Prepare Prelims 2017-Day-25-Indian Economy

Regional Comprehensive Economic Partnership:

  • Regional Comprehensive Economic Partnership (RCEP) is a proposed free trade agreement (FTA) between the ten member states of the Association of Southeast Asian Nations (ASEAN) (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam) and the six states with which ASEAN has existing free trade agreements (Australia, China, India, Japan, South Korea and New Zealand).
  • RCEP negotiations were formally launched in November 2012 at the ASEAN Summit in Cambodia.
  • RCEP is viewed as an alternative to the Trans-Pacific Partnership (TPP) trade agreement, which excludes China and India and includes several nations of the Americas

Asia-Pacific Economic Cooperation (APEC

  • a forum for 21 Pacific Rim member economies that promotes free trade throughout the Asia-Pacific region. It was established in 1989 in response to the growing interdependence of Asia-Pacific economies and the advent of regional trade blocs in other parts of the world; to defuse fears that highly industrialised Japan (a member of G8) would come to dominate economic activity in the Asia-Pacific region; and to establish new markets for agricultural products and raw materials beyond Europe.
  • An annual APEC Economic Leaders’ Meeting is attended by the heads of government of all APEC members except Taiwan (which is represented by a ministerial-level official under the name Chinese Taipei as economic leader). The location of the meeting rotates annually among the member economies, and a famous tradition, followed for most (but not all) summits, involves the attending leaders dressing in a national costume of the host country.
  • Members State: Australia, Brunei,  Canada,  Chile, China, Hong Kong*, Indonesia, Japan,  South Korea, Malaysia,
  • Mexico, New Zealand,  Papua New Guinea, Peru, Philippines, Russia, Singapore, Taiwan, Thailand, United States of America, Vietnam.

* Not a country, part of China.


  • The Asia-Pacific Trade Agreement (APTA), previously known as the Bangkok Agreement and renamed 2 November 2005, was signed in 1975.
  • It is the oldest preferential trade agreement between countries in the Asia-Pacific region. Seven Participating States- Bangladesh, China, India, Lao PDR, Mongolia, South Korea, and Sri Lanka are the parties to the APTA. 
  • APTA’s key objective is to hasten economic development among the six participating states opting trade and investment liberalization measures that will contribute to intra-regional trade and economic strengthening through the coverage of merchandise goods and services, synchronized investment regime and free flow of technology transfer making all the Participating States to be in equally winsome situation
  • Its aim is to promote economic development and cooperation through the adoption of trade liberalization measures.
  • APTA is open to all members of the United Nations Economic and Social Commission for Asia and the Pacific, which serves as the APTA Secretariat.
  • Members of APTA are currently participating in the Fourth Round of Tariff Concessions, which are expected to conclude in October 2009.

  • The Asian Development Bank (ADB) is a regional development bank established on 19 December 1966,which is headquartered in the Ortigas Center located in Mandaluyong, Metro Manila, Philippines.
  • The company also maintains 31 field offices around the world to promote social and economic development in Asia.
  • The bank admits the members of the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP, formerly the Economic Commission for Asia and the Far East or ECAFE) and non-regional developed countries.
  • From 31 members at its establishment, ADB now has 67 members, of which 48 are from within Asia and the Pacific and 19 outside.  
  • The ADB was modeled closely on the World Bank, and has a similar weighted voting system where votes are distributed in proportion with members’ capital subscriptions.
  • ADB releases an annual report that summarizes its operations, budget and other materials for review by the public.

Aim

  • The ADB defines itself as a social development organization that is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration.
  • This is carried out through investments – in the form of loans, grants and information sharing – in infrastructure, health care services, financial and public administration systems, helping nations prepare for the impact of climate change or better manage their natural resources, as well as other areas.

Focus areas

Eighty percent of ADB’s lending is concentrated public sector lending in five operational areas.

