The world needs India to do well: Andres Velasco, former finance minister of Chile

“The countries in East Asia that grew very quickly did so through labour-intensive manufacturing. That model is hard to reinvent today,” he said. “India’s path to sustained growth may have to come through services, which remain very labour intensive.”

He added that the global potential to create large-scale factory jobs has diminished, meaning India will need to innovate rather than replicate.

“Services have one advantage—they are labour intensive. Sustained growth is achievable, but it will require doing new things, not simply repeating past policies,” he noted.

Democracy as a Strategic Asset

Velasco underscored that India’s democratic tradition is its greatest strength.

“Institutions, particularly democratic institutions, are essential for sustained development and improved quality of life,” he said. “India has been democratic since day one, and sustaining democracy in such a large and diverse country is never easy—but India has managed it.”

He argued that India’s natural partners lie among other democracies.

“A grouping like BRICS, which includes both democratic and undemocratic countries, is a mixed blessing. India’s natural partners are other democratic nations—especially in Europe. There is a lot of room for collaboration across democratic countries in the emerging world,” Velasco said.

Globalisation and the New Trade Reality

Velasco, one of the architects of the “London Consensus” on global trade, said that while protectionism is rising in the West, emerging economies still stand to gain from openness.

“Trade has had different benefits and costs for different countries. For countries like India, integrating into the world economy has been a positive,” he said.

He criticised the tariff wave unleashed during US President Donald Trump’s administration but acknowledged that reversing it will be politically hard.

“Once you generate a tariff, you create a vested interest that wants to keep it. Doing away with them won’t be easy,” he said.

South–South Trade to Deepen
Velasco urged developing economies to trade more among themselves rather than depending solely on advanced nations.

“The US accounts for about 14 percent of global trade. One can imagine not only trade that is more intensive across emerging and developing countries, but also trade that is more active with the European Union,” he said.

He dismissed concerns that the age of global commerce is ending.

“International trade will not be rolled back permanently,” Velasco said.