Political Governance, Economic Pursuit, Global Hegemony, and Environment; China, India, and the World

By Kartik Roy

This treatise presents a critical discourse on the formulation and implementation of economic development policies as well as on the outcome of the implementation of such policies in terms of the attainment of the (i) rate of economic growth and of the (ii) rise in the size of GDP and of the (iii) attainment of economic and social wellbeing of the citizenry of both China and India.

The author has analyzed the pattern of economic development of China and India in terms of the (i) growth in factors of production and of the (ii) growth in expenditures. The reasons for the spectacular rise in economic power of authoritarian China and the subdued rise in economic power of highly decentralized democratic India have been explained. The growth and development outcome story of China shows that the limited political freedom of citizens and of officials of provincial governments has acted as a panacea for the realization of the country’s developmental goals but in India, the unlimited and uncontrolled political freedom of citizens and provincial rulers has acted as a powerful recipe for the growth of anarchy and for the realization of circumscribed goals of economic development.

In 1970, the per capita income of China and India stood at $US 70.00 and $US 60.00 but in 2022 the per capita income of China and India currently stands at $US 12,536.00 and $US 2691.20. The share of India’s per capita income in China’s per capita income in 1970 stood at 85.71 percent. In 2022, the share of India’s per capita income in China’s per capita income has declined to 21.46 percent. In this book the author has discussed all these issues. Furthermore the author has also presented a short commentary on the possibility of the rapid decline of economic and political status of China by 2030 and of a steady rise of India as an economic and political Super Power.

• Language: English
• Publisher: Balboa Press AU
• Release date: Jan 12, 2023
• ISBN: 9781982296506

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ISBN: 978-1-9822-9649-0 (sc)

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Balboa Press rev. date: 01/06/2023

DEDICATION

To My late Father who worked hard to earn enough money to finance the cost of my education but did not live long enough to enjoy the happiness of a retired life.

To Mrs. Bani Sengupta Roy who as my life’s partner and companion sacrificed her personal happiness to enhance the wellbeing of members of her marital and premarital families and whose income made the lives of four of us sustainable in a foreign land.

To Dr. Jared Dart B.A (Queensland); B. Sc (Queensland); MB. BS (Queensland); Ph. D (Queensland); FRACGP whose contribution to the physical and mental welfare of members of my family will never be forgotten.

CONTENTS

Dedication

Prolegomena

Chapter 1: A Discourse on the Concept of Governance

Chapter 2: Forms of Political Governance in the World

Chapter 3: Theoretical Foundation of Enabling Political Governance

Chapter 4: Theoretical Foundation of Economic Governance for Economic Development

Chapter 5: Land and Labour in Economic Pursuit of China and India

Chapter 6: Capital in Economic Pursuit of China and India

Chapter 7: Sectoral Contribution and Expenditure in Income Growth

Chapter 8: Trade in Acquisition of Economic and Military Power

Chapter 9: Global Hegemony: China and India

Chapter 10: Environment and Human Development

Chapter 11: Social Capital, Deprivation and Empowerment of Women

Chapter 12: The Terestrium

Appendix 1

Appendix 2

References

Notes

LIST OF FIGURES

Chapter 4

4.1: Income – Expenditure Diagram

4.2: Liquidity Trap

LIST OF TABLES

Chapter 2

2.1: Forms of Political Governance

Chapter 5

5.1: Land and Land Use Pattern

5.2: Women in Employment

Chapter 6

6.1: The Flow of FDI and Portfolio to Emerging Economies

Chapter 7

7.1: Sectoral Contribution to GDP of Emerging Economies

7.2: The Structure of Manufacturing: China, India and Other Emerging Economies

7.3: The Pattern of Expenditure

Chapter 8

8.1: Structure of Merchandise Exports and Imports of Asian Countries (In $Us Billion).

8.2: The Commodity Composition of Merchandise Exports (% of Total Value).

8.3: The Commodity Composition of Merchandise Imports of Asian Countries (% of Total Value).

8.4: The Composition of Service Exports of Asian States.

8.5: The Composition of Service Sector Imports ($Us Billion and Percent of Total Value).

8.6: The Share of Asian States in Global Merchandise Trade (Value in $Us Billion and % Shares).

