Tripolar(USChInd)Wrld11jan05Ceip

8/6/2019 Tripolar(USChInd)Wrld11jan05Ceip

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A Tri-Polar World:A Tri-Polar World:USA, China And IndiaUSA, China And India

Arvind VirmaniArvind Virmani

(views are personal)(views are personal)


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9th February 2011 CarnegieEIP:av

IntroductionIntroduction

Index of Power: Economic, Overall Review of Our Past projections

Globalization: Major driving Force

New DevelopmentsEffect of Global Crisis

Revised estimates: Changes

Transition: Multi-polar or Bi Polar

Peace: Asian Balance of Power


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Nations PowerNations Power

Traditional: Industry, Population, Fiscal-Debt, Economy(Kennedy), Technology,Military, Navy, Nuclear.

Complex Models: Tellis(2000) Simple model: Two level index-VIP

Foundation/base: Economy

Basic modern economics -> VIP2

Apply all countries, over millennia

Upper level: Strategic Assets/Tech



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Economic Foundations of PowerEconomic Foundations of Power

Growth Theory and ExperienceConvergence (PcGdp):Intra AE only

LDCs: Divergence, Shooting stars

HGEs: Gr. persistence, Catch-up Growth Globalization and Reform

Asia (Japan;NICs,Asean;China,India,Vietnam)

Global Technology Frontier Shares in world (GDP- Population)

Europe, Japan, USA=>China, India, Indonesia



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26/10/0711 April,2007

11 April, 2007 AV

Global Growth ExperienceGlobal Growth Experience Sustained high growth over decades rare.

Inter-decadal growth persistence (correlation) low (0.18) Complete mean reversion in three decades (0.06)

Exceptions: Asian high growth economies (Japan, NIEs,ASEAN, China, India, Vietnam)

GrPcGdp > 7.5% for 30 (20) years: 2% (4.5%) ctry

Per Capita GDP: Corellogram of Average decadal growth rates

1950s 1960s 1970s 1980's 1990s

1950s 1.0 0.26 0.07 0.02 -0.04

1960s 1.0 0.34 0.12 0.06

1970s 1.0 0.15 0.211980's 1.0 0.18

1990s 1.0

Countries 66 89 127 129 182

Note: No of countries varies because of data availability

Data: Penn World Tables, ver 6.2; Chain index, const price


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Indices of Power: VIPIndices of Power: VIP22, VIP, VIP

Size of Economy (GDP)Gdp = Population * Per capita Gdp

Population(demography)

Quantity Comparison: PPP Economic Power : Index(VIPP/VIP2)

General Technological capability: Prod

Fn. (K/L, Hs/L, A(t)) = Per capita Gdp Overall Power: Index (VIP)

Strategic Technology and Assets



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Uni- Polar to Bi PolarUni- Polar to Bi Polar

US NIC (Dec 2004) Based on Goldman Sachs October 2003

Chinas GDP(US$) couldbe 2nd largest by 2020

Indias GDP(US$) couldbe 3rd largest by 2035

2004 Paper (ICRIER WP150) China and India rise faster than projected

Demographic decline (Russia, Japan, Ger, Itly, Fra)

Kissinger(94): US,EU,Russia,Japan,China,India(?)

Bi Polar Transition China: GDP at PPP equals USA by 2015

Power potential 70% of USA by 2035


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Bi Polar to Tri PolarBi Polar to Tri Polar

2005 Paper (ICRIER, WP160, Mar. 2005) Rise of India:

Third largest economy 2015,

Real GDP=USA by 2040

Power potential 80% of US by 2050. Chinas Power potential = US 2030-35

Bi-polar world by 2025, Tri-polar by 2050

Association of States(EU): Virtual State (USSR)

2006 Book (Academic Foundation) Weakness and threats to China, Indias growth

China: Mercantilist Export-FDI/PSU investment led growth

India: Governance/Public Goods e.g. Rule of Law (Police, legal system)


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US NIC: November 2008US NIC: November 2008

The eight largest economies in 2025will be, in descending order: the USChina, India, Japan..