  • Education – Most developing countries in Asia and the Pacific have earned high marks for a dramatic rise in primary education enrollment rates in the last three decades, but daunting challenges remain, threatening economic and social growth.
  • Environment, Climate Change, and Disaster Risk Management – Environmental sustainability is a prerequisite for economic growth and poverty reduction in Asia and the Pacific.
  • Finance Sector Development – The financial system is the lifeline of a country’s economy. It creates prosperity that can be shared throughout society and benefit the poorest and most vulnerable people. Financial sector and capital market development, including microfinance, small and medium-sized enterprises, and regulatory reforms, is vital to decreasing poverty in Asia and the Pacific.
  • Infrastructure, including transport and communications, energy, water supply and sanitation, and urban development.
  • Regional Cooperation and Integration – Regional cooperation and integration (RCI) was introduced by President Kuroda when he joined the ADB in 2004. It was seen as a long-standing priority of the Japanese government as a process by which national economies become more regionally connected. It plays a critical role in accelerating economic growth, reducing poverty and economic disparity, raising productivity and employment, and strengthening institutions.
  • Private Sector Lending – This priority was introduced into the ADB’s activities at the insistence of the Reagan Administration. However, that effort was never a true priority until the administration of President Tadeo Chino who in turn brought in a seasoned American banker – Robert Bestani. From then on, the Private Sector Operations Department (PSOD) grew at a very rapid pace, growing from the smallest financing unit of the ADB to the largest in terms of financing volume. As noted earlier, this culminated in the Long Term Strategic Framework (LTSF) which was adopted by the Board in March 2008.

  • The Asian Infrastructure Investment Bank (AIIB) is an international financial institution that aims to support the building of infrastructure in the Asia-Pacific region.
  • The bank has 50 member states (all “Founding Members”) and was proposed as an initiative by the government of China.
  • The initiative gained support from 37 regional and 20 non-regional Prospective Founding Members (PFM), all of which have signed the Articles of Agreement that form the legal basis for the bank.
  • The bank started operation after the agreement entered into force on 25 December 2015, after ratifications were received from 10 member states holding a total number of 50% of the initial subscriptions of the Authorized Capital Stock.
  • Major economies that did not become PFM include the G7/G8 members’ Japan and the United States, although Canada applied for membership on 23 September 2016.
  • The United Nations has addressed the launch of AIIB as having potential for “scaling up financing for sustainable development for the concern of global economic governance. 
  • The capital of the bank is $100 billion, equivalent to 23 of the capital of the Asian Development Bank and about half that of the World Bank.
  • The bank was proposed by China in 2013 and the initiative was launched at a ceremony in Beijing in October 2014.
  • India is a member state.

The Colombo Plan;

  • The Colombo Plan is a regional organisation that embodies the concept of collective intergovernmental effort to strengthen economic and social development of member countries in the Asia-Pacific region.
  • The primary focus of all Colombo Plan activities is on human resources development.

Objectives

  • To promote interest in and support for the economic and social development of Asia and the Pacific
  • To promote technical cooperation and assist in the sharing and transfer of technology among member countries;
  • To keep under review relevant information on technical cooperation between the member governments, multilateral and other agencies with a view to accelerating development through cooperative effort;
  • To facilitate the transfer and sharing of the developmental experiences among member countries within the region with emphasis on the concept of South-South cooperation.
  • The Colombo Plan currently has 27 members, including countries in the Asia-Pacific region, non-Commonwealth countries and countries belonging to regional groupings such as ASEAN (Association of South-East Asian Nations) and SAARC (South Asian Association for Regional Cooperation).
  • India is a member State

The Bretton Woods Conference:

  • The Bretton Woods Conference, formally known as the United Nations Monetary and Financial Conference, was the gathering of 730 delegates from all 44 Allied nations at the Mount Washington Hotel, situated in Bretton Woods, New Hampshire, United States, to regulate the international monetary and financial order after the conclusion of World War II.
  • The conference was held from July 1–22, 1944.
  • Agreements were signed that, after legislative ratification by member governments, established the International Bank for Reconstruction and Development (IBRD) and the International Monetary Fund (IMF).

