A. Michael Spence, Nobel Laureate and professor emeritus of Economics at Stanford University spoke with Srijana Mitra Das of the Economic Times to discuss economic changes occurring worldwide and expressed confidence in India’s growing economy.
Lightly edited excerpts from the interview pertaining to India:
Das: How can India benefit from the digital movement while providing employment to millions?
Spence: India is a powerhouse in the digital and life sciences realms. It has a thriving digital ecosystem. Instead of digital systems replacing existing retail systems, entrepreneurs and companies are building solutions to integrate existing and sometimes very small retail businesses into digitally enabled supply chains, making them more effective.
Mobile internet penetration has proliferated and India’s data rates are among the lowest in the world now, inspiring an incredible explosion of entrepreneurial activity. I think the net effect of the digital revolution in India will be to create employment — it’s not the whole solution for jobs but it provides businesses opportunities and lets them scale up. With policy and incentives, digital advantages can be steered to employment creation rather than reduction.
Das: Where does India’s economy figure in this moment of global ‘regime change’?
Spence: The Indian economy is the outstanding performer at this point — among the very large emerging economies, India has the highest potential growth at 7%-plus and is among the most attractive investment destinations now. It has all the ingredients. It’s not heavily dependent on any one growth engine whose might is fading — and its strengths are precisely in areas which are advancing in economic power. As elsewhere, there’ll be some bumps and public and private markets will need to make adjustments — but don’t get confused by the short-term stuff. I’m optimistic about India’s economic trajectory over the next decade.