By 2025 China will have the worldssecond largest economy and will be aleading military power.

A global multi polar system is emerging withthe rise of China, India, and others

The development of a globalized economy inwhich China and India play major roles


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New Developments: 2008-10New Developments: 2008-10

Oil, Energy Price BoomRussias comeback, Brazil

New PPP estimates from ADB-WB

India, China: -36%/40%

US-EU Crisis

Differential Impact on economies

Domestic vs. Export oriented

Fiscally constrained vs. non-FC


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Fiscal ImpactFiscal Impact

Fiscal Deficits: USA, EU (Japan)Foreign Aid, Military expenditures

China: Fiscal Surplus, CAS

Global rebalancing(US CAD)?

China Domestic caution (Ec-tech): Financial

External Assertion(Pol-Mil nationalists)

S China Sea, Arunachal-Kashmir


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Impact on ExportsImpact on Exports

Global GDP & Import slowdownExport oriented => Export neutral

Development strategy, Growth model

E, S E Asia: FDI-Export or PublicInvestment-Export led growth model

India: Domestic Entrepreneur led gr

Export Neutrality, Investment neutrality

Continue Policy, Institutional Reform

Mid-decade Gr. Rt.: China


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1a Economic Size (GdpPpp)1a Economic Size (GdpPpp)


0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

Rleative Size of Economy: GDP PPPUSA China India

Japan Germany Russia

Brazil


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Difference: 2010 from 2004-5Difference: 2010 from 2004-5

ImpactLower Gdp Ppp estimates

Offset by faster growth

China: GdpPpp = US in 2017(+2 yrs) India 3rd largest in 2012

Equals USA in 2034 (-6 yrs)

Indias (trend) growth rate fasterthan Chinas by mid-decade.


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1b Economic Size (GdpPpp)1b Economic Size (GdpPpp)


0.0

0.1

0.2

0.3

0.4

0.5

0.6

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

Rleative Size of Economy: GDP PPP

USA China India

Japan Germany Russia

Brazil UK


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RussiaOvertake Germany by 2020

5th in Size and Power Potential

Reason - Oil/Gas prices: Faster growth Non-market power of energy cartel

Actual Power higher: Strategic Technology

BrazilOvertake France and UK by 2012.

Positive effect of natural resource endowment


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Power Potential (VIP2)

China VIP2=USA 2027

India: VIP2 80% of USA in 2040

10 yrs earlier than in first prediction


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Long Term Evolution: Power Potential VIPLong Term Evolution: Power Potential VIP22


0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

2

11

2

1

2

1

2

1

2

1

2

2

2

2

2 2

2

2 2 2

1

Power Potential: VIPP

USA China Japan

Germany UK France

India Russia


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Global System: Long TermGlobal System: Long Term

Global Power: VIP2 > 25%China 2010, India 2025 (Japan -09)

Super Power: VIP2 = 40% - 50%

China 2015-18

India 2031-34

Uni-polar: US Sole super-power

Peak 1999 (1990-2010)

Bi-Polar: 2020, Tri polar: 2035


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Long Term Evolution:Long Term Evolution:Power Potential VIPPower Potential VIP22


0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2010 2020 2035

USA China India Japan Germany


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Quadri-Polar: UnlikelyQuadri-Polar: Unlikely

Virtual State: Unified decisionmaking w.r.t external relationsComecon/E block (USSR+ E Europe)

EU is not Virtual State(VS)Move in opposite direction: ReferendaOnly in Trade (WTO) does it act as one

Financial crisis: Mixed signals

Politically and Militarily: Nil No EU seat in Multilateral organizations


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Multi-Polar TransitionMulti-Polar Transition

Multiple descriptions: Competitive fringe Pluri-polar, Multi-polar, A-polar, US and Rest

