Introduction

In neoclassical trade theory the so-called primary factors of production, capital and labour, are treated as strictly national assets, assumed not to cross national borders. Technology, on the other hand, is assumed to be a transnational resource, moving freely across borders. The only fundamental difference between national systems is the difference in factor proportions, and export and import specialisation reflects nothing but such differences.

One way to restate this model would be to propose a more restricted mobility of technology, and to treat investments in R&D on par with investments in factories and machinery. However, the national system of innovation would still be of very limited analytical interest in this extended model. The only new variables to be considered would be the stock and the rate of investment in R&D.

The National System of Innovation and the Fundamental Neoclassical Assumptions

In order to see, why the national system of innovation is a useful analytical concept, a more radical revision of basic neoclassical assumptions is necessary. In a world where agents are perfectly rational (maximisers of utility and profit, with unlimited access to information, and an unlimited capacity to gather and process information) and where all transactions take place in pure markets, with anonymous relationships between buyers and sellers, national borders play a limited economic role. In such a world, it is legitimate to assume that institutional and cultural differences between nations do not to interfere with economic processes.

One of the domains in which India belongs conspicuously with the developed world is higher education and research. Go to an international conference on physics, statistics, economics, and, increasingly, even English literature; or open a journal in any of these disciplines and you will find an Indian presence in a way that no other Third World country matches, and just a handful of developed countries do. Nevertheless, it is time to rethink our education policy. This advantage in higher education, especially in the sciences, is beginning to get eroded. The deterioration of the libraries and laboratories and the students' lack of access to computers are now causing a competitive disadvantage. Second, India's remarkable achievement in higher education is matched only by its notable failure in primary education.

Suppose you construct a house in which the ground floor has as many square feet as the number of persons who have primary education in the country, the first floor as many square feet as the number who have secondary education, and continue the same way constructing a floor each for high-schoolers, undergraduates, and postgraduates. For most countries, the house will look like a pyramid, tapering off rapidly as one goes higher. In the case of India, the building is relatively like a tower.

In 1995, only 52 per cent of Indian adults were literate. This is in sharp contrast to, say, China's 81 per cent.

Introduction

We could be facing today, at the global level, the phenomenon that Garret Hardin identified in 1968 at the local level, which he called the ‘Tragedy of the Commons’ (Hardin 1968). In the twenty first century, nation-states are behaving in ways similar to Hardin's herdsmen when they over used and/or abused pastures on which their livelihood depended. Predatory practices for short term gains to individual national or local interests, if unchecked, may entail long term losses to the global community, including those that used the resources for short term gain. Given the externalities of globalization, this contemporary phenomenon is part of the problem, but can also be part of its solution by means of global governance mechanisms to balance short-term individual gains with long-term global sustainability. The challenge of protecting the global commons – a type of common pool resource, like the ozone layer – calls for reaching beyond the boundaries of the nation state and local interests to seek collective solutions at the global level and to share in the promises that globalization holds. Collective needs and interests in a global world transcend national boundaries and require mechanisms for global governance creating demand for a range of International Public Goods (IPGs). A 2007 World Bank Report on global public goods states ‘protection of the environmental commons through collective action at the global, regional and country levels will be a key challenge for the twenty first century.

All ages come to an end. The Ice Age was succeeded by the Bronze Age, the Renaissance was followed by the Reformation, great powers have succeeded one another, Rome, Great Britain, the US(Senge et al. 2008, 7). Nothing's here to stay. With the present financial crisis, another age is drawing to a close – but not, as many globalization critics may think with glee, the age of globalization. What we now see going down is an international order in which the Western societies are the center and the measure of all things (the G7 is a reflection of this eroding constellation of power), the age of industrialization (based as it was on the delusion of an infinite supply of natural resources and infinite capacities of the atmosphere, the oceans and the global forests to absorb greenhouse gas emissions and other collateral wastes of our consumption patterns), and the illusion that the nation-state could, despite accelerating globalization, somehow just muddle on as it has in the course of the past 200 years. The concern now is to create a truly viable, sustainable globalization that accepts the global challenges of the twenty-first century.

