By Vritika Mathur
At the World Economic Forums (WEF) annual summit in Davos, PM Narendra Modi delivered the keynote speech, becoming the first Indian leader to do so in two decades. He sent out a strong message against protectionism and inward-focused economic policies, saying such tendencies could be as dangerous as terrorism and climate change.
What is protectionism?
Protectionism is a preference for sheltering a countrys domestic industries from foreign competition by levying taxes on imports. Such tariffs help to reduce dependency on international goods, thus boosting the countrys own economy. While this theory may work in the short run, it can have a negative effect on economic growth and welfare in the long term. Free trade, on the other hand, allows a country to gain competitive advantages as it specialises in the production of certain goods and creates more jobs.
In a speech pushing countries to adopt open trade reforms and policies, Modi stated, Forces of protectionism are raising their head against globalisation. Their intention is not only to avoid globalisation themselves but also to reverse its natural flow. The result of all this is that we get to witness new types of tariff and non-tariff barriers.
He raised a concern regarding an increase in anti-globalisation movements. This came just hours after President Trump imposed taxes on the import of solar equipment. In a thinly veiled but apparent reference to Trumps America First policy, Modi said, Many countries are becoming inward focused and globalisation is shrinking and such tendencies cant be considered lesser risk than terrorism or climate change.
The Prime Minister also took this opportunity to initiate a dialogue with the audience, focusing on India as an investment destination. He also presented new reforms, such as removing the requirement for certain licences and “permit raj”, making it easier for countries to work in India. We are replacing red tape with red carpet, he said in an attempt to woo investors.
Terrorism and climate change
Modis speech also touched on the issue of terrorism. In his talk, he urged countries to fight against terrorism by distancing themselves from groups that advocate for it. Under no circumstance should they be provided with money, arms or ammunition. He expressed his concern with an increase in the number of young who have been radicalised.
Another global challenge, according to Modi, is climate change. He strongly put across the fact that very few countries have come forward to help developing countries combat CO2 emissions. The Paris Climate Accord of 2017 introduced many reforms in the struggle against greenhouse gas emissions. However, US President Trump rejected the accord, which has resulted in widespread condemnation. Modi urged the world to think about what can be done to mitigate the threat. He also mentioned how caring for the environment is a part of Indias culture and that it will do its bit.
Impressions and impact
Dignitaries, such as President Paul Kagame of Rwanda and President Emmerson Mnangagwa of Zimbabwe received PM Modis talk very well. China especially welcomed his speech against protectionism as this in an interest that is shared between the two countries.
The foreign ministry spokesperson in Beijing said, I noticed that Prime Minister Modi made some remarks on protectionism and his remarks showed that globalisation is the trend of the times and serves the interests of all the countries including developing countries and the fight against protectionism and promoting globalisation.” Last year, China gave a similar speech calling out against the anti-globalisation wave that was then emerging.
While the speech was an impressive intervention and aims at matters of grave importance, it is also an attempt to sell India’s success. With multiple examples of its economic growth, diversity and strong democracy, his speech hit all the right notes.
However, one problematic issue for the PM is that, while Modi talks about protectionism and its harmful effects, he fails to take into account his own protectionist Make in India initiative. This scheme encourages domestic production over foreign imports. Given this, the masterful speech was also an act of hypocrisy.
Featured Image Source: World Economic Forum on VisualHunt /CC BY-NC-SA