8.7: The Direction of Trade of Asian States (Value in Us Dollar Billion).

8.8: The Share of Asian States in Global Service Trade (Value in $Us Billion and % Shares in Global Trade Value.

8.9: The Trade and Payments Balance of World’s Major Economic (In Billion of Us Dollars).

8.10: China, India, and Japan: Historical Trend in G.D.P, Growth Rates (%).

8.11: FDI Inflow and Foreign Exchange Reserves of Major G-7 and Asian Countries in 2021 (Billion of Us Dollars).

Chapter 10

10.1: The Pattern of Fossil Fuel Consumption in Major Economies of the World.

10.2: Environmental Performance Index for Selected Countries for 2022.

10.3: Human Development Index for Selected Countries (Scores in Numbers).

10.4: Social Progress Index of Selected Countries in 2021.

11.1: The Distribution of Income or Consumltion (China, India, and other Countries.

11.2: Global Gender Gap Index (GGI) and Gender Development Index (Gdi).

PROLEGOMENA

I was born in a remote corner of undivided India’s vast rural hinterland at the time of the onset of the Second World War. At night while in bed I could clearly hear the sounds of military planes flying over the top of our house throughout the whole night. Following the tradition set by Kautilya my early childhood education was completed at home. I completed by high school education at the age of 15; obtained the Bachelor of Arts (B.A) Degree with Honours in Economics in 1959; completed my first Master Degree in Economics from Calcutta University in 1961. My uneventful rural life changed forever in 1961 when at a picnic, I met with a sophisticated and slim woman of rose-coloured complexion and of sublime beauty, named Bani Sengupta who eventually become my life’s partner and the mother of our twins (a son named Santanu and a daughter named Sormistha).

Our daughter and son-in-law Dr Prabal Kar (a Medical Specialist) have been blessed with a son named Projit who is on course to complete his Medical Doctor’s Degree: MB.BS from the UK based U Clan Medical School.

Our son Santanu and our daughter-in-law Lynn M. Roy have been blessed with a daughter named Violet Roy who is our only beautiful grand-daughter. They left the United States and returned to our original home in Brisbane in order to take care of the physical needs of me and Bani at our old age.

My life before 30th of January 1971.

After completing my first Master Degree which happens to be in Economics in 1961, I initially started working as a teacher in a Higher Secondary School in Howrah District and later as a college professor at a newly established undergraduate college while Bani was working at a public sector office in Tamluk Town in Bengal Province. I returned to Tamluk college in 1965 and Bani and I became united by marriage on the 15th April in 1965. I obtained my second Master Degree from Calcutta University in 1965 while working as a college professor at Tamluk College.

But my mind was in Gandhi’s term, a restless bird. Hence the more it obtained the more it wanted in order to attain the goal set by my destiny. The process of realisation of that goal began on 30th of January 1971 when I accompanied by Bani and our two children left Calcutta Airport for Brisbane, Australia by a British Airways Flight from London to Brisbane via Calcutta, Singapore and Darwin to eventually arrive at Brisbane International Airport on 31st of January in order to take up a Junior Academic position at the Economics Department of the University of Queensland.

I obtained the Third Master Degree in Economics in 1978; first Ph.D. Degree in Economics in 1982; and the second Ph.D. Degree in Economics in 1983.

While working at the University of Queensland, I began to concentrate my effort on the completion of manuscripts for edited books and authored books. My first edited book entitled Economic Development and Environment; A case study of India which was published by Oxford University Press, received a rousing ovation from the readers. My first authored book written in collaboration with Cal Clark of the University of Auburn was published by Lynne Rienner in Boulder, Co. USA in 1997.

Two of my important authored books include Economic Development in China , India, and East Asia; Managing Change in the Twenty First Century which was published by Edward Elgar in UK in 2021 and Governance Institutions and Economics Development: China, India, East Asia and Brazil which was published by WSPC in Singapore in 2018.

My latest authored book entitled: Political Governance, Economic Pursuit, Global Hegemony and Environment: China, India and the World is set to be published by Balboa Press in Bloomimgton, Indiana, USA in 2023.

I delivered guest lectures at eleven universities in the world. During the last few years of my life, I am hoping to seek spiritual happiness.

