Thats just my professional constitution. I am hope full often that once i do the research myself and once i go to try to back it up, that i can demonstrate that person was right. But i never take anyones word until ive done my own reporting. Further questions clacks. I just wanted to say i spent an entire night last week reading ninas book cover to cover completely mesmerized and its really hard to mesmerize me especially given who i am and my background and everything. Who are you, maam . Can you tell us who you are . I am senegalese and i have spent a great amount of my life so far on these issues. When i started reading ninas book i was very afraid in my heart was pounding because i could tell how fair she was trying to be. For me its not a matter of jeffrey sachs, its beyond him. Its an entire thinking process of people who never ever would imagine their minds but africa just like anyone else we are no different from anyone else. The only way we will make this is through capitalism and id like to say conscious capitalism. Thats the only way forward. It reminded me of an argument i had at some point with the editor freakonomics in the new york times. She had the nerve to say i heard him talk and she was saying i could see why a business can work in china and india as vehicles of Economic Development but i dont see how its relevant to africa and thats a problem. How come they got capitalism and we get economic you make such an interesting point. I talk about this in my book. There is this tremendous overlay or suggestion that neocolonialism is people talk about, make you feel terribly uneasy when youre on the ground as an outsider in africa, watching the absolute domination in foreign aid and humanitarian aid circles of europeans. When africans say europeans they mean americans and europeans. It is unsettling and of course there are so many people who are in development in and foreign aid for deeply devoted. You dont work in those fields unless you are devoted to your cause but its unsettling. You raise a very important point as we go around and talk about the book i dont know if you have spent any time interviewing people that i think think i would have loved when i was reading the book to see some hints on what i like to call the industry of aid because its a real industry. Jeffrey sachs was lucky to have sub or for read this book about him. She spent six long years doing it. Shes not like the reporter who cause you out of the blue with a deadline in the morning and doesnt have time to check anything. You will be lucky to read her book six years in the making in six years of hard research. Its an rate look. [applause] [applause] 10 or 15 years ago we started with and at the Census Department data and something very strange kind of pops out great when you look at where the profits are multinationals, if you look at a map of europe ac germany france ireland italy but if you look at the date on where the profits are its italy france germany ireland. Its just a hugely disproportionate amount of profit in ireland. That was one indication that something was going on. Why dont people take their seats. If you would prefer not to send sitting his so you all the longer if you stand for throughout this meeting. Welcome to the council on Foreign Relations and tonight is one of those nights i like best because its a chance to celebrate a book via celebrated author and thinker. The council prides itself on being what i would call it low culture but not a book only culture. Books do fill an essential space its not simply research but we pride ourselves on policy relevant research. The length of the look ,com,com ma the amount of research and thinking that goes into it, the kind of thinking you all need to do if you are forced to write something at length in forms a lot of other things. There is a depth and breadth of analysis that emerges from books i dont care how good the oped is they cant compete. We are not a book only culture. People write and disseminate ideas and all sorts of forms that interlink but again books occupy a unique and i believe essential part of the intellectual real estate here at the council on Foreign Relations. Its one of the things that distinguishes this organization from any others. And that is good is tonight we have Jagdish Bagwati who has been a senior fellow at the council on Foreign Relations and divides his life between there and the start of university of the road on 115th street. Jagdish has produced no less than at least a halfdozen books in these years. Essentially he writes them faster than we read them, but he really is somebody who has an amazing way with words. The idea are big and the style, the style and a book that over the years has had a tremendous effect in the policy relevant debate which is work about localization, which was important work when the idea was so under attack and now jagdish has produced a new look with the title why Growth Matters. He has coproduced it actually. Like most children it has two parents, in this case with a colleague of his at the same university, colombia and the subtitle is 10 how Economic Growth in india reduced poverty and the lessons for other developing countries. Let me ask the obvious first question. Why do you even have to write a book called why Growth Matters who in the world would not rank that . Thats the question im frequently asked but its not just in india but around the world that people in fact do raise questions about growth partly because there is an antigrowth movement and an antigrowth sentiment around the world. What i want to do in this book is basically bring out the notion that in the very large countries with a lot of poor people in few rich people, even the 1 ers, you can put them all over the florida sinkholes and there would be another 1 of course pretty soon but that is not going to make any difference. The real problem is what to do about the large numbers of poor people. I think that is where india had a comparative advantage. Too many exploiters so even if you ask are created the exploiters you could not redistribute