Kishore Mahbubani

Opinion | Why India can learn from Asean to become a stronger economy than China or the US

India must unleash the vibrant animal spirits of its 1.3 billion people by exposing them to global economic competition if it is to reach its potential and become the world’s largest economy

Three steps are needed: join the RCEP; encourage an open South Asia region (and that means boosting trade with Pakistan); and welcome FDI, particularly US manufacturers seeking a ‘China Plus One’

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Ride-sharing bicycles parked at Connaught Place in New Delhi, India. Photo: Bloomberg

Kishore Mahbubani

Published: 5:00pm, 18 Aug 2021Updated: 5:30pm, 18 Aug 2021

The country with the biggest gap between its economic potential and its economic performance today is India. India’s Gross National Product (GNP) today is US$2.6 trillion. It should be at least 10 or 20 times larger.

If we look at what ethnic Indians have achieved in the most competitive human laboratory in the world – the United States of America – and elsewhere, it is clear that Indians are naturally competitive economic animals and thrive in economic competition.

In this regard, they are very similar to the Chinese. The economic fortunes of the Chinese turned after the key reformist leader of China, Deng Xiaoping, opened up the Chinese economy in 1980 and allowed all Chinese, 1.4 billion of them, to compete.

In 1980, the size of the Chinese economy (US$191 billion) and the Indian economy (US$186 billion) were about the same. Today, the size of the Chinese economy is US$15 trillion, over five times the size of the Indian economy at US$2.6 trillion.

By contrast, the 1.3 billion Indians have been deprived of economic competition. Since they have been deprived of economic competition, they cannot thrive. Hence, India’s economy has fallen behind other regions and countries, including Southeast Asia.

Of the 10 states in the Association of Southeast Asian Nations (Asean), nine have an Indic cultural base. Hence in some ways, they are cultural satellites of India. The total population of Asean is 650 million, half that of India’s. But the combined GNP of Asean in 2020 was about US$3 trillion, slightly larger than that of India (US$2.8 trillion).