My father who spent on my education much of the income he earned at the local Land Registration office as a Deed Writer hoped that I will be able to provide education to my brother and two sisters.

I grew up in an undivided family consisting of 8 adults and 8 children. Among the rest of 3 brothers and one sister of my father, the sister who was the eldest of them, was the decision maker in family affairs. Her decisions were accepted by my father and her brothers. My first uncle was dumb although he could hear every conversation that took place at home. While my father was engaged in income earning activities to support the educational expenses of his children, the three of his brothers were engaged in the management of the family farm.

In my school days and in early years of my college life, I used to read novels from where I acquired the meaning of the concept of Love. It was Bani Sengupta who helped me to enjoy the feeling of togetherness and love. Her companionship and efforts during the days of our happiness and distresses kept us going forward. I would not be what I am today and where I am today with her mental and financial support.

Chapter 1

A DISCOURSE ON THE

CONCEPT OF GOVERNANCE

The English word ‘Governance’ which has been derived from Latin and ancient Greek terminology did originally refer to the power of exercising control, guidance and manipulation of animate subjects and inanimate objects. This term, thereafter, became integrally linked to those administrative and political activities of the state (Keeping 2018) which required the authorities of state to ensure that the accountability is maintained in its policy formulation and implementation.

The term governance, therefore, is linked to the management of all institutions in the society starting from the management of the family and ending with the management of the State. The objectives of political governance include also growth promoting economic governance, social governance, and environmental governance. The political governance apparatus of the State must ensure that public resources and problems are managed effectively, efficiently in order to attend to the critical needs of the society. To ensure that such a task is performed efficiently it is also important for the State to make its actions transparent. An efficient honest and non-aligned bureaucracy is the most essential prerequisite to the realisation of the State’s political and economic governance goals since the effects of bureaucratic failure on the economy has been accepted to be worse than those of market failure (Bhagawati 1982). Accountability in good governance can only be practiced if the State’s political governance institution has been created through a democratic process of election. Then one may ask the following question: Is democratic political governance of J.S. Mill suitable for economically, socially poor developing countries? The answer is No.

In the area of economic governance, the primary objective of any political governance regime in any country is to the transform the majority of able-bodied citizens from being endowed with only physical strength to those being endowed with technology induced human capital. For this to happen, it is necessary for political governance leaders to create a nationwide uniform education curriculum which would include basic education and skill-based education. If parents are economically poor, parents in highly populated economically poor countries are not able to increase the level of investment in their children, then it would be necessary for the political governance leaders of the State to make such investment in children cost-free to parents. The increase in investment per child continues to raise the size of human capital augmented population. Since the technological progress continues to increase the size of human capital, it is also expected to slow down the growth rate of actual number of people. And to accelerate the per-capita economic growth rate more rapidly (Galor and Weil 1999; Rosenweig 1990; Vandenberg 2001; Roy 2012; Roy 2018)

Technology Induced Human Capital and the making of Self-reliant complete Human being:

In order to transform the vast majority of citizens of a country from an unskilled or low skilled dependent labour to skill-embedded labour, the political governance leaders are required to eliminate economic and social poverty by creation by the State and the private sector businesses of the opportunity for employment in the production of all kinds of goods and services in the country

The level of poverty, in modern days does not simply relate to the share of population living below the poverty line expenditure per month or year in the total population. Such a process of measurement of poverty is also wrong.

Since 2011, China set a poverty line income which is based on a mould of such indicators as income i.e., employment, education, health care, shelter, clothing and other human needs to enjoy a decent quality of life. Large number of people whose quality of life stayed below the matrix (composite figure) in the mountainous region of China have now been able to cross the minimum threshold of Quality-of-Life Matrix due to state directed expenditure on schools, clinics, housing, transport and on making provision for other amenities of life to eliminate extreme poverty and income inequality. Along with the creation of housing companies, erection of school buildings, setting of bullet-train lines the State also built textile plants in Guizhou for worker to be actively employed (Areddy 2020).

In the first Phase of Poverty elimination programme, after the death of Mao Zedung, the introduction of market-oriented reform in China’s Eastern coast line eliminated poverty of 700 million people (Meier and Rauch 2005, Weber 1930, Wade 1990, Roy 2018, Roy, Blomqvist and Clark 2012).

