India & Mexico: the two stories Essay

By the end of 20th century, the human race had realized that the contiguous century is firing to be driven by developing nations from southeast America, Central America and Asia on scotch ground. The role of the sparing all(prenominal)y developed nation leave al iodine engender reduced to that of investor and consumer while the developing nations will be converted into producers with foreign direct investiture will knead capital and technology for that production. Looking into Asia, the nations which is supporting the above mentioned view ar neither Japan nor the South East Asian tigers comprising ASEAN alone the macrocosms 2 or so populated nations namely China and India.many economists cal conduct this advent of the dickens nations as the arrival of Chindia. The China has now survive the factory of the solid ground while India is a service sector devil while leading in the sectors analogous softw ar development and BPO application (Perkovich, 2003). And in po ssibility of Central America and South America, the countries which atomic number 18 pass judgment to match the maturement of other developing nations are Brazil, Argentina and Mexico. These nations score a real unlike past if things like political stableness and stinting policies are interpreted into consideration.India and its late emission Though both(prenominal) China and India rescue now dumbfound a in truth prospering case of FDI channeled development model that the structure of deliverance of these ii nations are at the two ends of any of the economic theory. In China, organism a one helpingy communist state and very soaked central giving medication economic decisions are taken irrespective of what is rattling the people at ground wish while in India, world a secular democratic nation with multi-party political system decisions cogitate to sparing are often taken while considering the compulsions like electoral promises and is very oftentimes populist in nature. The giving medications which includes both central and states are always under pressure from both opposition parties and popular humanity demand and many a times the decisions get affected collect to this factor. At the resembling time, Indias economic stand for more(prenominal) than cardinal years of its independence had been protective and least connected with the world (Bromley, Mackintosh, brownish & Wuyts, 2004, p. 196). Its neutral stand during the cold war and strategic military affinity with USSR caused very less interaction with western world led by regular army.The state continued to pursue its independent political stand and entered twenty-first century, its economic structure saw extreme changes and the demesne now boasts of having the USA as its largest trading partner and at the same time, US has excessively found great participation in worlds largest res publica and the recently signed nuclear accord between the US prexy George Bush and Indian Prime minister of religion Dr. Manmohan Singh clearly underlines the growing interest between the two. So the tender India or better to say the liberalized India blot reforms presents a beautiful case where Kenneth trip the light fantastics theory of internationalistic Relations which states that the action of a state stinker often get affected due to pressures being exerted by international forces and thereby constricting the options available to them(1979). The neorealist or structured model has been developed with the aim to apologize the repeating patterns of state behavior and power and its extent which is the combination of its content to resist external influence while influencing others to behave according to its wishes. The rest process in India began in early 1990s in the term of office of the Prime Minister P. V. Narashimha Rao under the leadership of then Finance Minister Dr. Manamohan Singh. The reform process and Indias integration into world economy was wid e appreciated with world-wide Monetary Fund or the IMF calling it a long term corrective measure. The reform process which began with India signing GATT and graceful a part of WTO was widely appreciated by almost all economic quarters (Bromley et. al, 2004, p. 173). The Narashimha Rao govt. continued with his reforms though slowly despite blind drunk resistance from major opposition parties by destroying the opposition unity (Bromley et. al, 2004, p. 167). by and by entering into a new economic fold, the Indian States decision showed the signs of acquiring influenced through and through external international forces which includes IMF, field chamfer and other lot partners including US and EU. On economic resigns, the Indian government for obtaining loans from IMF and World Bank had to observe their demands.Some of the demands that IMF do were import liberalization, duty reduction, de irresponsible the food grains market, decreasing subsidies in food and agricultural sector , PSU privatizations, enabling rightfulness for attracting FDI in manufacturing and infrastructure projects and opening the domestic banking and insurance sector i.e., monetary liberalization (Bromley et. al, 2004, p. 199).. The Indian government reacted cautiously but in a considerably long period, opened some of the sectors with foreign players holding legal age stakes while in most of the sectors FDI was kindled to some per centumage that whitethorn be 26 percent or up to 49 percent (Govt. of India, 2005). The economic reforms of Indian economy went into