depends on what India itself does in terms of its own policies. So, in the end, in my thinking, ultimately countries on leadership and on policies and their implementation good governance are going to determine the future of the countries rather than anything else that happens either in terms technology to change or in terms of the global policies," the economist said.
To a question on global governance, Panagariya said the importance of developing countries is much larger globally today — both in terms of the economic trade and the voices that they have.
They still need to acquire much greater voice in these international institutions, he said, adding that these institutions themselves require necessary reform.
"But I would not go so far as to place all the policy making it into global governance in one single institution. I think multiple institutions do serve a purpose and I would rather keep that," he said.
Sharing the concern expressed by representative from Tanzania that there is some kind of threat today to the WTO, the Indian economist said at least some part of this world body is working reasonably efficiently in terms of a dispute settlement body.
The developing countries have been able to challenge the developed countries quite successfully in a number of different cases and where the size of the country has not been central to what the decision ultimately gets made, he said.
"But today there is some bit of a change in there. So, I think that the membership has to be very vigilant to ensure that, he said, insisting that there has to be four-five judges in the appellate body at all times.
These are the kinds of "immediate threat" appearing at the World Trade Organisation (WTO) which needs to be resolved, he told the UN committee, observing that developing countries must bring pressure on those nations that are dragging their feet on this.
"But, I personally believe that WTO is a certainly a sound body and this is the most recent body that have we have created in terms of governance as opposed to International Monetary Fund or the World bank. It is well worth preserving and hopefully eventually also making progress," Panagariya said.