An analysis of the current level of poverty in China by using the US Dollar 5.50 per day in poverty line income share of population below this poverty line per day at 27 percent of total population. On the other hand, 68.8 percent of India’s population lives on less than $US 2.00 a day. While income is accepted as the principal determinant of a person’s capabilities to fulfill the basic needs of him or her to stay alive, this measurement fails to capture the level of poverty of a person who lives below or just above poverty line and accordingly the level of he or she tends to suffer from systemic inequalities in the ownership of other amenities which are necessary for him or her to become a complete human being who will not be reliant on dole and other hand-outs from the political governance leader and from such leaders of the provinces of the country.

The policy of continuation of the dole to poor people produces the two following two telling effects on the society and on the economy:

1. A person who receives the dole for a long period of time begin to lose their physical capability, mental strength and the desire to secure a job to earn income and maintain the life of a proper human being. Such dole recipients become eventually vote casting slobs.

2. The retention of the political power becomes the objective of political governance leader. Hence the policy of implementation of economic development programme is thrown into back burner in a democratically governed country. Such a situation cannot be found in China because it is a unitary State and President Xi is an autocratic marginally altruistic dictator.

But such a situation does exist in India where among 30 dictators among whom at least one provincial dictator just throws away money to people to secure their votes in the next election and prevents any economic development projects from being implemented in that province in India during 11 years of her reign.

Political Governance and Total Fact Productivity (TFP)

Enabling political governance creates an institutional environment under which the manufacturing sector will create employment opportunities for millions of a country’s citizens and can also improve the efficiency in the use of factors in production.

This has happened in China where the size of efficiency gains in the use of factors of production in manufacturing sector in has been well above that in India (Xiao-Yuan Dong 2009). Between 1998-2003, the average TFP growth for the manufacturing sector in China was about 11 percent higher than in India due to the following changes in institutional governance in manufacturing industries:

1. A significant change in the transfer of ownership of firms and industries from the State to private sector.

2. A substantial retrenchment of idle labour force in hundreds of State-owned enterprises (SOE) and

3. In the early days of industrialization, the facilitation by the State of joint venture agreement of local firms with foreign entrepreneurs enabled local companies to gain knowledge to better utilise millions of cheap labour who began to move from the interior to factories in eastern coast line and

4. Almost total non-existence of trade unions with vicious bargaining power in China.

In India, the governance of industrial sector failed to introduce the above noted changes that the governance regime of the same sector in China was able to do.

In agriculture the recorded improvement gained in the efficiency in use of inputs in production process played the most important role in raising the rate of TFP growth in China. In case of India, technical change improved the TFP growth rate in agriculture in India. But efficiency did not improve in India in 30 years (Pratt, 2008).

Hence it can be stated the important features of authoritarian political governance in China can account a great deal for the success in the realisation of the goals of poverty alleviation, employment generation and of making citizens technology and ethical value induced self-reliant human beings. On the other hand, one can say that in India, too much of democracy.

In every political decision-making process may have stymied the progress of the country in the elimination of poverty and in making citizens ethical value induced self-reliant human beings.

Governance Institutions in Africa and in Bengal Province of India

In almost all countries in Africa, the State which is the foremost institution has become the private property of the political governance leaders and of members of the inner sanctum of the political governance regime (Weber 1978). The relationship of the leaders with the citizens possesses the features of that of the patron and clients. Clients have been forced to obey the dictates of the patron who often grant patronage to elite members of the citizenry in return for their loyalty to the overlord of the State. The patrimonial political governance regime in Africa and in Bengal province in India has used the power of the government to reward the rent seeking behaviour of political insiders with the overlord’s approval in actions to misappropriate State funds; to distribute state created jobs to followers as well in actions to demolish the regime of rule of law by forcing the police force to act servants of the overlord (Sandbrook and Oelbaum 1997; Roy 2012; 2018).

Hence in hindsight it can be stated that the non-democratic form of political governance as proposed by Mill and Lord Hailey (1940) should have been the preferred mode of political governance in all newly independent countries in Asia, Africa, and Latin America. The installation of democratic governance regimes in all newly independent countries in Africa has not been able to weaken the force of authoritarianism and to strengthen the level of openness and accountability in the political and economic governance of those former colonies of European powers. Even in India which earned independence from the British rule in August 1947, has also suffered from major drawbacks of democratic governance, due to the fact that a substantial part of the media has been purchased by the evil and predatory provincial rulers such as that one of Bengal Province.

