Background

Since its creation out of the prior General Agreement on Tariffs and Trade (GATT) in 1995, the World Trade Organisation (WTO) has attracted the interests of many. Individuals, corporations, governments, policy makers, NGOs, and academics are drawn to study this international organisation which has in such a short time made significant impact on the lives of all people in our global community.

With over 20,000 pages of legal documents comprising WTO negotiated agreements over trade and other trade related issues and a plethora of decisions reached under the various dispute settlement cases brought before the Dispute Settlement Body of the Organisation, the legal framework of the WTO presents a formidable mass of scholarly material. Research into the activities of the organisation has been remarkable and varied. It has ranged from analyses of the general practicability of a rules-based approach to trade regulation, to recurrent arguments over the potential gains of participation in a rules-based system for less developed country members of the Organisation.

This latter scope of research activity has occupied the interests of scholars in both developing and developed countries. Most of the work done in this area has been preoccupied with identifying the importance of global market integration for developing countries. The literature has centred on particular aspects of developing country participation – agriculture and the need for greater access to developed country markets; the restrictions of the agreement on Intellectual Property which confront those countries which have not evolved a strong intellectual property framework prior to their accession to the WTO; the challenges of assuming further obligations on new proposals in trade negotiations without a sufficient capacity for entering into trade negotiations in the first place. This work in contrast, presents a holistic view: the view that what is important is to identify the nature and potential of the WTO as an organisation which can contribute to the socio-economic well-being of individuals and societies across the world as they engage in global economic endeavour.

The research here is at a more fundamental level, and offers concrete reviews of WTO action in line with the Organisation's development obligations. Much has been made of developing countries and the problems they confront with implementing the obligations in accordance with the ‘single undertaking’ requirement of accepting all the agreements under the WTO as binding.

The tourist experience begins and ends in the mind of the visitor, bounded by anticipation and recollection. The experience consists of those on-site activities, encounters, sights, and other sensations, along with any accumulation of souvenirs, that promise to make the tourist's visit memorable. Of course, the experiences of visitors to Ireland varied from one individual to another, depending on interests and itinerary. Many centered their primary experiences on picturesque scenery, trying perhaps to capture it in watercolors or sketches. For others the tourist experience may have included collecting information about schools, roads, ruins, farming practices or poverty. Some busied themselves investigating the conditions of the peasantry, while others were happy enough merely to be entertained by them. At the end of each day tourists made notes, finished sketches, up-dated their journals, wrote letters and planned the next day's activities.

The process by which a site becomes incorporated into tourism involves a series of steps. Although they often occur in combination with each other, initially there may be a particular sequence. For example, before a site can be toured it first must be “discovered.” This means that it is perceptually abstracted from the “ordinary” and placed in the “extraordinary” context of tourism. It becomes a sight that must be seen. Then it must be “marked”—placed on the tourist's mental as well as paper map. Although a tourist sight can be marked in many ways, naming is most important.

An examination of the legacy of two Russian linguists of the early Soviet period, Boris Alexandrovich Larin (1893–1964) and Lev Petrovich Iakubinskii (1892–1945), shows that their interest in ‘living vernacular speech’ (‘zhivaia razgovornaia rech'’), so typical of the sociolinguistic approach to language study, served as a source of genuine inspiration that led them to a novel approach to Russian language studies in early Soviet linguistics. It also provided them with what largely constituted their source of data – everyday language, mostly spoken (or transcribed spoken language) and all language varieties rather than just the standard one.

Representatives of the first generation of Soviet linguists, Boris Larin and Lev Iakubinskii advanced the sociological paradigm in Russian linguistics in the beginning of the 20th century while simultaneously pursuing traditional lines of research. They had been educated as linguists by, inter alia, Jan (Ivan) Baudouin de Courtenay, a linguist of exceptional abilities and a person of liberal values, active civic orientation and political awareness, and by Aleksei Shakhmatov, who imbued them with his love for ‘living speech’. Both Larin and Iakubinskii lived and worked in Leningrad; their professional paths crossed at Petrograd- Leningrad University and the Herzen Pedagogical Institute, the institutions where they worked in various capacities in the 1920–1930s, and at seminars at ILIaZV (Institut sravnitel'noi istorii iazykov i literatur zapada i Vostoka (Institute for Comparative History of the languages and Literatures of the West and East), which promoted creative thought and new research.

