APEC Key to Unlocking India’s Economy and Boosting Global Growth
NEW YORK, March 1, 2016 — With China and the rest of the global economy slowing down, India has emerged as the fastest growing major economy in the world. A new Asia Society Policy Institute (ASPI) report argues that India has great potential to boost economic growth at home, in the Asia-Pacific, and globally if it is better integrated with the region by joining the Asia-Pacific Economic Cooperation (APEC) forum.
APEC, a forum of 21 member economies, has played a central role in promoting regional economic integration in the Asia-Pacific. As APEC considers adding new economies, India is “the ideal next member,” argue authors Harsha V. Singh, senior associate at the International Center for Trade and Sustainable Development (ICTSD), and Anubhav Gupta, ASPI senior program officer, in the new report, India’s Future in Asia: The APEC Opportunity.
“The first and necessary step toward greater Indian participation in Asian trade and investment flows is membership in APEC,” writes ASPI President Kevin Rudd in the foreword to the report. “It is a step whose time has come, for India, for APEC, and for the international economy.”
The report concludes that India’s inclusion in APEC would produce tangible benefits for India, APEC member economies, and the region. India is projected by the U.S. Department of Agriculture to be the world's third largest economy by 2030. Its middle class, expected to grow to 475 million by 2030, can provide a significant boost to global demand if better connected to other markets. India's growing workforce could help offset aging populations and labor shortages in other parts of the world.
For these reasons, in the past year, key APEC economies, such as the United States, China, Japan, and Russia, have welcomed India’s interest in APEC. The report’s authors caution, however, that not all APEC members are currently in favor of Indian membership because they view Indian policy and politics as insufficiently supportive of more open trade and greater regional integration.
Authors Singh and Gupta identify four concrete steps that India could consider taking to address concerns about its bid to join APEC:
- enact policy that would signal reform and lead to major economic benefits, such as the introduction of a Goods and Services Tax (GST);
- engage in more substantive proposals in external trade negotiations, such as in the World Trade Organization (WTO) or in ongoing bilateral investment talks;
- energize efforts to improve the ease of doing business for domestic and foreign firms;
- establish a vigorous diplomatic effort alongside key APEC members who are supportive of India’s bid.
Kevin Rudd argues that “APEC is a process not a destination” and was designed to “be flexible even as it holds out the very ambitious goal of pan-regional economic integration.” APEC’s processes and mechanisms were intended to help emerging economies such as India undertake critical reforms rather than to set those reforms as preconditions for membership.
The report outlines steps that the APEC Secretariat and key APEC members could take to facilitate consideration of India’s membership. APEC, for example, could share members’ concerns and work with India on potential solutions. It could commission studies to analyze the impact of India’s inclusion and identify key goals and targets that India could work toward once it became a member. Most importantly, key APEC members could provide vocal support for India’s membership in order put the issue on the APEC agenda for the 2016 APEC Leaders Meeting in Lima, Peru in November.
The report builds on the work of the ASPI Task Force, India and APEC: Charting a Path to Membership, which was launched in July 2015 and is chaired by Rudd, as well as ASPI’s meetings with senior industry and government leaders in India and key APEC members.
About the Asia Society Policy Institute
With a problem-solving mandate, the Asia Society Policy Institute tackles major policy challenges confronting the Asia-Pacific in security, prosperity, sustainability, and the development of common norms and values for the region. The institute builds on the mission of the Asia Society, which has sought for 60 years to explain the diversity of Asia to the United States and the complexity of the United States to Asia, and to be a bridge in problem-solving within the region and between Asia and the wider world.