What is the ‘International Monetary Fund – IMF’

The International Monetary Fund (IMF) is an international organization created for the purpose of standardizing global financial relations and exchange rates. The IMF generally monitors the global economy, and its core goal is to economically strengthen its member countries. Specifically, the IMF was created with the intention of:

1. Promoting global monetary and exchange stability.

2. Facilitating the expansion and balanced growth of international trade.

3. Assisting in the establishment of a multilateral system of payments for current transactions.

BREAKING DOWN ‘International Monetary Fund – IMF’

  • Fixed exchange rates, also known as the Bretton Woods system (named after the original UN conference at which the IMF was conceived), refer to the value of a currency being tied to the value of another currency, or to gold.
  • The system of fixed exchange rates was established by the IMF as a way to bolster the global economy after the Great Depression and World War II. 
  • This system was abolished in 1971, and ever since, the IMF has promoted the system of floating exchange rates, which means that the value of a currency can change in relation to the value of another.
  • This is the familiar system today. For example, when the U.S. economy suffers, the dollar’s value goes down in relation to that of, say, the euro of the European Union, and the opposite is also true.
  • The exchange rates established by the IMF allow countries to better manage economic growth and trade relations.
  • These exchange rates are set in order to prevent economic collapse, which can occur with runaway exchange rates, which occurs when the rates continue to rise.
  • The organization’s objectives stated in the Articles of Agreement are: to promote international monetary cooperation, international trade, high employment, exchange-rate stability, sustainable economic growth, and making resources available to member countries in financial difficulty.

World Bank:

  • The World Bank is an international financial institution that provides loans to countries of the world for capital programs.
  • It comprises two institutions: the International Bank for Reconstruction and Development (IBRD), and the International Development Association (IDA).
  • The World Bank is a component of the World Bank Group, which is part of the United Nations system.
  • The World Bank’s stated official goal is the reduction of poverty.
  • However, according to its Articles of Agreement, all its decisions must be guided by a commitment to the promotion of foreign investment and international trade and to the facilitation of capital investment.
  • The World Bank was created at the 1944 Bretton Woods Conference, along with three other institutions, including the International Monetary Fund (IMF).
  • The World Bank and the IMF are both based in Washington, D.C., and work closely with each other.

International Bank for Reconstruction and Development:

  • The International Bank for Reconstruction and Development (IBRD) is an international financial institution that offers loans to middle-income developing countries.
  • The IBRD is the first of five member institutions that compose the World Bank Group and is headquartered in Washington, D.C., United States.
  • It was established in 1944 with the mission of financing the reconstruction of European nations devastated by World War II.
  • The IBRD and its concessional lending arm, the International Development Association, are collectively known as the World Bank as they share the same leadership and staff.
  • Following the reconstruction of Europe, the Bank’s mandate expanded to advancing worldwide economic development and eradicating poverty.
  • The IBRD provides commercial-grade or concessional financing to sovereign states to fund projects that seek to improve transportation and infrastructure, education, domestic policy, environmental consciousness, energy investments, healthcare, access to food and potable water, and access to improved sanitation.
  • The IBRD is owned and governed by its member states, but has its own executive leadership and staff which conduct its normal business operations.

International Development Association:

  • The International Development Association (IDA) is an international financial institution which offers concessional loans and grants to the world’s poorest developing countries.
  • The IDA is a member of the World Bank Group and is headquartered in Washington, D.C., United States.
  • It was established in 1960 to complement the existing International Bank for Reconstruction and Development by lending to developing countries which suffer from the lowest gross national income, from troubled creditworthiness, or from the lowest per capita income.
  • Together, the International Development Association and International Bank for Reconstruction and Development are collectively generally known as the World Bank, as they follow the same executive leadership and operate with the same staff.
  • The association shares the World Bank’s mission of reducing poverty and aims to provide affordable development financing to countries whose credit risk is so prohibitive that they cannot afford to borrow commercially or from the Bank’s other programs.
  • The IDA’s stated aim is to assist the poorest nations in growing more quickly, equitably, and sustainably to reduce poverty.
  • The IDA is the single largest provider of funds to economic and human development projects in the world’s poorest nations.

World Trade Organization:

  • The World Trade Organization (WTO) is an intergovernmental organization which regulates international trade.
  • The WTO officially commenced on 1 January 1995 under the Marrakesh Agreement, signed by 123 nations on 15 April 1994, replacing the General Agreement on Tariffs and Trade (GATT), which commenced in 1948.
  • The WTO deals with regulation of trade between participating countries by providing a framework for negotiating trade agreements and a dispute resolution process aimed at enforcing participants’ adherence to WTO agreements, which are signed by representatives of member governments and ratified by their parliaments.
  • Most of the issues that the WTO focuses on derive from previous trade negotiations, especially from the Uruguay Round (1986–1994).
  • The WTO is attempting to complete negotiations on the Doha Development Round, which was launched in 2001 with an explicit focus on developing countries. As of June 2012, the future of the Doha Round remained uncertain: the work programme lists 21 subjects in which the original deadline of 1 January 2005 was missed, and the round is still incomplete. 
  • The conflict between free trade on industrial goods and services but retention of protectionism on farm subsidies to domestic agricultural sector (requested by developed countries) and the substantiation of fair trade on agricultural products (requested by developing countries) remain the major obstacles.
  • This impasse has made it impossible to launch new WTO negotiations beyond the Doha Development Round. As a result, there have been an increasing number of bilateral free trade agreements between governments.

European Union:

  • a political and economic union of 28 member states that are located primarily in Europe.
  • The EU has developed an internal single market through a standardised system of laws that apply in all member states. EU policies aim to ensure the free movement of people, goods, services, and capital within the internal market, enact legislation in justice and home affairs, and maintain common policies on trade, agriculture,fisheries, and regional development.
  • Within the Schengen Area, passport controls have been abolished.
  • A monetary union was established in 1999 and came into full force in 2002, and is composed of 19 EU member states which use the euro currency.
  • The EU operates through a hybrid system of supranational and intergovernmental decision-making.
  • The seven principal decision-making bodies—known as the institutions of the European Union—are the European Council, the Council of the European Union, the European Parliament, the European Commission, the Court of Justice of the European Union, the European Central Bank, and the European Court of Auditors.
  • Additionally, 26 out of 28 EU countries have a very high Human Development Index, according to the United Nations Development Programme.

India–Africa Forum Summit

  • The India–Africa Forum Summit (IAFS) is the official platform for the African-Indian relations.
  • IAFS will be held once in every three years.
  • It was first held from April 4 to April 8, 2008 in New Delhi, India.
  • It was the first such meeting between the heads of state and government of India and 14 countries of Africa chosen by the African Union. Libya and Egypt’s heads of state did not attend.

Shanghai Cooperation Organisation:

  • The Shanghai Cooperation Organisation (SCO), or Shanghai Pact, is a Eurasian political, economic, and military organisation which was founded in 2001 in Shanghai by the leaders of China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan.
  • These countries, except for Uzbekistan had been members of the Shanghai Five, founded in 1996; after the inclusion of Uzbekistan in 2001, the members renamed the organisation. On July 10, 2015, the SCO decided to admit India and Pakistan as full members.
  • India and Pakistan signed the memorandum of obligations on 24 June 2016 at Tashkent, thereby starting the formal process of joining the SCO as full members.
  • The acceptance process will take some months, by which they are expected to become full members by the next meeting at Astana in 2017.
  • The Beijing-based SCO currently has China, Russia, Kazakhstan, Kyrgyzstan, Uzbekistan and Tajikistan as members.
  • Along with India, the process to include Pakistan as a member was initiated.

United Nations:

  • an intergovernmental organization to promote international co-operation. A replacement for the ineffective League of Nations, the organization was established on 24 October 1945 after World War II in order to prevent another such conflict.
  • At its founding, the UN had 51 member states; there are now 193.
  • The headquarters of the UN is in Manhattan, New York City, and experiences extraterritoriality. Further main offices are situated in Geneva, Nairobi, and Vienna.
  • The organization is financed by assessed and voluntary contributions from its member states.
  • Its objectives include maintaining international peace and security, promoting human rights, fostering social and economic development, protecting the environment, and providing humanitarian aid in cases of famine, natural disaster, and armed conflict.

International Court of Justice

  • The International Court of Justice (ICJ), located in The Hague, in the Netherlands, is the primary judicial organ of the UN.
  • Established in 1945 by the UN Charter, the Court began work in 1946 as the successor to the Permanent Court of International Justice.

The Sustainable Development Goals

  • The Sustainable Development Goals (SDGs), officially known as Transforming our world: the 2030 Agenda for Sustainable Development is a set of 17 “Global Goals” with 169 targets between them. Spearheaded by the United Nations through a deliberative process involving its 194 Member States, as well as global civil society, the goals are contained in paragraph 54 United Nations Resolution A/RES/70/1 of 25 September 2015. The Resolution is a broader intergovernmental agreement that acts as the Post 2015 Development Agenda (successor to the Millennium Development Goals). The SDGs build on the Principles agreed upon under Resolution A/RES/66/288, popularly known as The Future We Want.
  • On 19 July 2014, the UN General Assembly’s Open Working Group (OWG) on Sustainable Development Goals (SDGs) forwarded a proposal for the SDGs to the Assembly. The proposal contained 17 goals with 169 targets covering a broad range of sustainable development issues.

