Dr. Gita Gopinath, John Zwaanstra Professor of International Studies and Economics, Faculty of Arts and Sciences, Department of Economics at Harvard University, USA visited MYRA School of Business, Mysore, to deliver a talk on the important global economic trends and its implications for India. Dr. Gopinath’ mesmerized the large audience gathered with her amazing lecture and her scholarly perspective of the global macroeconomic scenario and its implications for the Indian economy. Dr. Gopinath began by noting that the current economic scenario is in a very interesting phase. We are coming out of the recession with the world economy slowly repairing itself with different countries going through different trends in the recovery process; now is a good time to pause and see where the world is heading, she said.
Dr. Gopinath outlined four major trends that are currently playing out there in the global economic field —China’s slowing growth; collapse in the commodity prices; the beginning of the end of easy money and the increase in the aging population. The current scenario of diminishing rates of GDP growth in China and its immense negative effect on the entire global economy;, the collapse in the commodity prices which has sent a chill down the spine of commodity investors —a huge drop of up to 40%— this sudden plunge in demand for commodities has set in to generate a macroeconomic bubble; the beginning of the end of low interest rates — the tightening of the monetary and fiscal policies to bring down inflation rates; and the fourth, and this is the trend that has a long-term effect, said Dr. Gopinath, —is the demographic trends of rising life expectancy with an increase in aging population in advanced economies has had a negative impact on the global economy with a steep decline in the ratio of working population to retired population. This last-mentioned trend represents the most critical long-term economic dilemma facing the developed world.
The big implications are on the fiscal side, increased social security and related costs on the budgets with a significant amount of the population being retired and trying to live off the wealth it generated during its working years, she elaborated.
What then are the implications of these global economic trends on the Indian economy? Dr. Gopinath said, there is good news for India, she said. While most emerging markets are exposed to a negative shock due to crashing commodity prices, India being a big commodity importer, is in a rather privileged position, she said. The China Slowdown effect has not had a major negative effect on India as India’s exports to China are a small 4%. The high borrowing interests are not bothering India too much and since India has a young working force, the demographic aging trends and their negative impacts on the global economy is not a major threat to India either.
The audience interacted with her with questions on the global currency issues; stagnation of TFP, increasing environmental concern on the global economy; the issues related to the distribution of agri-products, etc. Her response was that while each country is trying to do its bit, and new employment opportunities have opened up with the solar projects, waste management programs and such, yet on the global front, there are no teeth to it, she said. Implementation of the right technologies can address a few of these problems, she added.
Dr. Gita Gopinath, who comes with a number of laurels to her credit and the ‘Young Global Leader Award’ title by the World Economic Forum in 2011 was inducted into the Women Achievers’ Hall of Fame at MYRA School of Business, Mysore, by Mr. Ashok Baweja, Head, Quest Global Defense and Former Chairman of HAL.
Mr. Ashok Baweja in his address wished her more success and hoped to see her reach many more heights.
Dr. Sudhendar Rao, Professor of Information Systems at MYRA in his valedictory address said that her talk on the global economic situation was a capstone course to the just-concluded course on Economics and the on-going course on Global Competitiveness at MYRA.
Dr. Shalini R Urs Founder and Chairperson, MYRA, Dr. M N Panini, Distinguished Professor Centre of Excellence for Sustainable Business Innovations, Dr. Shrijay Urs, Executive Director, MYRA, Faculty, staff, students and invitees formed the audience.