RIDING THE LONG ASIAN WAVE

DURING India's highest-growth years of 2003-08, I held the view that India was unstoppable.

- R GOPALAKRISHNAN

My view today continues to be optimistic in the long cycle, but with bumps along the short cycles. Russian economist Nikolai Kondratiev had argued that nations move according to waves of long cycles. People usually think about the shocks and imperatives of short cycles, but these occur within that long cycle.

India liberalized its economy approximately 15-20 years after China and has been less directive with reforms. How do we compare? Around 2005, I reckoned that India was about 20 years behind China, based on consumption per capita of shampoo, soaps, electronics, steel, automobiles and so on, rather than macro-economic data. I still think that India is about 20 years behind China. This rise of India is a part of the long cycle of the rise of Asia.

The long cycle

The Russo-Japanese war of 1905 was the start of the Asian long cycle. In 1904-05, the Japanese definitively defeated the Russians after centuries of Western expansionism, colonialism and mercantilism. The battle of Tsushima is famous because after centuries an Asian empire defeated a European one.

In the early 1900s, Europe plus America accounted for over two-thirds of the global GDP. Since the Russo-Japanese War, the West has declined to about one-third, whereas the rest of the world has climbed to two-thirds. This is what I mean by the long cycle.