Arvind Subramanian

For nearly four years, Arvind Subramanian stood at the centre of economic policymaking in India. Through the communication of big ideas and the publication of accessible Economic Surveys, he gained a reputation as an innovator. Through honest pronouncements that avoided spin, he became a figure of public trust. What does it entail to serve at the helm of the world's fastest-growing economy, where decision-making affects a population of more than a billion people? In Of Counsel: The Challenges of the Modi-Jaitley Economy, Arvind Subramanian provides an inside account of his rollercoaster journey as the chief economic advisor to the Government of India from 2014-18, succeeding Raghuram Rajan as captain of the ship. With an illustrious cast of characters, Subramanian's part-memoir, part-analytical writings candidly reveal the numerous triumphs and challenges of policymaking at the zenith, while appraising India's economic potential, health and future through comprehensive research and original hypotheses. Charged with the task to restructure an insecure and fragile economy, Subramanian's trusteeship has seen the country through one of the most hotly contested and turbulent periods of economic governance and policymaking in recent decades-from the controversial recall of 85 per cent of circulated currency during demonetization to a complete overhaul in taxation with the introduction of the GST. Subramanian also addresses the overleveraging of public-sector banks, the fraught links between the state and private sector ('stigmatized capitalism'), the changing relationship between the state and the individual, and the ever-pervasive, life-threatening issues surrounding climate change. Recognized as one of the Top 100 Global Thinkers according to Foreign Policy magazine, Arvind Subramanian's Of Counsel: The Challenges of the Modi-Jaitley Economy is a deep-dive into the man, the moments, the measures and the means.

The Challenges of the Modi-Jaitley Economy

Of Counsel

In his new book, Arvind Subramanian presents the following possibilities: What if, contrary to common belief, China's economic dominance is a present-day reality rather than a faraway possibility? What if the renminbi's takeover of the dollar as the world's reserve currency is not decades, but mere years, away? And what if the United States's economic pre-eminence is not, as many economists and policymakers would like to believe, in its own hands, but China's to determine? Subramanian's analysis is based on a new index of economic dominance grounded in a historical perspective. His examination makes use of real-world examples, comparing China's rise with the past hegemonies of Great Britain and the United States. His attempt to quantify and project economic and currency dominance leads him to the conclusion that China's dominance is not only more imminent, but also broader in scope, and much larger in magnitude, than is currently imagined. He explores the profound effect this might have on the United States, as well as on the global financial and trade system. Subramanian concludes with a series of policy proposals for other nations to reconcile China's rise with continued openness in the global economic order, and to insure against China becoming a malign hegemon.

Eclipse

This paper examines different explanations--initial conditions, openness to trade and FDI, and institutions--of the Mauritian growth experience since the mid-1970s. We show that arguments based on openness to trade and FDI are either misleading or incomplete, and the transmission mechanism insufficiently identified. However, even when correctly articulated, openness appears to be a proximate rather than an underlying explanation for the Mauritian experience. The institution-based explanation offers greater promise. Ultimately, however, the econometric results indicate that existing explanations may be incomplete. Some idiosyncratic factors, particularly Mauritian diversity and the responses to managing it, may provide the missing pieces in the story of Mauritius's success.

Meade, Romer, Sachs or Rodrik?

Who Can Explain the Mauritian Miracle

Kalpana Kochhar

Raghuram Rajan

Utsav Kumar

Ioannis Tokatlidis

India has followed an idiosyncratic pattern of development, certainly compared with other fast-growing Asian economies. While the importance of services rather than manufacturing is widely noted, within manufacturing India has emphasized skill-intensive rather than laborintensive manufacturing, and industries with higher-than-average scale. Some of these distinctive patterns existed prior to the beginning of economic reforms in the 1980s, and stem from the idiosyncratic policies adopted after India's independence. Using the growth of fastmoving Indian states as a guide, we conclude that India may not revert to the pattern followed by other countries, despite reforms that have removed some policy impediments that contributed to India's distinctive path.

India's Pattern of Development: What Happened, What Follows?

Aaditya Mattoo

This paper elaborates on a number of key principles that need to underpin a coherent and development-friendly architecture for the WTO. The key principles include enlarging the scope of WTO bargaining to include labor flows as well as capital flows; creating a structure that would provide a balance between furthering liberalization and providing some discretion or policy space to accommodate the inevitable political constraints; and minimizing the extent of regulatory harmonization. These principles, while applicable to all countries, may have less immediate relevance in addressing the problems of the least developed countries.

What Would a Development-Friendly WTO Architecture Really Look Like?

