VIEWPOINT — By Anil Wadhwa — The end of the cold war had brought about new dynamics in international relations, and unprecedented challenges for nation states. But all along, while the drama was being enacted before our very eyes, no one could predict how it would all unfold.
Europe’s map was a transformed one and countries with alignments or without were all left to scramble for new linkages, dependencies and friendships. This is because today, we live in an interdependent world and an increasingly globalised world order.
The market crises all round the world leading to failure of economies and their bailout has brought home the fact that governance is becoming increasingly important in the management of global economics as well in the case of individual nation states.
Governance or lack of it has also recently resulted in a number of protests even in seemingly stable economic systems. The aspirations of the people living in this world have undergone a change. With the advancement of science and communication technology across the world and free flow of ideas has become the norm. Openness in society has become dear to the hearts of populations.
In general, more people around the world want to raise their living standards and they want to do so in the shortest possible time frame. Call it a materialistic world if you will, but the trend has its own ramifications, which requires deft handling.
The recent disturbances in many societies around the world happened because people were unhappy in the situation they were in, and did not consider it worth their while to wait while those who governed them could eventually get their house in order. In some case, a better system prevailed, but in many cases, the result has been greater chaos and difficulties.
The notion that peoples aspirations should come first and everything else should follow was a notion prevalent in wealthy societies where governance was not a challenge due to small populations. But the rise of China and India on the world scene and the models pursued by the other emerging countries has given rise to new thinking. It is now increasingly important to govern with imagination, to face challenges as they arise head on and not to let ones guard down even when the economic systems are supportive and the going is good. But it has also taught an important lesson to the world — no model of governance or development is sacrosanct — the scenarios and circumstances in each case are different.
The largest flaw in the global economic order set up after the Second World War was the tendency to become prescriptive and propagate the one size fits all theory. Increasingly, the failure of such policies is becoming apparent. It is also clear that good governance and law and order brings about the conditions for economic prosperity, especially in societies with large populations. One of the starkest lessons learnt by the world over the last decade is that administrators should put themselves in the shoes of those whom they govern, and not remain in an ivory tower. If not, it often gets too late to rectify mistakes, leading to a disruption in the societies that they wish would stay on to a certain course.
It has also become necessary to react in a timely manner to situations as they arise and correct the course. The euro zone crisis coupled with the economic difficulties in the United States has brought about despondency around the economic circles in the world. The failure of the US Congress joint select committee to produce a deficit plan implies that the long term fiscal challenges in the US are still left unaddressed.
The Euro ship ran into rough weather and hit a number of reefs, developing many leaks. Yet, there is no agreement in Europe over the exact path to follow as far as fiscal control and governance is concerned. As economies slow, more European countries are in the throes of slowing growth, lack of confidence and mounting debts. Suddenly, those who were to be emulated are being seen as those with flaws in the system.
New solutions are being found, and mistakes being analysed. Yet, each crisis has a silver lining, and each difficulty leads to a churning. Whether we like it or not, the old world order is changing before our eyes, and many of us probably do not even realise it. Ask an investor today where the money should be invested, and there will be very few answers. While there are opportunities, no one is quite sure how the world economic system will play out in an interdependent and globalised, yet unpredictable world.
But one can discern some general trends — the strength of the societies with large, trained workforce in manufacturing, the advantageous situation for those who have adapted prudent fiscal policies in the past, and the foreseeable difficulties for those who have allowed the population to drift into a sense of complacency due to sheer bad governance. While the age and numbers are important for a workforce, training and a work ethic are equally necessary. Living standards are important but so is the quality of life. Development is important, but so is the air we breathe, the water we drink, and the streets where we walk.
What are the lessons from this situation which prevails in the world today? Those who are in a position to govern and take decisions need to keep the welfare of people in mind. They need to be responsive and work for the betterment of the economic health of their societies to avoid societal conflict. Above all they need to pay attention to education, sanitation and providing a good quality of life. Conflicts are seen as increasingly avoidable. It is a moot point that no one declares war today, and nation states always act in "self-defence”. The very notion that war can be raged is outrageous and seen as being destructive counsel and negotiation is increasingly seen as being more prudent. A confrontationist situation in the Straits of Hormuz or in the South China sea does only harm — no good. Market sentiment crash, despondency sets in and economies suffer. Ultimately, the people in this interdependent world with raised aspirations are the sufferers. In today’s globalised economy the world is being recreated every day. Let us hope we realise this soon so that the interdependent world lives in sanity and continues to provide happiness and prosperity for all on the planet earth.

Note: Anil Wadhwa, former Ambassador of India to Oman. The views expressed in this article are his own and do not reflect the views of the Government of India.