Abstract

It is increasingly asserted that recent financial crises have been driven by changes in market sentiment, the latter stemming from alterations in so-called fundamentals. There are, however, few studies aimed at identifying empirically whether this is true. Applying a Markov switching autoregressive model and using the broad money-to-international reserves ratio as the variable that captures market confidence, this chapter times the start and the end of Mexico's 1994–95 financial crisis. The estimated probabilities indicate that financial panic started since November 1993 and that it ended in May 1995. It is established that the beginning and end of the crisis is associated with a change in private agents' confidence and not to ex post events, such as the abandonment of the exchange rate or the recovery of the economy led by export growth. The results also indicate that in order to recover agents' confidence, the government had to reinforce its strategy of financial liberalisation. This placed strong limitations on the authorities' room for manoeuvre in setting macroeconomic policy.

Keywords: Markov switching autoregressive model; market confidence; financial crises; Mexico.

JEL Classification: E44, C22.

Introduction

One of the most well-worn arguments within the vast and divergent literature concerning recent financial crises is that they stem from changes in market confidence. Such confidence is held to rest on so-called economic fundamentals and domestic political conditions. As soon as the fundamentals diverge from what may be considered sound, so it is argued, the confidence of investors ebbs away causing progressive withdrawals of capital overseas.

Introduction

The Russian Federation is one of the largest countries in the world, covering an area of 17.1 million km2 (1/3 of Eurasia), with the world's largest reserves of natural resources (45 per cent of the world's total natural gas, 13 per cent of oil, 23 per cent of coal, 22 per cent of forests, 37 per cent of lake water, etc.). However, Russia's climate and soil are mostly not favourable for agriculture and industrial activities, with only 13 per cent of the surface suitable for farming, while the population is concentrated in several regions leaving large areas almost unpopulated.

Russian history has also been rather turbulent. After the October Revolution in 1917, the centuries-old tsarist regime was brought to an end. The Union of Soviet Socialist Republics (USSR), comprising 15 such republics, lasted up to 1991. The Russian Soviet Federative Socialist Republic dominated the USSR for its entire 74-year history, the USSR often being referred to as ‘Russia’ and its people as ‘Russians’. Russia was the largest republic of the USSR and contributed over half of its population. After the breakup of the USSR in 1991, social and economic reforms were launched. The Soviet ideology, economy and administration underwent a transition towards democratic principles and a free market system.

Russia as the successor of the USSR is also known for its contribution to the world's science and technology (S&T).

This chapter proposes to raise some fundamental questions relating to education. What is meant by a ‘national’ education? How does it relate to the state? Is the idea of nation relevant in the twenty-first century? And, finally, what kind of education should we plan for India in the light of these questions?

For those who have been following the order as well as the drift of these questions, their interconnections should be obvious. Nevertheless, it may help to spell out some of them. There is, to my mind, a great deal of confusion regarding what we mean by nation. A lot of people use it interchangeably with the idea of the state. Hence, when we speak of a topic such as national education, we sometimes equate it with the state's educational policy. But isn't there a way of conceiving the nation so as not to confine it to the state? Often, a certain lack of clarity dogs such inquiries.

Similarly, the links between culture and nation, on the one hand, and between the nation itself and its education system are seldom examined rigorously. To worsen our confusion, some of these terms have become so ideologically charged that it becomes practically impossible to discuss them dispassionately in intellectual circles. A certain kind of well- or ill-intentioned wishy-washiness coupled with the passionate decrying of our perceived opponents’ positions becomes the substitute for clear thinking.