Globalisation Change in relative importance of Economic,

military, social elements of power

Economic, social(?) Multi-polarity USSR disintegration 1990=> Russia

Ec. decline of allies: Large, increasing Gap with2nd rank Japan, 3rd rank Germany etc

Ec. rise: Non-allies China, Brazil, India

Formation of Euro, expansion of EU


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Overall PowerOverall Power

Actual Power: VIP=(VIP2

,Strategic Assets) Strategic-military technology/assets/capability

USA even more dominant

Russia: Legacy strategic assets immobilised

Overall: US pre-dominant power Monopoly with Competitive Fringe

Future: Strategic assets

Russia: Gradual depreciation

China: Systematic build of strategic capability!

India: Political Will to build, exercise power?


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Transition: Power PotentialTransition: Power Potential

VIPVIP22


0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

211

21

21

21

21

22

22

2 2

2

2 2 2

1

Power Potential: VIPP

USA China Japan

Germany UK France

India Russia


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Net Assessment: PreliminaryNet Assessment: Preliminary

S1 Uni-polar Multi polar

G20; G9(1+1+3+1+3)?

S2 Bipolar (USA-China)

S2a(Jelly spine) Action(appeasement)-Reaction China(declining respect/fear) expands strategic space in Asia.

G2 => Matrix (India-Asean-Japan-Korea; Medium powers, G6)

S2b(Velvet glove-iron fist) China-hard Realism(SCs corenat int) US reacts(Open seas, alliances, dvlp partners)

S3 Tri polar

S3a Jelly Spine: G2 USA-China

S3b Velvet Glove: Key role of USA-India Partnership S3c China-India (Buddhist): => G3 or G4 (+EU)

S3d Independent(all): Un-stable disequilibrium, danger


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Velvet Glove Scenario:Velvet Glove Scenario:US-India PartnershipUS-India Partnership

Dangerous Decade(2025-35)=> S3b Partnership: Globalization-multifaceted

interaction (Economic, military, social)

Global Economic Organizations Legitimacy, credibility and governance

Fair democratic rules that will last

IMF: Bop support/ST Loans

Crises: Macro imbalances=>Macro mgt.

European Institution, Power base

WB: Aid/social: India (7)


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Initiatives: EconomicInitiatives: Economic

Positive Levers: Traditional Polity Fiscal constraints on USA

Indian Aid Organization

R&D & Joint Production Health care costs (US)

Energy: Thorium breeder, non-conventionalsources; Use efficiency (Bldgs, AC, Refrig)

Cyber Security (Indian IT)


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Initiatives: International SecurityInitiatives: International Security

Fiscal Def =>Vacation of strategicspace =>Strategic partnership (Asia)

Freedom of Asian Seas Initiative

Suez to South China seaNaval co-operation: broaden, deepen

UNSC: Permanent member with veto

Technology access: Membership ofNSG, MTCR, Wassanar, Australia Group


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Initiatives: International SecurityInitiatives: International Security

Global Anti-terror Strategy Create consensus in UN and other forums Travel, financial ban on Intelligence agents, military

officers (rogue?) involved with terrorists

Definition of Aggression and Self defense

Irregular/Guerilla warfare from territory

Elimination of Terrorist networks Arms embargo on countries sheltering terrorists

Counter-terror expertise Deterrence capability: Pariah State, Non-State

actor, state sponsored; finance source/channel


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Medium Term: Geo-Political RulesMedium Term: Geo-Political Rules

New Rules for an era of globalization Economic: Macro decision making

Quadri polar? G4 (US, China, EU, India)

Social: Democracy Initiative (G6) Independent body: Degree of democracy

(index) to adjust 1 person 1 vote

Security: Institutions (rules):Vote proportional to power

Economic(VIP2) or Ec + Strategic (VIP)


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References 1References 1 From Uni-polar to Tri polar World: Multi polar

Transition Paradox, Academic Foundation, New

Delhi, 2009. Propelling India from Socialist Stagnation to

Global Power: Growth Process, Vol. I (Policy Reform,Vol. II), Academic Foundation, 2006.