"International cooperation on climate change has floundered. With mutual recrimination between rich and poor countries, the zero-sum arithmetic of a shrinking global carbon budget, and shifting economic and bargaining power from old CO2 emitters to new--what Aaditya Mattoo and Arvind Subramanian call the "narrative," "adding up," and "new world" problems--the wonder is not the current impasse but belief that progress might be possible at all. Each of these problems must be addressed in a radically different way. First, the old narrative of recrimination must give way to a narrative based on recognition of common interests. Second, leaders must shift the focus away from cutting emissions to generating technology. Third, the old "cash-for-cuts" approach must be abandoned for one that requires contributions from each country calibrated in magnitude and form to its current level of development and future prospects."--Publisher's website.

A New Approach to Cooperation on Climate Change

Greenprint

Steven R. Weisman

Euijin Jung

This PIIE Briefing published by the Peterson Institute for International Economics traces the complex economic relationship between India and the rest of the world, focusing on the United States. The various chapters, by leading experts, emphasize the contrast between political ties between Washington and New Delhi, which have steadily improved since the 1980s, culminating in the landmark nuclear agreement in 2005, and economic ties, which have lagged despite intensive negotiations and pledges of cooperation. The current moment of uncertainty and turbulence may not seem to be the time for a new collaborative chapter in this frequently contentious economic relationship. But the authors argue instead that a crisis can compel leaders of both countries to rethink their failed policies and expand, not reduce, their economic cooperation. By examining the record of international economic policies in the world’s two most populous democracies, this volume can illuminate a path forward. There are no illusions in these essays about the costs and obstacles. Their assumption is that learning the lessons of the past can guide the way for progress in the future.

Future of US-India Economic Relations

A Wary Partnership

Devesh Roy

This paper examines different explanations-initial conditions, openness to trade and FDI, and institutions-of the Mauritian growth experience since the mid-1970s. We show that arguments based on openness to trade and FDI are either misleading or incomplete, and the transmission mechanism insufficiently identified. However, even when correctly articulated, openness appears to be a proximate rather than an underlying explanation for the Mauritian experience. The institution-based explanation offers greater promise. Ultimately, however, the econometric results indicate that existing explanations may be incomplete. Some idiosyncratic factors, particularly Mauritian diversity and the responses to managing it, may provide the missing pieces in the story of Mauritius's success.

Meade, Romer, Sachs Or Rodrik?

Who Can Explain The Mauritian Miracle

Dani Rodrik

Franklin Allen

Nancy Birdsall

Jere Richard Behrman

Shahrokh Fardoust

Andrew Steer

Fluctuations in international trade, financial markets, and commodity prices, as well as the tendency of institutions to favour the interests of the better-off and powerful, pose risks for citizens of all countries. This volume examines the factors that are most likely to facilitate economic growth in low-, middle-, and high-income economies.

Policy Implications for Citizens Worldwide in the Twenty-first Century

Towards a Better Global Economy

John Williamson

Olivier Jeanne

Most countries emerged from the Second World War with capital accounts that were closed to the rest of the world. Since then, a process of capital account opening has occurred, with the result that all developed and many emerging-market countries now have capital accounts that are both de facto and de jure open, while many developing countries also have de facto openness. This study examines this in part by considering some of the first lessons from the current global financial crisis. This crisis may change the terms of the debate on capital account liberalization in a deeper and more lasting way than any of the crises of the past two decades because it may mark a reversal in the secular trend of financial liberalization at the core of the international financial system. The current crisis also raises new questions about the appropriate policy responses to boom-bust dynamics in domestic credit and in international credit flows. Intellectual consistency is needed between the domestic and international dimensions of financial regulation and the policies aimed at dealing with boom-bust dynamics in domestic and international credit.

Who Needs to Open the Capital Account

By most accounts, China has quickly grown into the second largest economy in the world. In this controversial new book, Subramanian argues that China has already become the most economically dominant country in the world in terms of wealth, trade and finance. Its dominance and eclipsing of US global economic power is more imminent, more broad-based and larger in magnitude than anyone has anticipated. Subramanian compares the economic dominance of China with that of the two previous economic superpowers--the United States and the United Kingdom--and highlights similarities and differences. One corollary is that the fundamentals are strong for the Chinese currency to replace the dollar as the world's reserve currency. The final chapter forecasts how the international economic system is likely to evolve as a result of Chinese dominance.

Eclipse: Living in the Shadow of China's Economic Dominance

We examine one of the most important and intriguing puzzles in economics: why it is so hard to find a robust effect of aid on the long-term growth of poor countries, even those with good policies. We look for a possible offset to the beneficial effects of aid, using a methodology that exploits both cross-country and within-country variation. We find that aid inflows have systematic adverse effects on a country's competitiveness, as reflected in a decline in the share of labor intensive and tradable industries in the manufacturing sector. We find evidence suggesting that these effects stem from the real exchange rate overvaluation caused by aid inflows. By contrast, private-to-private flows like remittances do not seem to create these adverse effects. We offer an explanation why and conclude with a discussion of the policy implications of these findings.

Arvind Subramanian

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