India poised to boost its economic and geopolitical role in coming decades: Nobel Laureate Michael Spence

In an exclusive panel discussion, Nobel Laureate Michael Spence and other leading economists said that India is poised to boost its economic and geopolitical role in the coming decades, helped by an evolving demographic dividend, rapidly expanding digital economy and top GDP growth rates.

“As somebody who has spent the last 25 years thinking about growth in one form or another in virtually every corner of the world, let me just say that the major economy with the highest potential growth rate is India. It has successfully developed, by far, the best digital economy and financial architecture in the world. It is a transformational architecture,” Prof. Spence said, in conversation with ET Now senior editor, Ajaya Sharma.

India’s leap on the technology front will be a key catalyst for the economic expansion of the nation, currently the world’s fifth biggest economy and its pivotal position in international affairs, he added.

Responding to a question from a student on crypto assets, including bitcoin, Prof. Spence said, “Crypto currency is not a currency, because a currency is a store of value and a medium of exchange. If its value changes by a factor of 20 or 30 per cent in a week, it is hard to believe it is a store of value. It is only a currency for those people who want to hide in the darknet.”

He added, “What we will have are central bank digital currencies. They are like regular currencies because the central banks control that. They are going to solve extreme data security challenges. Whole economies and financial systems are going digital and so do currencies. The notion that we will have an economy running on a currency that’s entirely decentralized-- is not going to happen.”

Prof. Rohinton Medhora, chair of the governing board of INET, said a significant part of global wealth is in intangibles and intellectual property. “The source of wealth is locked up in intangibles. Most governments haven’t fully caught on to govern an economy, where so much wealth resides in intangibles, where fixed costs are high and marginal costs of production are practically zero.”

“If it is existential, firms will get it. But often existential is still 10, 20, 30 years down the horizon. Very few firms have that horizon because they don’t have that capital or staying power. So, we need capital markets that encourage that kind of horizon,” said Prof. Medhora.

The discussion was held at Bennett University (BU), which is the higher education initiative from The Times Group and comprises six schools with undergraduate, postgraduate, and doctoral programs across Engineering, Management, Law, Media, and Liberal Arts.

The discussion with Prof Spence and INET is an ET NOW presentation and will air on Friday (7.30pm) and Saturday (8.30pm).

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