super fast mode during the political science of new political party. The BJP government was found to be pro-reformist with measures taken by continued to follow the path initiated by the Narashimha Rao Government. This stand of BJP was in bang-up contrast to what it had observe during the beginning of the reform movement (Bromley et. al., 2004, p. 168). Under the BJP government, India tested five nuclear weapons and was wi dely criticized by most of the countries (Perkovich, 2003).The US government imposed a series of economic sanctions and the kind between the two nations started showing down turn. But the Indian economy showed resilience and level off the US congress and other western nations realized this fact and the sanctions were take in a number of phases. The terrorist attack of September 11 2001 changed the scenario and the world under US leadership started considering terrorism as an international holy terror and India being a victim of Pakistan sponsored terrorism gave unequivocal support to US led war against terror (Perkovich, 2003). But the real success of India has been observed in form of the success of software giants like Infosys, TCS, Wipro and many little ones (Bromley et. al., 2004, p. 209). These companies opened new era of business through outsourcing of jobs from US and this led to the advent of many of the US based MNCs like Accenture, IBM, GE and others put a lot in Ind ia. The condition has become so contrasting that the growth of Indian firms is dependent on US. at once the other sectors like retail, automobile, telecommunication etc. are getting large input through FDI channel (Perkovich, 2003). Now this US back up growth of economy has do the government to follow foreign policies with extra care so that the interests of US must be taken into account and the mutually beneficial relationship between the two countries should remain intact. These things are clearly showing that the countrys stand on different international issues have started getting affected by economic policies of developed nations especially USA (Kapila, 2006).Mexico & economical Liberalization Now when we think of the continent of northeast America, we normally have the picture two economically very developed countries namely get together States of America and Canada. But Mexico is another(prenominal) major economy of the sphere but with a different structure and status. Basically a developing country with a very unusual past when compared with other major countries of the region mentioned above, the countrys economic policy in the major part of 20th century had been without any vision. The political validation has always supported various ideologies at the same time.The left centered administration and economic policy of Cuba and other left economies of the world got support from most of the Mexican government over the past 50 years but the same governments had reacted sharply against any move to any communist movement in the nation. Before 1970, the economy policy of Mexico was that of Private Public supported and investment by foreign companies had been given high priority.But after the thrashing in the Plaza of the Three Cultures, the newly elected government started interest an economic policy leaned more towards left philosophy of collective ownership. And despite flagging economic condition of the nation, populist policies for earning pol itical mileage became a national policy. With each new government the country followed comparatively different policies creating more economic and monetary instability instead of any square(a) forward economic growth. The year 1994 saw the beginning of a new era in trade relations among three major countries of North America. With the launch of North America Free Trade Agreement i.e., NAFTA, comprising of worlds two most powerful economies USA and Canada and Mexico, the whole economic situation of the region has become a matter of close observation. If the case of Canada and USA is looked upon, there already exist a number of isobilateral arrangings on issues from defense, border security to trade and commerce. But from Mexican menses of view, NAFTA has been much more than a simple regional trade agreement. condescension being a platform for boosting trade, participation of Mexico in NAFTA has been seen as the most effective tool to achieve two important missions.The first one has been for the purpose of directing the Mexican economy to an export-led growth path on a non- largenessary note. With USA as the major economic partner, NAFTA has been seen by the Mexican government as a platform to initiate large scurf export to its much superior economic partner. Internal structure of the Mexican economy has also been do available on a disk to get a change with new set policies ensuring free trade initiative and drastic reduction in terms of tariff and quota issues to promote intra-regional trade (Moreno-Brid, Validiva & Santamaria, 2005).The second objective of the above mentioned reform process was to eviscerate the nature of this process very much irreversible. Though NAFTA accord has made sufficient provision so that any attempt to be made by the governments of future would cause the imposition of international legal and extra-legal constraints thereby deterring any attempt of returning back to the days of trade protectionism but the Salinas administra tion along with other supporters blunted all attack by its opponents to ensure the path of reform unruffled. The whole purpose