The goals

  1. No Poverty – End poverty in all its forms everywhere
    • Extreme poverty has been cut by more than half since 1990- however, more than 1 in 5 people live on less than $1.25 a day
    • Poverty is more than lack of income or resources- it includes lack of basic services, such as education, hunger, social discrimination and exclusion, and lack of participation in decision making.
    • Gender inequality plays a large role in the perpetuation of poverty and its risks; They then face potentially life-threatening risks from early pregnancy, and often lost hopes for an education and a better income.
    • Age groups are affected differently when struck with poverty; its most devastating effects are on children, to whom it poses a great threat. It affects their education, health, nutrition, and security. It also negatively affects the emotional and spiritual development of children through the environment it creates.
  2. Zero Hunger – End hunger, achieve food security and improved nutrition and promote sustainable agriculture
    • Globally, 1 in 9 people are undernourished, the vast majority of these people live in developing countries
    • Agriculture is the single largest employer in the world, providing livelihoods for 40 per cent of today’s global population. It is the largest source of income and jobs for poor rural households. Women comprise on average 43 per cent of the agricultural labor force in developing countries, and over 50 per cent in parts of Asia and Africa, yet they only own 20% of the land.
    • Poor nutrition causes nearly half (45 per cent) of deaths in children under five – 3.1 million children each year.
  3. Good Health and Well-being – Ensure healthy lives and promote well-being for all at all ages
    • Significant strides have been made in increasing life expectancy and reducing some of the common killers associated with child and maternal mortality, and major progress has been made on increasing access to clean water and sanitation, reducing malaria, tuberculosis, polio and the spread of HIV/AIDS.
    • However, only half of women in developing countries have received the health care they need, and the need for family planning is increasing exponentially, while the need met is growing slowly – more than 225 million women have an unmet need for contraception.
    • An important target is to substantially reduce the number of deaths and illnesses from pollution-related diseases.
  4. Quality Education – Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all
    • Major progress has been made for education access, specifically at the primary school level, for both boys and girls. However, access does not always mean quality of education, or completion of primary school. Currently, 103 million youth worldwide still lack basic literacy skills, and more than 60 per cent of them are women
    • Target 1 “By 2030, ensure that all girls and boys complete free, equitable and quality primary and secondary education leading to relevant and Goal-4 effective learning outcomes”- shows the commitment to nondiscriminatory education outcomes
  5. Gender Equality – Achieve gender equality and empower all women and girls
    • Providing women and girls with equal access to education, health care, decent work, and representation in political and economic decision-making processes will fuel sustainable economies and benefit societies and humanity at large
    • While a record 143 countries guaranteed equality between men and women in their Constitutions by 2014, another 52 had not taken this step. In many nations, gender discrimination is still woven through legal and social norms
    • Though goal 5 is the gender equality stand-alone goal- the SDG’s can only be successful if women are completely integrated into each and every goal
  6. Clean Water and Sanitation – Ensure availability and sustainable management of water and sanitation for all
  7. Affordable and Clean Energy – Ensure access to affordable, reliable, sustainable and modern energy for all
  8. Decent Work and Economic Growth – Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
  9. Industry, Innovation and Infrastructure – Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation
  10. Reduced Inequalities – Reduce income inequality within and among countries
  11. Sustainable Cities and Communities – Make cities and human settlements inclusive, safe, resilient and sustainable
  12. Responsible Consumption and Production – Ensure sustainable consumption and production patterns
  13. Climate Action – Take urgent action to combat climate change and its impacts by regulating emissions and promoting developments in renewable energy
  14. Life Below Water – Conserve and sustainably use the oceans, seas and marine resources for sustainable development
  15. Life on Land – Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss
  16. Peace, Justice and Strong Institutions – Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
  17. Partnerships for the Goals – Strengthen the means of implementation and revitalize the global partnership for sustainable development

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