The American Interest
Analysis by Walter Russell Mead & Staff
Forget Europe: Watch India

This is the advice of AI board member (and therefore, full disclosure, WRM colleague) in the New York Times. Cowen points out that the economic slowdown in India will have more effect on the well being of more people than anything that happens in Europe. Hundreds of millions of people in India and in nearby South Asian countries will be condemned to the kind of absolute poverty that Americans can scarcely conceive for decades to come if India’s growth slide can’t be stopped.

As Cowen notes, India’s slowdown is not alone; the BRICs generally have slumped.

India may not be alone in this slowdown. There is a more general worry that the grouping of disparate giants known as the BRIC nations — Brazil, Russia, India and China — has, for some reason, lost much of its previous momentum. Last year Brazil grew at only a 2.7 percent rate, down from 7.5 percent, and Chinese and Russian G.D.P. growth are slowing too, to an unknown extent and duration. In the past, many countries engaged in catch-up growth have suddenly slowed and hit plateaus, although economists do not have firmly established theories as to when and why this happened. In any case it remains a real danger.

Watching Europe remains important for those of us worried that a crisis in the eurozone could spread into a worldwide panic. India’s troubles don’t have the potential for that kind of impact in the short term.

But looking forward, Cowen is right: the economic story unfolding in India is, for better or worse, one of the most consequential things happening on this planet. Via Meadia advises readers to keep their eyes on the Indian economy, and we will do our best to help.

Published on May 6, 2012 9:57 am
  • Kenny

    The economies of the ENTIRE world, Mr. Mead, depend on a healthy West.

  • Byron

    The various factors Cowen identifies as primary contributors to India’s slowdown are almost without exception problems of government over-taxing and over-regulating economic activity.

    Somebody call Ripley.

  • Anthony

    Global economy in 2012 is both fragile and unbalanced – Asian economies are exposed to China and you’re right attention need to be paid beyond Europe.

  • http://facingzionwards.blogspot.com/ Luke Lea

    I think the point is that Europe (and/or China) would affect us, India wouldn’t. It’s not just about numbers, but whose numbers. (Granted, I didn’t bother to read the article: in the name of economy you sometimes just have to guess.)

  • Corlyss

    Forget Europe. Watch India!

    Over at johnbatchelorshow.com and for years when Batchelor was on ABC Radio before Sept. 06 Batchelor regularly said the same thing. The 21st Century might still be an American century, but it is also the Century of the World’s Largest Democracy (India) and the World’s Largest Totalitarian State (China). They are scratchy neighbors, and how they resolve their disagreements will shape much of the 21st Century and beyond.

  • Corlyss

    @Luke
    The time you saved not reading the article you should spend reading Kaplan’s Monsoon about why the world’s focus is shifting from the Atlantic states to the Indian Ocean states. At the very least, you’ll read some beautiful writin’, along with the powerful insights, at no extra charge.

  • Jacksonian Libertarian

    All of the BRICS economies are built on an export model, dependent on manipulation of their currency to gain a price advantage for their exporting businesses. This means that if the importing Nations are in a slump and can’t buy as much of the exporters products, then the exporters are going to see a slump as well. If the BRICS want to see strong growth they are going to have to encourage their own internal markets, and make things easy and profitable for entrepreneurs.