Harvard’s Gita Gopinath At MYRA: Global Economic Headwinds To Have Minimal Impact On India

Dr. Gita Gopinath, John Zwaanstra Professor of International Studies and of Economics, Department of Economics at Harvard University, USA visited MYRA School of Business, Mysore, on December 22, 2015 to deliver a talk on important global economic trends and their implications for India.

Dr. Gopinath focused on the global macroeconomic scenario and its implications for the Indian economy. 

She began by noting that the current economic scenario is in a very interesting phase. We are coming out of the recession with the world economy slowly repairing itself and different countries going through different trends in the recovery process; now is a good time to pause and see where the world is heading, she said. 

Dr. Gopinath outlined four major trends that are currently playing out in the global economy:

• Diminishing GDP growth in China and its immensely negative effect on the entire global economy
• Collapse in commodity prices which has sent a chill down the spine of commodity investors: a huge drop of up to 40%, this sudden plunge in prices of commodities has set in a macroeconomic bubble
• The beginning of the end of low interest rates: tightening of the monetary and fiscal policies to bring down inflation rates is already in process
• Demographic trends of rising life expectancy with an increase in aging population in developed economies: this has had a negative impact on the global economy with a steep decline in the ratio of working population to retired population

The last trend is the one that will have a long-term effect, said Dr. Gopinath. This trend represents the most critical long-term economic dilemma facing the developed world. The big implications are on the fiscal side – with a significant amount of the population being retired and living off the wealth it generated during its working years, there are expected to be increased social security and related costs on government budgets,  she elaborated. 

What are the implications of these global economic trends on the Indian economy? 

As per Dr. Gopinath, while the global economic scenario might look bleak, things are looking good for India.

While most emerging markets are exposed to a negative shock due to crashing commodity prices, India being a big commodity importer, stands to gain, she said. 

The China Slowdown effect has not had a major negative effect on India as India’s exports to China are a small 4%. 

The high borrowing interests are also not bothering India much. Given that India has a young working force, the demographic aging trends and their negative impacts is not a major concern to India either. 

The audience interacted with her with questions on wide ranging issues—the global currency issues, increasing environmental concern on the global economy; distribution of agri-products, etc. 

Commenting on this, Dr. Gopinath said, “While each country is trying to do its bit, and new employment opportunities have opened up with the solar projects, waste management programs and such, yet on the global front, these (policies) lack teeth.”

Implementation of the right technologies can address a few of these problems, she added. 

Dr. Gita Gopinath, who has a number of laurels to her credit including the ‘Young Global Leader Award’ by  the World Economic Forum in 2011 was inducted into the Women Achievers’ Hall of Fame at MYRA School of Business, Mysore, by Mr. Ashok Baweja, Head, Quest Global Defense and Former Chairman of HAL.

Dr. Gita Gopinath with MYRA students and faculty

Mrs. Rashmi Bansal, the well-known author was inducted into Women Achievers’ Hall of fame (WAH) in 2014.

Dr. Shalini R Urs Founder and Chairperson, MYRA, welcomed Dr. Gopinath to the event with enormous pride, and talked about her contributions to the field of macroeconomics, especially fiscal devaluation studies. Dr. Gopinath, who was born in Mysore, drew praise from Dr. Urs for her illustrious journey. Dr. Gopinath’s journey from Mysore to Harvard is truly remarkable and inspiring to young minds, she said in her welcome address.

Dr. Shrijay Urs, Executive Director, MYRA, Faculty, staff, students and select invitees formed the audience. 

Dr. Sudhendar Rao, Professor of Information Systems at MYRA in his valedictory address said that her talk on the global economic situation was like a capstone course to the just-concluded course on Economics and the on-going course on Global Competitiveness at MYRA. Dr. M N Panini, Distinguished Professor Centre of Excellence for Sustainable Business Innovations, read out the citation.