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India Unbound

India Unbound
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India today is a vibrant free-market democracy, a nation well on its way to overcoming decades of widespread poverty. The nation’s rise is one of the great international stories of the late twentieth century, and in India Unbound the acclaimed columnist Gurcharan Das offers a sweeping economic history of India from independence to the new millennium.

Das shows how India’s policies after 1947 condemned the nation to a hobbled economy until 1991, when the government instituted sweeping reforms that paved the way for extraordinary growth. Das traces these developments and tells the stories of the major players from Nehru through today. As the former CEO of Proctor & Gamble India, Das offers a unique insider’s perspective and he deftly interweaves memoir with history, creating a book that is at once vigorously analytical and vividly written. Impassioned, erudite, and eminently readable, India Unbound is a must for anyone interested in the global economy and its future.


From the Trade Paperback edition.
Knopf Doubleday Publishing Group; June 2001
ISBN 9780375413445
Download in secure EPUB or secure PDF format
Excerpt
Chapter One

Ranting in English, Chanting in Sanskrit

I can measure the passages of my life by the nation's milestones. When I was born, we were fighting to get the British out of India. By the time I went to school, we were free and we thought we would soon enter a new paradise. During my school days in the 1950s, Nehru set about building a proud new nation based on democracy, socialism, and secularism. When I went to work in the sixties I discovered that we had become economically enslaved and socialism was leading us to statism. By the time I got married and we had children, Indira Gandhi was creating dynastic rule and leading us into a ditch. When she declared the Emergency in the mid-seventies, we knew that political freedom was gone, and paradise was lost. Mercifully, the Emergency lasted only twenty-two months, and we soon recovered our political freedom. Just before I took early retirement in the early nineties, Narasimha Rao delivered us our economic freedom. It doesn't matter who will be ruling India when I die, because democracy has got entrenched and its institutions are best run by modest men. Thanks to the reforms, we have glimpsed paradise again and are on our way to regaining it. We have climbed to a 7 percent economic growth rate, and if we grow at this rate for a few decades and keep raising our literacy level, the nation will turn increasingly middle class and the degrading poverty of India will begin to vanish.

I was born soon after Mahatma Gandhi challenged the British by launching the Quit India movement in 1942, which led to Independence five years later. My birth also coincided with a second event, the Great Bengal Famine, in which three million people perished. Both these events would never be repeated, and have become remote in public memory. They were the last examples of what were commonplace happenings during my father's and grandfather's days. In a sense, the year of my birth brought down the curtain on an age.

The Quit India movement was born of frustration. For twenty years, Gandhi and the leaders of the nationalist movement had tried to negotiate with the British. It was a nonviolent struggle, based on Gandhi's belief in satyagraha, or "truth force." Because "truth" was on his side, Gandhi believed that he would shame the rulers into giving us freedom. Twelve years earlier, on 11 March 1930, he had informed the British that he was going to violate the salt-tax laws and collect salt from the sea. On that day, in a single stroke, he aroused the whole of India. Fishermen began collecting salt; then the peasants were making salt; the housewives followed suit. Soon the whole country was breaking the law and the people began to court arrest. But how many could the police arrest? Thus, year in and year out, Gandhi provoked the rulers with civil disobedience and drove them to distraction. In the end, they just gave up and left. India won freedom without a single English casualty--and this happened in a world filled with Hitler's and Stalin's shadows. No wonder we felt that we were a nation created by saints.

I grew up in a middle-class home in Punjab in northwest India. Most of Punjab was arid, but over three generations the vision and toil of engineers like my father created a network of canals that irrigated the land and made it a granary. The lower Chenab canal was one of the first to be built in the last quarter of the nineteenth century. With it came an orderly and planned town called Lyallpur, so named after the ruling lieutenant governor of Punjab, Sir James Lyall. It was to this town that my mother's ambitious father proudly moved in the early part of this century to start a law practice. I was born there a generation and a half later. In the middle of Lyallpur was a brick clock tower where eight roads crossed and around which the town spread out in concentric circles. Our house was off one of these roads, called Kacheri Bazaar, on the way to the Company Bagh, whose gardens sprawled sumptuously over forty acres.