The Idea of ‘Tolerance’

I want briefly to reflect on the connotations of the word ‘tolerance’. This is but natural, not just from a philosophical standpoint but from that of language and literature, of which I am a student. No doubt, there is an affirmative side to tolerance. It implies acceptance, forbearance, open-mindedness, patience, even charity. But the connotations of the word, at least to me, are not entirely positive. Tolerance suggests a reluctant, even forced, acceptance of the Other. It stops short of respect or appreciation. In fact, it might even imply an uneasy coexistence. Etymologically, the word suggests a burden, coming from the Latin tollere, which means to lift up. Tolerance is not the best possible attitude to Others, but rather the minimum prerequisite for social harmony. It is also used to indicate the interdiction of something undesirable as in the phrase ‘zero tolerance’. Overall, I don't think it to be a happy word. We may, perhaps, need to begin with tolerance, but must not end with it. We will have to go much farther than tolerance, work much harder on ourselves if we really want this world to be peaceful. The principle of tolerance will have to be converted to that of love, love that is proactive, powerful, and healing. The politics of conflict must be replaced by the politics of embrace if perpetual peace is to be institutionalized on earth.

Preamble

The crisis that has hit the world economy since 2008 has lent support to suggestions put forward previously that a significant share of the growth potential of the world economy resides in a few large less developed countries. Brazil, Russia, India, China and South Africa (BRICS) have such potential. More than just that, the BRICS countries are thought to have the capacity to ‘change the world’ on account of both the threats and the opportunities they represent from the economic, social and political points of view.

International agencies and analysts suggest that investors should pay careful attention to the opportunities offered by these countries. In such analyses, the focus has been restricted to identifying investment possibilities in the BRICS production structures and examining the prospects offered by their consumer markets. This book is part of a study—the BRICS project—where the interest in analysing the BRICS goes much further. These countries present significant development opportunities, as well as several common characteristics and challenges. Identifying and analysing them may help to uncover possible paths for fulfilling their socio-political and economic development potential. More importantly, it can also reveal development alternatives that might help both developed and underdeveloped countries to overcome the problems brought by an exhausted production and consumption system and a malignant regulatory and financial regime.

One of the biggest challenges before the Indian republic is how to manage relations between Hindus and Muslims. This dispute preceded the formation of India; indeed, was instrumental in the bloody partition of the country into India and Pakistan, and, perhaps, has an even older prehistory, going back to the Muslim conquest of North India at the end of the twelfth century. Is it fair to call it Muslim conquest, which has religious overtones, rather than an Arab, Turkish, Afghan, Persian, Central Asian or Moghul conquest, as the case may have been? The answer to this question depends partly on how the conquerors saw themselves, how the conquered saw them and what historians have to say in the matter.

The first mosque in Delhi was called the Quwaat-ul-Islam, or ‘the might of Islam’ mosque. It was built on the ruins of dozens of Hindu and Jain shrines, destroyed by the conquerors. The tallest minaret in the world, the Qutub Minar, was started by Qutub-ud-Din Aibak, the man who defeated the Hindu king, Prithviraj Chauhan, to found the Delhi Sultanate, the first of many Muslim kingdoms in India. India was by no means the first foreign land conquered by Islamic armies. So what happened here followed an older pattern. In Andalusia, for example, a similar destruction of existing churches took place to build the great Mesquita in Cordoba. Victorious Islamic armies, in this case, Arab–Berber hordes, also built victory towers.

Nationalism and the Present Intellectual Crisis

In a previous chapter, I looked back at the ninety years before Independence to map the trajectory of protonationalism as it manifested in the Great Revolt of 1857. I then examined some examples of national(ist) thought in the twentieth century. In this chapter, I wish to look sixty years after Independence to trace the progress of post-nationalism during a period that I see India passing through an intellectual crisis. One of the components of this crisis is the confusion over Indian nationalism. Very simply, the question before thinking Indians is whether to forget the history and traditions of our national struggle, to deny the sacrifices and efforts of all those who strove that we might be free and self-reliant today, nay, to denounce nationalism itself as a false ideology—and to look for some other way, some other principle of organizing our civic life? Or, whether to go back to these very traditions, to rejuvenate them to deal with some of our present problems?