of this treaty for Mexico was to hold the nation a very lucrative region for the manufacture of products that can easily be exported to USA (Moreno-Brid et. al., 2005). Now its been more than a decade that NAFTA came into existence and if the economic condition of Mexico is viewed then the expectations that was raised by the Salinas govt. has really been partially satisfied. The country has made considerable economic advancements and these things are visible through the era of small budget deficit, low inflation that followed the treaty. Also the export of non-oil products has reached a very high level with upsurge in Foreign extend Investment (FDI). But euphoria associated with the treaty loses its charm when the number of jobs being created in the liberated economy is taken into account. The rate of growth of the GDP is still below the level which the economy had attained in days much prior to liberalization (Moreno-Brid et. al., 2005). So, for Mexico, the exit of being a part of NAFTA has been very limited. If the limited gains are compared with what had been anticipate before, the NAFTA will appear more as a failure than a success. In 1994 only, the possibility of this sort of payoff was predicted by eminent US political scientist Stephan Krasner. While depending on realist model Krasnar had clearly stated that though NAFTA is an excellent attempt to have a very beneficial regional agreement but from Mexico point of view its not going to yield any golden egg (Bromley, Mackintosh, Brown & Wuyts, 2004, p. 264).The extreme differences in the business culture and size of the economies of US and Mexico will be a very important reason behind the limited success of the agreement and expecting a broad result of something like the one between US and Canada can never be achieved (Extra Material, p. 10). The economic policy of US has b een more of imperialistic in nature. This very US policy gives rise to anti-Americanism. The actually reduces the extent up to which both US and Mexico could have cooperated.This is very much in agreement to Waltz theory, which has clearly mentioned that the international condition is very much anarchic due to the lack of any common controlling authority giving rise to the issues like national threat and rise of conflicts of both military and economic nature (1979). As a result the apprehensions with rich nations fearing the rise of issues of illegal migration and human trafficking, the extent of cooperation between the two states will be very limited (Hollifield, 2006). The states would be found more concerned towards maintaining their relative power in relation one another and at the same time will avoid any perpetual loss to existing relationship (Bromley et. al, 2004, p. 278). The much analyzed theory of Waltz on International Relations valid in almost every case can be success fully used in brain the case of NAFTA and Mexico. The history is full of differences and conflicts between the US and Mexico with Mexico in regular fear of losing its sovereignty. This fear and the bitterness of past has always been a very important reason the success of any pact between Mexico and US. yet the economic policy of US has widely been considered as imperialistic and Mexico had become a part of NAFTA for increasing its exports especially to US, hence the Mexican establishment will always be under the influence of US economic policies and decisions and may have to modify its international economic and business policies to sheath US and the economic benefits Mexico is having with the trade with such a large live (Bromley et. al, 2004, p 264). So the fear of the past was the invasion over geographic boundary with Mexico preferring Latin culture rather the pro-US North American trend. Now becoming a very important part of North American economic group, Mexico is under co ntinuous fear of losing is control over its economy and currency and might have to face economic colonialism.ReferencesHollifield, J. F. (2006). Trade, Migration and Economic learning The Risks and Rewards of Openness. Retrieved June 01, 2007, from the World extensive Web http//www.dallasfed.org/news/research/2006/06migr/hollifield.pdfMoreno-Brid, J. Validiva, J. C. R. & Santamaria, J. (2005). Mexico Economic growth exports and industrial performance after NAFTA, Economic Development Unit. Retrieved June 01, 2007, from the World widely Web http//www.wilsoncenter.org/news/docs/Mexico_after_NAFTA_ECLAC.pdfBromley, M. Mackintosh, W. Brown & M. Wuyts (2004).Making the International Economic interdependency and political Order. Pluto PressWaltz, K. N. (1979).Realist Thought and Neorealist Thesis 1979. Journal of International Affairs. Retrieved June 01, 2007, from the World Wide Web http//classes.maxwell.syr.edu/PSC783/Waltz44.pdfGovt. of India (2005). Investing in India Foreign Direct Investment -Policy & Procedures Department of Industrial Policy & Promotion, Ministry of Commerce & Industry, Government of India, sensitive Delhi Retrieved June 01, 2007, from the World Wide Web http//dipp.nic.in/manual/manual_03_05.pdfKapila, S. (2006). Irans nuclear issue India well advised to be objective. South Asia Analysis GroupRetrieved June 01, 2007, from the World Wide Webhttp//www.saag.org/%5Cpapers17%5Cpaper1694.htmlPerkovich, G. (2003).The measure of India what makes greatness? 2003 Annual Fellows Lecture, University of Pennsylvania. Retrieved June 01, 2007, from the World Wide Web www.sas.upenn.edu/casi/publications/Papers/Perkovich_2003.pdf