EDITORIAL : THE HINDU, INDIA

Why exports need to be robust

The robust export performance in February is attributed primarily to the rebound in demand in the U.S. and a few other advanced economies. According to figures released by the Commerce Ministry, exports grew by nearly 50 per cent over February 2010 to $23.6 billion. During the 11 months of the current year (April 2010-February 2011) exports have grown to over $208 billion, crossing the annual target of $200 billion with one month to spare. The government's strategy of encouraging diversification into newer markets and the focus on non-traditional exports — the two important features of the Foreign Trade Policy — have paid off. Heartened by the strong export performance, the government has, in a strategy paper released recently, called for a doubling of exports to $450 billion by 2014. That can happen if exports grow at an annual rate of 26 per cent over the next three years. More in the nature of a visionary statement, the strategy is based on four pillars: a product strategy that will build on intrinsic strengths of some industries; market diversification; incentivising research and development; and building a Brand India. None of these is new but obviously the government hopes to refine some of the ongoing programmes of export promotion for even better results.

However, while a visionary approach to exports is welcome, perhaps necessary, the limitations of the Commerce Ministry ought not to be overlooked. While significant success has been achieved in fine-tuning procedures, discarding unwanted ones and building up an impressive technology backbone, the Ministry depends on various other arms of the government for achieving even some basic goals such as reducing transaction costs. Despite the adverse impact of rupee appreciation on export competitiveness, it has not always been possible to counter it just for the benefit of exporters. Facilitating infrastructure development has been a challenge for the government as a whole. On the external front, the weak recovery in the industrialised economies and the disasters in Japan call into question the assumption of world trade bouncing back to pre-crisis levels. Obviously Indian exports ought to be encouraged by every possible means to maintain the recent momentum. But trade policy is about imports too and what matters most in today's macroeconomic calculations is the level of merchandise trade deficit and its implications for the current account of the balance of payments. To a large extent, the growth in imports last year was due to the buoyant economic conditions at home, but the recent spikes in petroleum prices are a big cause for worry as energy imports are bound to enlarge in the coming years.

Contrasting elections

  Niger and Ivory Coast provide a stark contrast in responses to democratic voting. They also pose problems for globalisation theory. Niger's presidential election has been acclaimed as peaceful, free, and fair by 2,000 observers from the African Union (AU), the Economic Community of West African States (ECOWAS), the European Union, and others. The dictator, General Salou Djibo, who seized power in 2009 when the previous president, Mamadou Tandja, repealed a constitutional ban on a third term in office, is carrying out his promise to step down. The election is no mean achievement. Niger — vast, landlocked, and drought-prone — is desperately poor. Foreign corporations profit hugely by exploiting Niger's minerals; uranium extraction in particular is tainted by poor safety records and high rates of radiation-induced diseases. In addition, the country is a target for al-Qaida in the Islamic Maghreb (AQIM) and faces a long-running Tuareg rebellion in the northern region. As for the election result, the second-round turnout of about 35 per cent is likely to give victory to Mahmadou Issoufou, who, having won the first round by 13 percentage points over an ally of Mr. Tandja's, Seini Oumarou, is now endorsed by many of the first-round losers.

Ivory Coast, on the other hand, has collapsed into near-civil war with a concomitant humanitarian catastrophe. The election was free and fair, and the country is far wealthier than Niger. But the incumbent President Laurent Gbagbo has rejected the result, which was a clear win for Alassane Ouattara. He has unleashed his troops, who machine-gunned an all-women demonstration in Treichville; 80,000 Ivorians have fled to Liberia, and 450,000 have been internally displaced. As essential supplies dwindle, militias claiming to support Mr. Ouattara have created a condition of near-total lawlessness in Abidjan's Abobo district, amid tribal rivalries with other groups. Mr. Ouattara and his entourage are holed up in a luxury resort, and the 8,000 troops of the United Nations Operation in Côte d'Ivoire (UNOCI) have only a limited mandate. There is no doubting the popular commitment to the ballot-box in both Niger and Ivory Coast. The key difference lies only partly in the response of the two authoritarian regimes. The AU and ECOWAS have attempted to mediate in Ivory Coast and have imposed sanctions, but to no apparent effect. What Mr. Gbagbo is exposing, among other things, is that unless multilateral bodies create strong mandates for justifiable humanitarian intervention, the theory that national sovereignty has been vitiated in these purportedly globalised times is a vast overstatement.