While Ritchie's and Fisher's conclusions may not be typical of those pursuing the picturesque tour in Ireland, most travel writers did at least take notice of Irish poverty and privation. But if social realities had the power to push their way through the conventions of the picturesque, the reverse is also strangely true. By the time of the Great Famine, the picturesque had so defined Ireland that even some of those who came to observe the crisis and/or to minister to its victims were drawn to Ireland's scenic landscapes. Although the number of “tourists” must have dropped during the Famine, roughly the same number of travel accounts appeared during the most critical years, 1846 and 1849, as had been published between 1840 and 1845, the year the potato blight first appeared.

Relatively few of the travel accounts produced during the Famine described what might be considered conventional picturesque tours. In what may be one of the first examples of “disaster tourism,” visitors from Britain came to Ireland during the worst years of the crisis to verify the extent of the problem or to provide relief. Touring during 1847, one of the worst years of the crisis, Rev. John East visited some of the hardest hit areas. An Evangelical who suspected that the Roman Catholic peasantry and their clerical leaders had brought the catastrophe upon themselves, East encountered and described some grim scenes. Yet, he also visited Killarney, Bantry Bay and other scenic locations, which he greatly appreciated.

The months of July and August in 2004 saw announcements from India's BJP-led government preparing citizens for major changes in the country's labour laws. This is an important undone task from the reforms initiatives of the early 1990s. I have, over the years, written about the need to revise our labour market policies, and welcomed these announcements. At the same time, the statements from the government were so conflicting that I could not help feeling apprehensive that the effort would be botched once again.

A proper reform of labour laws requires intimacy with the field of law and economics, and a modicum of understanding of the role of incentives in markets. But there is no sign of the Indian government wanting to marshal the kind of research and knowledge needed for this purpose.

Judging by past laws and policy debates, the Indian policy-maker's understanding of the role of labour legislation is deeply fallacious. The first fallacy is to view the marketplace as a zero-sum ‘game’, where, as I said earlier, one person's gain is invariably another person's loss. This has led to the oft-repeated observation that for India to progress, organized labour must be prepared to make sacrifices. So the reform is presented as something that will hurt organized labour but is justified in the interest of the nation's overall growth. In fact, a properly revised labour policy can help us achieve faster economic growth and at the same time benefit all workers, including organized workers.

To the saying ‘Behind every great man there is a woman’, Groucho Marx famously added, ‘And close behind her is his wife.’ Much is to be learnt by looking beyond what meets the eye. In trying to understand India's predicament we often look only for the proximate causes—corruption, squabbling politicians, rhetoric sans action. But fifty years of Independence is a good time to go behind these immediate factors to take stock of how we have come to be where we are.

India was born of an astonishing intellectual legacy. It had the good fortune of immense inputs from statesmanship and scholarly intelligence over its formation. This gave us our democratic tradition and commitment to higher education. But it also became the source of economic ambivalence. India's economic system emerged from an uneasy compromise between Mahatma Gandhi's objective of a village-based economy and Jawaharlal Nehru's faith in the welfare state and heavy industry. Nehru confided to his diary in 1933 his growing alienation from Gandhi's ideology: ‘I am afraid I am drifting further and further away from him mentally. His continual reference to God irritates me […]. What a tremendous contrast to the dialectics of Lenin & Co.’ By the time India became independent in 1947, Nehru was disillusioned by Lenin's method, but he still believed in planning and heavy industry.

Historically, India's position vis-à-vis the WTO has been to argue that the WTO is an instrument of the North and to resist virtually its every move. Thus, before the Ministerial Meeting at Doha, the Indian government's line was to oppose the launching of a new trade round, resist the liberalization of trade in industrial products, and oppose the use of trade sanctions to punish countries that fail to meet minimal labour standards.

The perception that the WTO is largely an instrument of powerful industrialized nations is correct, but India's response to this, namely, opposing it on all fronts, is wrong. We must learn to take a more sophisticated line towards the WTO and the North in general. We can hope to gain much at the fifth ministerial meeting, projected to take place in Mexico in 2003, if we do so.

