During the six years of World War II, one-third of the global population collapsed. In the Soviet Union, China, Japan and Europe, about 80 million people died, mostly civilians. It also undermines the economies of Europe and Japan. Europe's share of the global economy decreased from about 40% during the Great Depression in 1935 to 25% in 1945.
Only one winner – the United States – at that time the Pacific Ocean east and west of the Atlantic Ocean was assured to the Atlantic and western Pacific Ocean, developing its manufacturing and infrastructure behind the great isolation. By the end of the war, it had a share of 40% of global GDP. To be sure, the US GIS and officers died in the war. But their family is living a safe and effective life when they come home.
War is the best: The sober lesson is that only wars that are fought at sea can be profitable, although it is undeniable that the profits of war in the United States effectively use their wars. It rebuilds the destruction of Japan and Europe, funding the establishment of the United Nations to prevent and improve the impact of conflict, the International Monetary Fund for fiscal and price stability, and the World Bank for funding post-war reconstruction and subsequent development.
All three of them did a good job. The question today is whether China, a global pole competitor, is equally committed to exercising its main economic capabilities in trade and manufacturing for global interests, or will it continue trading agreements to maximize profits? Granted, the new trends set by the United States in Ukraine are not inspiring.
Experience in India: Even short wars are expensive. The post-independence war in India was short. The war with China in 1962 lasted for a month until the Chinese unilaterally withdrew. However, the growth rate of total value-added fell from 3.1% in the early stage to 2.1% in the year.
In 1965, India responded to Pakistan's attack on India's “Operation Gibraltar”. The war lasted for seven weeks. The growth rate was negative 3.6%, which was 7.6% in the previous year, despite the combination of drought and a war of depleting growth.
The 1972 war was to help Mukti Bahini, the oppressive regime in East Bangladesh, responding to Pakistan's first air strike on India in India. It lasted for 12 days. Growth dropped from 6.5% in the early stages to 5.0%. However, in 1972 it further dropped to one percent, while negative growth in 1973 decreased, and the drought once again exacerbated the economic impact.
This dataset supports IMF evaluation, i.e., conflict reduces GDP by 1-2 percentage points even in the short term. South Asia was also lost by the war between Pakistan and India, although regional cross-border trade is low, compared with 5% in Southeast Asia next door and 25% in trade.
The war will further postpone regional economic integration. As existing, sparse, B2B and P2P relationships are shredded, cross-border discord will increase. The unwise concept of some people recently expressed in Bangladesh (although without government support) that if India attacks Pakistan and annexes the Northeast of India with China, it illustrates the kind of cloud of hysteria wars arises.
Playing as China's game plan:Who gained it? The obvious winner is China.
The war will hinder India's growth and further undermine its ability to “manage” China. Don't you have to worry about the United States? It depends on whether they see India as a “customer country” or an important “partner”. As a client country, relying on the United States to seek assistance, technical and geopolitical priorities, India's dependence will increase, which may be suitable for the United States in the near term.
But as a “partner country” able to invest independently in strategic priorities, weakened India may be useful in strengthening democracy and fair trade in the Indo-Pacific. Sadly, the United States' ongoing commitment to these strategic principles is now doubtful.
Spends on maintaining peace and not funding war: If India is to remain self-reliant, it must spend to maintain peace, not to fund war. Domestic reforms are made to unlock private investment, improve fiscal stability and negotiate multilateral investment and trade treaties to selectively integrate into strategic global goals. The problem is domestic. The government must expand the space for domestic negotiations to integrate discordant areas – farmers and small businesses – to vote on behalf of about half of the population? Welfare measures (both private and community-based) have been angered over the past decade, which has reduced incomes for the bottom population and protected families from terrible poverty (below PPP $2.15 a day). The same level as the higher for low- and middle-income economies (PPP $3.65 per day), this means additional targeted aid to about one-third of the population, equivalent to 11% of current GDP.
Capture 22: Government revenue accounts for about 17% of GDP, and only when the economy grows faster can strengthen welfare support be affordable – war will curb it. Therefore, it is a wise compromise to promote a balance between employment-linked income enhancement and direct welfare support. Allowing state governments to design incentives can help reflect contextual particularity and opportunities. Sadly, we have been negligent in decentralization of power, especially on cities and villages, where there is room for proposals for “shared growth” as communities live nearby.
In contrast, the technology development plan in the distant New Delhi lacks context and particularity. The 1998 Good Friday Agreement of Belfast ended thirty years of intense sectarian violence in Northern Ireland. It is based on more decentralization from the British government to Northern Ireland.
Trying to increase equity can also stimulate growth.
India is a relatively young democracy, like Pakistan, culturally diverse.
Unlike Pakistan, India's political power still comes from the people and we have not succumbed to any form of monotheism. Unlike homogeneous China, competition among political parties is at the heart of Indian democracy. Accommodation and compromises of the complex political network that ensues are not design failures. Admittedly, it slowed down development.
But it provides a forum for addressing differences and actively participating in order to overcome shared challenges. The 19009 pandemic is one of them. Dealing with external aggression is another unified force, especially when wars we neither cause nor seek. Winning will require keeping our powder dry, getting global support, and continuing to invest in innovation, productivity and equity.
The author is an outstanding researcher at the Chintan Research Foundation and was associated earlier with the IAS and the World Bank
