In 1989, American academic Ronald Takaki wrote a pioneering history of Asian Americans, Strangers from a Different Shore. His starting point was that immigration to America (excluding the forced movements of slavery) had typically been viewed as coming from Europe, with those from Asia—the different shore—being invisible in these narratives. He wrote to counter this invisibility. I was reminded of this when reflecting on the new US strategy of “friendshoring,” which featured in US treasury secretary Janet Yellen’s recent remarks on her visit to India.
Friendshoring is about reconfiguring supply chains to take account of political and strategic risks, and is an outcome of a world in which Covid, the invasion of Ukraine, and the assertiveness of China and Russia have made corporations and governments nervous about global supply chains or production networks. Raghuram Rajan (Just Say No to “Friend-Shoring”, Project Syndicate) has made a familiar economic case against friendshoring—that it undermines free trade principles. But the chance for India to make up for its lagging participation in global supply chains is tempting. If the US government wants to encourage or subsidise its companies to invest in India for its own reasons, then why not take advantage?
This is where it is worth revisiting US history. America’s engagement with Asia before World War II and the new global order was never on par with its connection to Europe. It was the need to contain the Soviet Union, and then Communist China as well, that shaped economic policy with respect to Japan, South Korea, Taiwan, and other Asian countries. These countries thrived, not because of friendship, but because of their own efforts, riding on the platform of US strategic interests. Nixon’s opening to China was also prompted by the goal of containing the Soviets. When China’s leaders decided that they would embrace some features of capitalism, and take advantage of the appetites of the rich countries by participating in the international trading system, they did it mostly on their own terms.
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Western dreams of China democratising as it prospered have been disappointed, and it’s China’s increased assertiveness as a global power that has prompted the new Indo-Pacific Economic Framework (IPEF), along with purely military alliances. In all of this, friendship has not been particularly important. Certainly, the US is becoming more multicultural, but there is still a strong streak of treating Asian Americans as “strangers from a different shore.” Whether it was the rise of the Japanese auto industry as a global presence in the 1980s, or the ubiquity of Chinese imports in recent decades, and hate crimes against Asian Americans during the pandemic, friendliness is often in short supply.
India is, perhaps, in a different category than East Asia. Yellen mentioned the usual distinguishing factors—shared democratic traditions, the presence of Indian companies in information technology, and, indirectly, the rise of those of Indian origin in the US technology and education elites. And, of course, there is the shared language legacy of British colonialism. All this is good. India can certainly benefit from US investment and access to US markets. But like Japan, South Korea and China, it needs to define its strategic interests and participate in the global economy on that basis, not those of the US. After all, that is what the US is doing itself, as Yellen made extremely clear. Everything she said was driven by the needs of US national security, not friendship.
Indeed, in some ways, the US needs India more than the other way round. Japan, South Korea, Taiwan, Germany and the UK may be better partners for India in a range of areas, whether consumer white goods, engineering machinery, or project management skills. In other areas, the US will have technologies and expertise that are what India most needs. When the US facilitated the post-World War II globalisation, it was not government-to-government cooperation that drove the patterns of trade and development. Ultimately, business people in those East Asian miracle economies were the ones who figured out how and what to produce and where to sell their products. Similarly, US companies have been driven by their own economic logics in shaping global supply chains. The US government’s monetary and fiscal policies have an outsized impact on global macroeconomic conditions, but its corporations drive the microeconomic patterns of evolution and growth.
India’s policymakers seem to be well aware of its strategic interests. India has participated in three of IPEF’s pillars—supply chains, tax and anti-corruption and clean energy—but is staying away from the trade pillar for the moment, as it assesses the conditionalities that might be attached to trade deals in that context. Aside from the IPEF, there are other areas where India and the US will find common ground—energy and financial regulation and stability, for example.
And Yellen’s counterpart, finance minister Nirmala Sitharaman, perceptively highlighted “skilling at scale for meeting the challenges of the job” as a significant challenge for India. That need, alone, may be where India can gain the most from the US, given the shared language and strong presence of Indian-origin faculty in US universities. Revitalising and expanding India’s higher education system and research capabilities may be the place for deepest collaboration and, perhaps, even friendship.
The author is Professor of economics, University of California, Santa Cruz