A Tripolar World, India, China & US, Lecture delivered at India Habitat

Centre on May 18, 2005. Economic Performance, Power Potential and Global Governance: Towards aNew International Order, Working Paper No. 150, ICRIER, December 2004.(http://www.icrier.org/page.asp?MenuID=24&SubCatId=175&SubSubCatId=233).

A Tripolar Century: USA, China and India, Working Paper No. 160,ICRIER, March, 2005. (http://www.icrier.org/page.asp?MenuID=24&SubCatId=175&SubSubCatId=233).

Chinas Socialist Market Economy: Lessons Of Success, ICRIER OccasionalPolicy Paper, April, 2005 (http://planningcommission.nic.in/reports/wrkpapers/rpwpf.htm).

VIP2: A Simple Measure of Nations (Natural) Global Power, ICRIEROccasional Paper, July, 2005().
http://www.icrier.org/page.asp?MenuID=24&SubCatId=175&SubSubCatId=233http://www.icrier.org/page.asp?MenuID=24&SubCatId=175&SubSubCatId=233http://planningcommission.nic.in/reports/wrkpapers/rpwpf.htmhttp://planningcommission.nic.in/reports/wrkpapers/rpwpf.htmhttp://www.icrier.org/page.asp?MenuID=24&SubCatId=175&SubSubCatId=233http://www.icrier.org/page.asp?MenuID=24&SubCatId=175&SubSubCatId=233


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References 2References 2

Chinas Socialist Market Economy: Lessons Of Success,

Working Paper No. 178, ICRIER, December 2005. Global Power From The 18th To 21st Century: Power

Potential (VIP2), Strategic Assets & Actual Power (VIP),Working Paper No. 175, ICRIER, November 2005.http://www.icrier.org/page.asp?MenuID=24&SubCatId=175&SubSubCatId

.

World Economy, Geopolitics and Global Strategy: Indo-US Relations

in the 21st Century, Economic and Political Weekly, Vol. XLI No. 43-44, November 4-10, 2006, pp. 4601-4612 (http://www.epw.org.in/showArticles.php?root=2006&leaf=11&filename=10

). Trilateral Nuclear Proliferation: Pakistans Euro-Chinese Bomb, IDSA

Monograph Series No. 1, Institute of Defence Studies and Analysis,New Delhi, December 2006.
http://www.icrier.org/page.asp?MenuID=24&SubCatId=175&SubSubCatId=233http://www.epw.org.in/showArticles.php?root=2006&leaf=11&filename=10717&filetype=pdfhttp://www.epw.org.in/showArticles.php?root=2006&leaf=11&filename=10717&filetype=pdfhttp://www.icrier.org/page.asp?MenuID=24&SubCatId=175&SubSubCatId=233


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References 3References 3

The Economic Foundations of National Power: From Multi polar to

Tri-Polar World? in V. R. Raghavan (Editor), Economic Growth &National Security, Centre for Security Analysis, Chennai, 2008.

Future Economic Contours of the Asia-Pacific and South AsianRegion and Thier Impact on Global Security Architecture, USINational Security Lecture, 2006, in National Security, GlobalStrategic Architecture and Information Security, National Security

Series, 2006, KW Publishers Pvt Ltd, New Delhi, 2007. Evolution of World economy and Global Power: From Unipolar to

Tripolar World in Economic Diplomacy, Editor I. P. Khosla, KonarakPublishers, 2006.

Globalisation, Economic Growth and National Security

chapter in, Comprehensive Security for an EmergingIndia, Editor AVM Kapil Kak, CAPS 2010

The Sudoku of Indias Growth, BS Books, New Delhi,2009.

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Tripolar(USChInd)Wrld11jan05Ceip