enough except to give everybody one burrito a day. It wouldnt go very far particularly with the rowing population. So the five countries which are in a position where you had to think of a different strategy to be able to get at the poor and this is where the Growth Strategy came in. There are five factors i would say that are relevant. India, china, indonesia purcell and to some extent south africa. Thats about three fourths of the world in terms of population. It doesnt cover saudi arabia which has money crawling out of its ears. They have a different kind of rob rovlin, if you call it at rovlin, all right . So the issue was how do you get at the poor . That was my first job in india actually from the early 1960s. The idea was and she could not redistribute in social spending like schools and education and even guaranteed employment which is what indians are trying now. Then what would we do lacks the idea was we would have to grow. Growth would have two effects. One is a good poll people up into gainful employment and people at the very bottom levels do use opportunity. Thats pretty wellestablished. They just want to be a will to grow their way into the mainstream economy. That is one thing but the other thing is that it it would also join revenues. Once you have revenue, this is something we know from here, revenue would in turn enable us who want to do some social spending to be a will to do it. You know, god is asleep up there usaid doesnt have any money so we have to grow our own revenues. Let the interrupt you for a second. In this country and we would all agree we want to expand the pot or the chapati or whatever metaphor one, one wants to use. But you mentioned some of the countries you mentioned, just take india and china the two most populous countries, 1. 3 billion plus or minus, is fundamentally approach to growth. I assume im the synthesis not something the Growth Matters but somewhere along the idea that there has got to be sent competing models between india and china are often held out as in some ways the two Iconic Models of development not just for asia but really for the world. So it seems to me its not just the Growth Matters but i assume a subset of issues is how you grow or how you attempt to grow . That is really important. Many people ask me does your book apply to the United States . I say yes if you think about how rove can improve in this country. Im a republican in the medium run and the long run. We walk on two legs to produce growth in this country. This doesnt apply in the same way to other parts of the world. I think its a very good question you ask. How do you grow . Take china. China had a very different approach to growth. It went very fast on provinces. It absorbed a lot of Foreign Investment unlike india which remained until the reforms very much against Foreign Investment. We were trying to rely on very different model to row and of course we didnt grow as a result. China did grow very fast and so china had this advantage of being able to use a variety of techniques to be able to draw its underemployed people into gainful employment. I think that is where we succeeded. I would say for the future, china has a big question mark and we have they question mark ourselves. But china you see because it had a reserve army of labor it was able, this is what we call economic jargon you know, an elastic supply curve. People coming in at a constant rate so when you increase demand for labor through export performance then you are basically not having to i mean you were adding to employment in peoples welfare by basically giving them more jobs at a constant wage. But now china has rejoined the human race. Theres only so so much lowhanging fruit. Now ours they said they have rejoined the human race and than they are now having to pay for it. The wages are rising and that is where they are getting into problem now because that freebie is gone. At the same time because its an authoritarian system thats another are today and that is where the fact that peoples exasperations are now being aroused they have to worry about how to satisfy them. In china you dont have any democracy and that is where the political differences come in. If in china if you really want war you can go out into the streets and beat on pots and pans and probably get backed off to mongolia or somewhere. I mean thats the idealized version. In india yet about the elements of what we call, you know, a liberal democracy. We have a relatively free press and large numbers of ngos, opposition parties and independent judiciary. Jagdish as an interventionist he described india as a functioning democracy. Many people would challenge that. They would actually say india is a dysfunction or nonfunctioning democracy. Indian growth has slowed in reisingers dramatically. After a good good run india has elections coming up in early 2014. Do you believe that india can grow at seven, eight or 9 again or is there something about politics in india that preclude its . I think what happened was the corruption grew in a massive way. When we started our development, india india was supposed to be a great gift to the world. We had a super judiciary. Leaders came over from the independent movement who were not corrupt and so on. That is not what you have today. That is what youre referring to. All of these institutions have come under heavy fire. One important cause has been because what happened was many of us economists recommend the resources we have to have all kinds of controls. It is in fact exactly the wrong thing to do. The result was that you had bureaucrats learning how to exercise power by handing out licenses. The politicians learned he could make a lot of money even if you are raising it for the party. At some stage the money is going past with the window you are likely to take some in yourself and so on. The system gradually collapsed. I think what we are facing now now is a very important i think change and that is so many people are fed up now with the corruption thats been going on for quite a while but they are not willing to make