We were a professional middle-class family not particularly given to patriotic enthusiasms. We never thought much of Gandhi--he was merely our "liberator with clean hands." My uncle specialized in uncovering the latest scandal in our neighborhood, and that always took precedence over politics. Famines, of course, were too unpleasant to be the subject of polite conversation. Nevertheless, the famine in Bengal did intrude into our complacent world. My grandfather's nephew, Sat Pal, decided one day to help in the relief work. He took a train from Lahore to Calcutta, and from there he went on to the Bengal countryside, where he experienced the trauma of the riots and deaths that took place. On his return, he told us that he did not understand the insanity of the situation. The supply of food had declined only marginally, but its distribution had failed completely. The only thing he could say for sure was that there was a human agency involved in a criminal and nasty form. He spoke vividly of a peasant who had fallen dead on a street in Calcutta--he spoke as though he knew him intimately. When it came to explanations, Sat Pal tended to see everything in class terms, and the others would lose interest. Much to my grandfather's disappointment, Sat Pal had spurned a brilliant professional career and become a communist.

During the Great Bengal Famine entire villages ceased to exist. The tragedy of the Bengali people's suffering was equaled only by the indifference of the British authorities. It was largely a man-made event, caused not by a decline in the food available but by the inadequacy of the response. The reports of the district officers of the province and clippings from the Statesman reveal the progress of the tragedy: "Rangoon falls to Japan--rice imports cut off" (10 March 1942); "Cyclone hits Bengal" (4 October 1942); "Rice price doubles in Birbhum district" (6 November 1942); "Wholesale price of rice in Calcutta is Rs 13 compared to Rs 7 a year ago" (11 December 1942); "Hunger marches organised by communists" (28 December 1942); "People having to go without food" (10 February 1943); "Acute distress prevails" (26 March 1943); "Paddy looting cases have become frequent" (28 March 1943); "Major economic catastrophe in the making" (27 April 1943); "Bands of people moving about in search of rice" (12 June 1943); "Death in the streets" (12 June 1943); "Town filled with thousands of beggars who are starving" (17 July 1943); "Disposal of dead bodies . . . a problem" (27 September 1943).

Lord Wavell, the British viceroy, summed up the situation in 1944: "The Bengal Famine was one of the greatest disasters that has befallen any people under British rule and damage to our reputation here . . . is incalculable." The problem, it seems, was Winston Churchill's attitude. Mountbatten wrote in 1944 that Churchill was impossible on the topic of India and regarded sending food as "appeasement of the Congress Party." Churchill said, "I hate Indians. . . . They are a beastly people with a beastly religion." Though food was available, it was sent to Holland but not to India. Wavell noted in his diary "the very different attitude towards feeding a starving people in Europe."

Churchill's advisers frustrated Wavell's efforts to secure grain for India. One of them, Lord Cherwell, felt that the famine was a "figment of the Bengali imagination." It escaped Churchill that India had given two million fighting men for Britain's war effort. Field Marshal Alan Brooke commented that Churchill "seemed content to let India starve, while still wanting to use it as a base for military operations." The British army generals did let in some food, but much of it was diverted to their troops.

Reports of famines were familiar news to my parents and their generation. Today, famines have vanished from our memory. When the monsoon failed in 1979 and again in 1987, few people noticed. It is not only because the green revolution (to be discussed in chapter 9) has increased food supply in India. It is also because democracy and a vigorous press force politicians to act for the sake of their own survival, Nobel laureate Amartya Sen reminds us. Nowadays, the government routinely carries three to four months' supply of food grains in the national warehouses and the public distribution system. In China, on the other hand, despite higher nutritional standards, more than twenty million people died from famines during Mao's experiments in the late 1950s (though, amazingly, the world did not learn of these tragedies until the eighties). This happened partially because of the absence of democracy and an active free press. Sen's point is that merely having more food is not enough. What causes hunger is the inability of the poor to buy food. Hence, even if Wavell had succeeded in getting more food for Bengal from Churchill, he would not have saved the starving masses unless he had had a plan to create purchasing power among the poor.

