The Indian Elephant Shed its Past: The Implications for Canada

32 Pages Posted: 11 Dec 2008

See all articles by Wendy Dobson

Wendy Dobson

University of Toronto - Rotman School of Management

Date Written: June 2006

Abstract

India is a land of contrasts. Indian information technology (IT) services firms are globally competitive but many manufacturers still seek protection from foreign competitors. Economic growth rates are speeding up but trade is still a small share of the world total. Logistics infrastructure is abysmal. India has the most mature and diverse financial system in the emerging market economies and many excellent universities, but the government seeks to create 100 million industrial jobs in this decade to provide employment for its 400-million-strong work force, many of whom are still illiterate.

As serious attempts are made to tackle its weaknesses and build on its strengths, India is broadening its economic reforms and establishing itself as a high-growth emerging market. Canada should be moving more quickly to deepen the bilateral economic relationship. Two-way merchandise trade flows are small. But mutual interest is growing to provide services, both directly to each other and from platforms in both countries, to serve larger regional and global markets.While Canada's economic future will be determined mainly by its proximity to the United States, more could be made of the bilateral relationship with India. The two countries share many of the same institutions and language of commerce because of their common colonial heritage.

There is a sizeable Indian diaspora in Canada. Business ties will continue to grow, but incrementally, unless governments facilitate this mutual interest. They should consider negotiating a bilateral free trade agreement - either in services or across the board. Canadian interest would likely focus on greater across-the-board access for Foreign Direct Investment (FDI) in India, while Indians would likely push for liberalization of cross-border services provision and the movement of people. India has developed a mechanism, the Joint Study Group, for evaluating the net benefits of FTAs with other potential partners; the two countries should also take this step.

Suggested Citation

Dobson, Wendy, The Indian Elephant Shed its Past: The Implications for Canada (June 2006). Available at SSRN: https://ssrn.com/abstract=1313359 or http://dx.doi.org/10.2139/ssrn.1313359

Wendy Dobson (Contact Author)

University of Toronto - Rotman School of Management ( email )

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HOME PAGE: http://www.rotman.utoronto.ca/dobson/

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