{
  "title": "Looking Ahead: India in a Changing World",
  "publication": "IMF News, February 13, 2020",
  "sourceUrl": "https://www.imf.org/en/news/articles/2020/02/13/sp021319-looking-ahead-india-in-a-changing-world",
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  "summary": "Speech: The 8th C.D. Deshmukh Memorial Lecture by IMF First Deputy Managing Director David Lipton, New Delhi, February 13, 2020.",
  "publishDate": "2020-02-13",
  "sections": [
    {
      "heading": "Introduction",
      "content": "- Speech: The 8th C.D. Deshmukh Memorial Lecture by IMF First Deputy Managing Director David Lipton, New Delhi, February 13, 2020.  \n- Context and framing:\n  - C.D. Deshmukh’s role at the 1944 Bretton Woods Conference and his advocacy that the IMF and World Bank address development needs.\n  - Recent moderation of some global risks (U.S.-China trade conflict, a hard Brexit) but emergence of new uncertainties, including the coronavirus epidemic impacting global value chains.\n  - Central narrative: coexistence of secular stagnation in many advanced economies and the potential for “secular dynamism” in India and other youthful, developing economies."
    },
    {
      "heading": "Secular Stagnation and Productivity",
      "content": "- Core findings:\n  - Advanced economies have been stuck in low gear for a decade due to lagging productivity and weak investment opportunities.\n  - Contributing factors: demographic change, legacy effects of the global financial crisis, and a possible waning of the IT revolution that began 30 years ago.\n  - The full productivity impact of big data and artificial intelligence is still uncertain.\n  - Global trade slowdown predates recent trade tensions and has intensified.\n\n- Quantified impacts and estimates:\n  - In the year to October 2019, WTO members enacted restrictions covering about $750 billion of trade.\n  - The IMF predicts a 0.5 percent hit to global growth this year as a result.\n  - The IMF estimates that last year global growth would have been 0.5 percent lower without central bank support.\n  - Structural vulnerabilities: rising sovereign and corporate debt; markets signal low expectations for a business investment pickup.\n\n- Implications for emerging markets:\n  - Search for yield has brought portfolio inflows and capital volatility to emerging markets.\n  - Many developing countries remain insufficiently “investable” due to opaque legal frameworks, corruption, import restrictions, and onerous regulation, constraining access to stable, long-term capital needed for large-scale infrastructure and sustained growth."
    },
    {
      "heading": "Driving Convergence (India-focused)",
      "content": "- India’s strengths and recent trajectory:\n  - India has been the fastest-growing large economy in recent years, with a young and growing population and significant untapped demand.\n  - Services success: India is one of the largest exporters of information, computer and telecommunications services—key drivers of productivity growth and a modern path to development.\n\n- Constraints on faster convergence:\n  - Recent slowdown driven by weak domestic demand, falling credit growth, and financial system problems with significant balance sheet challenges.\n  - Longer-standing drags: lagging agriculture (contributing to falling rural consumption), slowing export growth, rising unemployment, falling labor force participation—particularly low for women.\n  - Manufacturing constraints: small scale of production, low productivity, trade restrictions, infrastructure gaps.\n  - Skills and education tradeoffs: investment in tertiary education fueled high-skilled services growth, but broader primary education access and reduced gender gaps in labor force participation are required to realize the demographic dividend.\n\n- Growth scenarios for reaching half of U.S. per capita GDP:\n  - At an average of 9 percent growth a year, it would take 15 years.\n  - At 7 percent, that would be 19 years.\n  - At 5 percent growth—just a bit over last year’s fourth quarter growth—it would be 23 years.\n\n- Automation risk:\n  - By one estimate, 14 percent of the global workforce—that is to say, 375 million workers—could lose their jobs in this decade as a result of automation.\n  - Some 9 percent of Indian workers could lose their jobs."
    },
    {
      "heading": "India’s Links to Global Value Chains",
      "content": "- Diagnosis:\n  - Greater use of foreign intermediate goods in producing exports is a route to stronger manufacturing.\n  - Policies that limit those linkages (e.g., tariffs on intermediate goods) constrain the emergence of globally competitive manufacturing and job creation.\n\n- Observations on recent trade shifts:\n  - So far, trade tensions have had limited direct impact on India because its trade integration is relatively limited compared with other Asian exporters.\n  - The investment channel, however, could produce significant medium-term reverberations if trade tensions worsen.\n  - Example cited: a Nomura Securities study of 56 companies that relocated from China found 26 moved factories to Vietnam but only three to India—indicating India is lagging ASEAN in attracting production relocation.\n\n- Policy imperatives to deepen value-chain integration:\n  - Invest in infrastructure.\n  - Reduce tariff and non-tariff barriers.\n  - Implement reforms that encourage emergence of larger, more productive manufacturers.\n  - Complement tertiary education successes with spending directed at primary education to broaden access and reduce gender gaps.\n  - Labor market reforms focused on protecting people rather than protecting jobs."
    },
    {
      "heading": "The Role of Multilateral Cooperation",
      "content": "- Rationale:\n  - Rapid convergence and sustained dynamism require global markets for goods, services, capital, and technology.\n  - Advanced-economy savers would benefit from opportunities to invest in profitable enterprises in fast-growing economies.\n\n- Core areas for cooperative action and reform (policy recommendations):\n  - Address frictions surrounding economic integration:\n    - Solve conflicts over trade and global value chains.\n    - Work cooperatively on protection of intellectual property, unfair competitive practices, unreasonable restrictions on investments, and the buildup of tax havens.\n    - Undertake serious WTO reforms if needed.\n  - Strengthen mechanisms to manage spillovers and volatility:\n    - Mitigate disruptive shifts in market sentiment and capital flows.\n    - The IMF is working to develop a more robust set of policy tools to promote stability in the face of spillovers.\n  - Provide global public goods to confront existential threats:\n    - Climate change; cyber-threats; ownership and use of data; new pandemics; migration.\n    - These problems require multilateral solutions beyond individual countries acting alone.\n\n- Overarching message:\n  - Individual country reforms to become investable are necessary but insufficient; multilateral cooperation and preserved integration are essential to address secular stagnation and enable emerging-market dynamism, benefiting the global economy.\n\nInternational Monetary Fund press release of the February 13, 2020 speech by David Lipton, \"Looking Ahead: India in a Changing World.\"\n\n---\n\n\n References\n\n- David Lipton\n- People's Republic of China and the IMF\n- India and the IMF\n- Speeches\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2020/02/13/sp021319-looking-ahead-india-in-a-changing-world"
    }
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    "Published: February 13, 2020",
    "Speech: The 8th C.D. Deshmukh Memorial Lecture by IMF First Deputy Managing Director David Lipton, New Delhi, February 13, 2020.",
    "Context and framing:",
    "Core findings:",
    "Quantified impacts and estimates:",
    "Implications for emerging markets:",
    "India’s strengths and recent trajectory:",
    "Constraints on faster convergence:",
    "Growth scenarios for reaching half of U.S. per capita GDP:",
    "Automation risk:",
    "Diagnosis:",
    "Observations on recent trade shifts:",
    "Policy imperatives to deepen value-chain integration:",
    "Rationale:",
    "Core areas for cooperative action and reform (policy recommendations):",
    "Overarching message:",
    "[David Lipton](http://www.imf.org/external/np/omd/bios/dl.htm)",
    "[People's Republic of China and the IMF](http://www.imf.org/external/country/CHN/index.htm)",
    "[India and the IMF](http://www.imf.org/external/country/IND/index.htm)",
    "[Speeches](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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