any concessions to anyone. What you are having his street demonstrations on a massive scale, the current government. That is, under heavy fire and has been discredited. That is creating a massive problem right now because that is causing the macroeconomic problem in turn. Whatever you do is going to be challenged by somebody in the parliament as a source of corruption. If you accept it that is because you must be taking money on the side. That is what is slowing down for decisionmaking by the bureaucrats. That is the reason for the growth and slowdown precisely because people are trying to change the system and saying that means bureaucrats dont. [inaudible] the investment is not taking place place. Let me also last question i want to open it up to our members. The last question which is you have written important books about. You have written much about migration and the movement of people. You mention before before that a. I. D. Is out of money but the United States still has tools. We have the. Negotiations. What can the United States and what should the United States and others be doing . Do directly or in direct to promote higher levels of growth . It think we have to have on a. You cant just give money away. Often economics and politics are not going in the same direction. Many people used to say thats the politics that the economics is substitution possibility. You had better put your nose into every corner and so on. People resent it on the other hand people are going to come. So you are a fan of millennial challenge . Very much so and i think we do need that and won everything about india, the big thing is about india and china and indonesia. They should be able to raise it in the public domain. I would want to reorder their priorities in usaid and the world bank so countries that cannot do it like many of them in africa are able to raise the money through these eight giving sources. When i say things like that and any guess i am not regarded with a great sense of obviously a lot we touched on an even more we didnt touch on and jagdish is that rare person with breadth and depth and space. Just wait for the microphone and let us know who you are. Im with morgan stanley. My question is about indias growth has been largely based in the Service Sector where lots of call centers and servicebased technologies i. T. Services have been kind of the frontier. How has that compared to more traditional export investments led model which created much more employment and opportunities for sustained growth over period of time . How would you compare those two models and what its implication with indias model . I would say one thing which is in the book we do explain how we havent really used laborintensive manufactures. What we do find out is that our growth has been inclusive. Theres a lot of evidence in the book that in fact the north has benefited and the marginalized groups including women. There is not a single group including the untouchables which have not profited as a result. We havent made the same impact. We havent had as much bang for the buck in reducing poverty as economies which use actually a lot of laborintensive manufactures. We have been trying to protect small guys which is a big mistake. As a result they have not been able to grow into bigger ones with more scale efficiency and so on. I think is the wrong way to approach the problem. I think we need to, the next stage of reform we should not knock manufactures out. I think that is the really wrong. On the Service Sector if its going to be important i dont think it carries the full weight but in the sense that we are a freewheeling democracy of the United States. We have actually no problem with people using software. In china for years the problem was we see [inaudible] they were very good at hardware but not with software. Levy to expand its on a massive scale. A microphone is coming. Chai that has been growing where rarely with did businesses farley monday from the Banking System and Infrastructure Spending has fueled the growth. The fiveyear plan they introduced 2010 they will reverse that. Investment spending was 5 percent of gdp then it was 35. Three years into the fiveyear plan those numbers are still five 35 with investment spending. If china will grow they have to get the consumer to spend. Why havent they and why cant day and will they ever do it . [applause] there is the economy more than in china but what you ask they have to go through domestic spending why is that in days significant ways so far . To my judgment is the scale of the problem. It cannot be mounted just like that. The infrastructure that is nowhere. That is what they are doing. They are already. But on the of a hand they dont do well and have a mutual dependence as well. Maybe it is the wrong kind of infrastructure as a result of technology. But why the transition a little more consumer demand led the economy was not happening . Because the tidies said on the funds they dont trust the government or the safety net this Savings Rates is fairly high. One policy has not helped but the growth has slowed down. [inaudible] i teach at the upstart university as well. [laughter] but it you have a terrific new governor of the central bank in india. Kayhan he and the of macro lovers influence . That brings us writeup to now become as what happens now . It is very simple. If you go less rapidly the bureaucrats not taking positions but if it is slow down that means the revenue intake also has slowed down. And when that is happening cover the forthcoming election means the government at the same time wants to spend more on social spending. Like the security bill. You have the attention. Then board monday being spent you dont have to be a macro economist, i am not one, but to know that you get inflation. Big inflation is in the position to be very dangerous. The big question mark of the economy now. Related to the situation is exactly the opposite of what we have here. But we have here cannot get off the ground. The violence is out of lax what. What about the Central Government . [laughter] he