Spokespersons for the WTO will tell you that it is a democratic organization that runs on the principle of ‘one country one vote’. But anybody who has been following the goings-on at the WTO knows that the way the rich countries get around this ‘nuisance’ is through the ‘green room’ channel, to wit, the lobbying behind the scenes to fix the agenda in advance.

While all this is true, India's response to it is wrong for several reasons.

First, it is important to recognize that in today's globalized world, with complex trading arrangements and disputes, we cannot do without a centralized ombudsman.

Last week I went to a notary public in Ithaca to have my signature on a document attested. I had phoned in advance and when I stepped into her office, she guessed: ‘Professor Basu?’ In about ten minutes I was out of there, job done. As I drove back to Cornell I could not help feeling impressed by the efficiency. But I must admit, there was also a feeling of nostalgia for India.

Last August my wife and I had to get a document notarized in Delhi. Dodging a procession of banner-waiving protesters of some sort, near the crossing of Sansad Marg and Ashoka Road, we entered an open arena resembling what I imagine the bazaars of ancient Babylon must have looked like during the decline of the Mesopotamian civilization, where notaries public (I just checked—that is the right way to write the plural) keep their offices. ‘Offices’ here means a cluster of ramshackle desks and chairs beneath makeshift sheds and tarpaulin to keep the sun out. Right in front of this arena is a garbage dump, with additions to it appearing like missiles every now and then from a window in an adjacent building. Chai-wallahs and peons weave their way through rows of desks where an assortment of men in black coats sit, some working, some staring vacantly, some dozing.

“Sunk costs” is a useful concept. Its definition in economic theory has many expressions in popular speech. The favorites seem to be “don't spend good money after bad” and “let bygones be bygones.” In less colloquial language, decisions should be taken on the basis of future benefits related to future costs and not on the basis of past costs. One should not let a poor prior decision color the decision to be taken now. Nevertheless, they do and that is why “sunk costs” is such a useful concept. The seemingly endless American wars in Afghanistan and Iraq are a good example. Politics explains why presidents and prime ministers do not apply the concept of sunk costs. In matters as grave as war, reversal of course is an admission of a monstrous error. So, to avoid paying the political price, the powers-that-be will “kick the can down the road” and ignore the concept of sunk costs. In the case of the simultaneous American wars, the price tag is already estimated in the trillions of dollars.

Economic theory is not much different. Its conceptual framework now exhibits sunk costs and nowhere is this more evident than in climate change and the intertwined mass extinction crisis. I italicize the adverb “now” to emphasize that at one time the benefits of the framework were greater than the costs, but that time has long since past. When did it pass? Why did it pass? And what exactly do I mean by economic theory?

Henry Jenkins, Director of the Program of Comparative Media Studies at the Massachusetts Institute of Technology, imagines a new form of academic unit where Departments “operat[e] more like YouTube or Wikipedia, allowing for the rapid deployment of scattered expertise and the dynamic reconfiguration of fields.” He calls it the “YouNiversity” where “we don't so much need a faculty as we need an intellectual network.” The methodology lies in an analogy. “Much as engineering students learn by taking apart machines and putting them back together, many of these teens learned how media work by taking their culture apart and remixing it.” The filmography of The Economics of the Yasuní Initiative adopts the spirit of the YouNiversity.

As an assistant to Professor Vogel since 2005 – the year that YouTube went online – I have seen first-hand how video-sharing has reconfigured learning. YouTube economizes the most precious of all resources: time. One can quickly gain familiarity with a diversity of topics through clips, some less than a minute long, and then lever those clips into classroom discussion. Nevertheless, the rich reservoir of the YouTube site raises the most mundane of questions: which clips?

Like so many questions in economics, the answer depends on the purpose. The purpose of The Economics of the Yasuní Initiative is to persuade the public that the carbon-rich-but-economically-poor countries must be compensated to get them through the bottleneck of a cowboy economy. Entertainment is key to persuasion.

As soon as the Nobel Prize in Economics of 2001 for George Akerlof (Berkeley), Michael Spence (Stanford), and Joseph Stiglitz (Columbia) was announced, I got a flurry of emails from students and friends. The reason they were congratulating me is that these were among the five or six names I had for the last several years been predicting and hoping would get the prize. And I must admit feeling mighty chuffed by the announcement. The work of Akerlof, Spence, and Stiglitz is among the most creative research that my profession has seen. Their papers involve a blend of logic and social observation which is very rare and hard.