Some might consider this is an exaggeration, if not caricature of the issue, yet it is not very far from the truth. The success of the Bollywood movie Rang De Basanti (RDB) is a vocal testimony to the crisis in Indian nationalism. The film touched a sensitive chord in the millions who saw it, especially the youth, who were also the protagonists of the story.

To trace the growth of the national sentiment, a convenient point of departure is the Great Revolt of 1857. Not only does it give us clues to what India was before the consolidation of colonial power, it also helps us understand the dynamics between the colonizers and the colonized. Without an examination of colonialism, it would be impossible to have a sense of how modern India came to be the way it is. There are, of course, several different ways of trying to understand the relationship between the colonizers and the colonized, especially as it unfolded in India. The overthrow of colonial power in India was one of the great events of the twentieth century, with widespread ramifications for many nations all over the globe.

While there was something spectacular about the end of the Raj in 1947, resistance to British power had a much older and continuous history in the subcontinent. The fabled stability of the empire was more or less just that—a fable, a myth, a colonial fabrication bolstered by endless propaganda. The actual history of British power in India is marked by periodic unrest and decadal famines. Almost every group that was subdued and forced to join the complex configuration of alliances that characterized British paramountcy in India, actively resisted such cooptation. A certain dissatisfaction and resentment simmered all over the land. From small tribal and peasant revolts to large-scale uprisings in different parts of India, colonial rule was marked by widespread discontent.

This book is partly an attempt to negotiate the very difficult and challenging terrain of Indian modernity, more specifically, of the role of Indian nationalism in its construction. I believe that it is nationalism that became the primary engine of modernity in India. What I propose to do in this chapter is to offer a model and three snapshots that might help in understanding this phenomenon better. My model identifies three positions in India's response to modernity, while the snapshots are close examinations of three moments in the history of Indian nationalism through the reading of three sets of texts. The model is meant to explain India's intellectual face-off with the West, while the three snapshots are oblique illustrations of both the model and the face-off. Together, they are a part of a larger project of Indian self-understanding, which is so essential to the attainment of svaraj, or responsible self-governmentality, a goal that at both the individual and collective level, continues to fascinate and inspire.

Svaraj is, of course, the cornerstone not only of Gandhian thought, but of much of India's intellectual exertions in the last two centuries. We might even assert that what distinguishes political thought in India from Indian political thought—to use the distinction made by Professor Anthony Parel (2006) in ‘From “Political Thought in India” to “Indian Political Thought”’—is that the latter is centred on svaraj, while the former is not.

Introduction

South Africa is one of the strongest economies in Africa and key to the economic and political development of Sub-Saharan Africa (World Bank 2007). In relation to the global arena, South Africa has been variously categorized, but the central thrust is one of considerable economic potential, with significant constraints imposed by the legacy of the past. It has generally been grouped alongside middle-income countries like Brazil and India in terms of its strong but highly uneven capacity to participate in global technological innovation in the era of a ‘knowledge economy’ (Albuquerque 2001, UNDP 2001). The general thrust of these analyses is to emphasize the potential of the South African national system of innovation to compete in the global knowledge economy, but that socioeconomic developmental demands require critical efforts for long-term sustainability, and may become a binding constraint.

After the end of Apartheid, and with the transition to a democratic government in South Africa since 1994, there have been changes in governance, in the economy and in science, technology and innovation policy. Unlike many other countries where change has been a more gradual process, the transition was an opportunity for a dramatic break with the fragmented system of the past, towards a systematic attempt to put in place new policy, structures and mechanisms to meet democratic goals.

South Africa is distinctive in that new science and technology policies were systematically redesigned in the mould of a national innovation system (NIS) approach.