In post-independence Africa, the new system of political governance was designed to disband the move for the re-instatement of market mechanism and the re-enforcement of the rule of law in order to direct the political governance mechanism to be engaged in extensive profit seeking (DVP) activities (Keen 1998, 2000; Vayrynen 2000; Nafziger 2006, 2012; Sandbrook 2002).

Vayrynen’s (2000) perception that the dominance of predatory economic behaviour in political governance would be less viable in countries with limited reserves and opportunity for export of mineral resources such as India, Tanzania and Togo, than in resource rich countries such as Angola, Congo, Liberia and Sierra Leone may not be correct for the confederate India which consists of 30 provinces led by political leaders among whom a few consider their territories as sovereign countries. These few leaders adept in the art of clientelism or Patrimonialism, which represents a personalised relationship between patrons (the political governance leaders and the inner circle of that leader) and clients (primary groups and secondary groups of citizens) for extracting and capturing unequal wealth; and also for the preservation of political and social status as well as of influence based on conditional loyalties involving mutual benefits (Nafziger 2006, 2012; Roy 2012, 2018) can be found in extreme form in West Bengal which is the most economically backward as well as natural resource poor province in India. In Bengal, in the patrimonial office of the Chief Minister there is no bureaucratic separation of the private from the official sphere of political governance.

The political governance of the province which eventually has become purely personal property of the ruler in Bengal of India and the State which have become the personal property of the ruler in most of African countries (Weber 1978) has now covered elite citizens of most ethnic groups who have forcibly been subordinated to the identity of the patron who have exchanged patronage; economic security and protection to elite clients in return for their loyalty to the patron. These clients in their turn have been allowed to upgrade their status to that of Patron in their dealings with the ordinary citizens who have been forced to pay to the second-tier patrons, the blood money and other material wealth for every legitimate economic transaction these clients have undertaken in both African countries and in Bengal Province in India.

Furthermore, the patrimonial political governance institution has remarkably been anointed with the power of the government to reward the rent seeking behaviour of political insiders; to take actions to misappropriate state fund; to distribute state jobs to followers and to allow non-payment of taxes by clients as well as with the Patron’s approval to demolish the regime of Rule of Law (Sandbrook and Obelbaum 1997; Roy 2012, 2018). Hence, benevolent dictatorial political governance as proposed by Mill and Lord Hailey in 1940, should have been the preferred mode of governance in all newly independent countries.

Ibn Khaldun on Good Governance

Ibn Khaldun the 14th century scholar in his Edict: The Muqaddimah discussed the essential traits of good governance in his seminal work (Rosenthal 2004; Abdullah 2018).

In his discourse on good governance for the welfare of the State he wanted the State to increase national wealth by undertaking productive economic activities instead of raising the rates of taxes and of leaving the tasks of capital accumulation and wealth creation to private sector capitalists. Such an action would enable the State leaders to take care of social needs of its poor citizens. But he was also of the opinion that the leader and those associates of the leader must be scrupulously honest and not be driven by greed and lust for accumulation of wealth to serve their personal selfish interest.

Khaldun was aware of the possibility of the governance of the State affairs being captured by unscrupulous greedy and cruel self-styled political elites who would re-dipped in national economic policies from realising their national economic and social welfare goals to realising the personal monetary and non-monetary welfare goals of the leader and of his or her compatriots (Olsen 1982). Khaldun’s in his views on political governance supporting the role of the monarchy prevailing in the entire Arab world, seems to have championed the case of a political governance leader who would create a welfare State. He devised the economic theory of Inverted U Shaped relationship that exists between the rate of increase in government revenue and in tax rate. This theory which is known as Khaldun-Lafer Curve, also can legitimately argue that although the deliberations on essential aspects of Khaldun’s concept of governance have generally placed greater emphasis on political governance as well as on the quality and role of political leaders in implementing economic development programmes, his views generally seem to correspond to those views on governance prevailing in the contemporary Arab world which he was very proud of living in.