India and Australia

There can be no doubt that Australia is looming larger and larger on the Indian horizon. Speaking personally, thanks to my participation with the LAFIA2008 — Leading Australia’s Future in Asia-Pacific — delegation in July, I have gained an increased appreciation of the issues that will draw Australia and India into a deeper strategic and economic relationship.

I discovered a great resource which paints the big picture regarding the future of the Australia-India relationship with ease. It is The Fifth Sir John Crawford Lecture, 2008 titled ‘Australia, India and Asian Integration: Building upon the East Asia Summit’ by Prof Peter Drysdale, Crawford School of Economics and Government, The Australian National University, on 3rd April 2008 in New Delhi. (pdf download of the lecture.)

Drysdale says “that India and Australia are on the cusp of an historic opportunity for sharing a new, much more important relationship in the future than we have shared in the past.” He notes that India’s externally oriented reforms are driving India’s economic integration with the world and has regional and global implications.

India’s continued growth and industrialization is forging a relationship between Australia and South Asia that, 10 or 20 years hence, is likely to match the well-established relationship with East Asia.

All this is changing fundamentally the stature of our bilateral relationship and the priority that it must now attract. The context of that change is the emergence of the Indian economy and the opportunity for integration of the South and East Asian economies, including Australia.

He goes on to talk about the policies and strategies required for realizing the potential gains from this opportunity.

I look at development with microeconomic lenses. So I would like to quote an excerpt from his talk which especially resonates with me.

Good microeconomic policy is at the heart of the process of domestic reform and liberalisation that delivers better economic outcomes and drives effective international integration, both in real and financial markets. In seeking remedies for the under-realisation of trade and investment potential as well as superior strategies for economic integration, we need to look at, but also well beyond, trade and trade policy (or border) measures and focus on domestic reform and liberalisation (behind-the-border) measures. Domestic reforms that strengthen commodity, financial and factor markets through increased competition and efficiency now have much more important effects in promoting growth through economic integration than traditional trade policies at the border.

This emphasis on domestic reforms is important and is consistent with the view that Prof Pranab Bardhan expressed in my conversation with him. (See “Walking around the Indian elephant” and “Reforms do not address the anxieties of the general population.”)

East Asia Forum

Prof Drysdale co-edits a blog on politics, economics and public policy in East Asia and the Pacific, titled “East Asia Forum“. About the EAF:

The blog is run out of the East Asian Bureau of Economic Research (EABER) housed in the Crawford School of Economics and Government. Contributors are from the Crawford School, across the Australian National University and other regional institutions in EABER. Content includes Australian, East Asian and Asia Pacific region perspectives, with guest bloggers from right around the region.

Prof Andrew MacIntyre of ANU’s Crawford School introduced me to Prof Drysdale. Now I have a guest blog post on EAF. How cool is that? 🙂

Categories: Economic Reforms, Globalization

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