The paper that gets the first mention in the Nobel citation is, rightly, George Akerlof's classic, ‘The Market for Lemons: Quality Uncertainty and the Market Mechanism’. Much of this paper was written during the year 1967–8 that Akerlof spent at the Indian Statistical Institute in New Delhi; and it suffered the fate common to a lot of truly original research—it was initially rejected by leading journals as being sub-par. It was eventually published in the Quarterly Journal of Economics in 1970.

The ‘lemons’ in the title refer to second-hand cars or duds that usedcar sellers often try to pass off as if they were of superior quality. This paper, written mainly in the form of examples, illustrates a point of immense importance. Much conventional economics used to be done under the assumption that buyers and sellers are fully informed and rational.

Introduction

Recently, several writers have argued that globalisation erodes national specificity and leads to long term convergence of structure, institutional set up, culture and, as a consequence, economic performance of countries. This does not correspond to observable facts nor has it been the message of this book. One of the most interesting developments of the 1980's is that despite globalisation, the distinctive features of national environments, have attracted much greater analytical attention than previously (Porter, 1990, Butry, 1991) and are seen by many authors as explaining differences among countries in competitiveness, growth and income.

While the post war, ‘golden age’ growth period from the early 1950's to the early 1970's was characterised by convergence between the OECD countries (Gomulka, 1971, Cornwall, 1977, Maddison, 1982 and Abramovitz, 1989), as well as by a trend towards an increase in economic and social integration and reduction in inequalities inside nations (cf. the small but real closing of the gab between the Mezzogiornio and Northern Italy and a lowering of income distribution inequality in many OECD countries), the diverging features have been significantly more important in the two following decades.

National specificity remains important and appears quite definitely to bear a relation to the capacity to produce, acquire, adopt and use technology. The erosion of the autonomy of national systems through globalisation is not synonymous with convergence and improved integration.

Has India Taken Off?

In recent times India has been getting a better international press than ever before.

When it comes to crafting national economic policy, few political leaders in the world have had the success of Singapore's Lee Kuan Yew. Whatever reservations one may have about his politics, it is remarkable how he steered Singapore from a poor nation to a fully industrialized one in three decades. He has also written on the economic problems of different nations with remarkable prescience. During his term as Prime Minister of Singapore he routinely expressed pessimism on India. ‘It was sad to see the gradual rundown of the country’, he wrote in his book, From Third World to First, and added in his inimitably undiplomatic style that the crockery at a formal government dinner was very bad and ‘one knife literally snapped in my hand and nearly bounced into my face.’

It therefore caused a stir when, in early April, on the occasion of the founding of the Lee Kuan Yew School of Public Policy in Singapore, he predicted that India will be propelled into the ‘front ranks’. In this speech, crammed with information and analysis, he argued that, over the next decades, ‘China and India will shake the world. … In some industries, [these countries] have already leapfrogged the rest of Asia.’

The European Union is on track towards a common currency for eleven of its fifteen member nations. The culmination of this currency merger will occur on 1 July 2002, when national currencies cease to be legal tender and all citizens of the participating nations switch over to the use of euro notes and coins. The main motivation behind the euro is, arguably, to boost European trade and challenge the US dollar's primacy as world currency.

Whatever the motivation, this is a more momentous event for the world than most people realize. The reason is that it points to the future. The current international monetary system is increasingly showing up as unviable for the emerging world economy. And my guess is that the euro is the start of a long process that will take us to a single-currency world. This was in fact a recommendation made in 1878 by the English economist Stanley Jevons. In outlining the advantage of an ‘international money’ he had to, it must be admitted, scrape the barrel's bottom. By the time a similar case was made again in 1984 by Harvard's Richard Cooper (who argued for one currency to be shared by all the industrialized nations of the world), the idea did not seem quite as far-fetched. Since then the structure of the world economy has changed even further; and the repeated crises of the 1990s—Sweden 1992; Mexico 1994; Thailand, Indonesia, Korea 1997; and Japan currently teetering on the brink-is evidence of this.