The year 1942 was a watershed. The Second World War was raging in Europe and had now spread to Asia. Following their devastating raid on Pearl Harbor, the Japanese had begun to advance on British colonies in Southeast Asia. The tired nationalist movement in India had acquired a new vigor. There was an unstoppable momentum towards independence. The spectacular Japanese victories in the East had unnerved the British. The surrender of Singapore, in particular, had been a staggering blow to their prestige in India. It had also opened the Bay of Bengal to the Japanese navy. My family wondered if we should support the British in their war with the Japanese. They asked who were our real enemies--the British or the Japanese? Would the British really give up India? Would the English split the country before they left?

These questions were on the minds of many Indians in those days. Although our family was apolitical, dinnertime conversation would often veer around to politics. My grandfather used to get impatient with people who did not realize that the Japanese posed a bigger threat. My uncle would retort that we were already under alien rule, and who was to say that one foreigner was better than another? My mother would add that we should be neutral in a conflict that did not concern us. My uncle confessed that he had secretly enjoyed Britain's discomfort in the East. He had applauded the successive fall of Hong Kong, the Philippines, then Malaya and Indochina. He was amazed at the speed of the Japanese advance. It meant that the colonial empires were flimsy structures built on pillars of rotting clay.

The British sought Indian support to fight the Japanese, who were practically knocking at our eastern door. Gandhi asked for what he thought was reasonable--a commitment in principle to India's freedom after the war, and in return the Indian people would fight the Japanese. But Churchill was unwilling, saying, "I did not become the Prime Minister of England in order to preside over the liquidation of the British Empire." Even President Roosevelt, who was a great champion of Indian independence, could not persuade him. From this frustrating deadlock was born the Quit India movement.

If we hated Winston Churchill, we loved Roosevelt for supporting us. In 1942, President Roosevelt sent a personal envoy, Averell Harriman, to liaise with Churchill, and he promptly began an affair with the attractive Pamela Churchill, the wife of Winston's son Randolph. The British establishment did not seem to mind the liaison, as it might help "drag" America into the war. "To have FDR's personal representative, the man charged with keeping Britain safe, sleeping with the Prime Minister's daughter-in-law was a wonderful stroke of luck," said Lord Beaverbrook. But the establishment did resent Harriman's pressure for India's freedom. The disastrous collapse in the Far East had made Britain heavily dependent on Roosevelt, who was not amused by the irony of Churchill claiming to fight a war on behalf of freedom yet making no concessions for freedom to the second-largest country in the world.

In the end, Churchill had to resort to a lie to get Roosevelt off his back. He telegraphed Roosevelt under his famous code name, "Former Naval Person," informing him that "he had no wish to allow Indian Muslims to be governed by the Congress Caucus and Hindu priesthood when 75 percent of the Indian soldiers were Muslim." This was clearly false--the truth was that less than 35 percent of the Indian army was Muslim, and Gandhi and Nehru's Congress freedom movement was by no stretch of the imagination a Hindu priesthood. At any rate, Roosevelt was unmoved. Churchill had to agree to dispatch a political mission--the Cripps Mission--to India a few days after the fall of Rangoon. It failed and Churchill was delighted. He said to FDR, "I feel absolutely satisfied we have done our utmost." However, Roosevelt did not think so. He knew that Churchill had stacked the deck against the mission. He telegraphed Churchill to try again, saying that Britain's unwillingness "to concede to the Indians the right of self-government was at the root of failure." Churchill was so furious that he released a "string of cuss words, which lasted for two hours in the middle of the night."

One of the intriguing "what-ifs" of history is that if the Japanese had succeeded in overrunning India, we might have been tempted to follow the successful Japanese model of export-led economic development after Independence, much like the Asian tigers. At the very least, it might have been a foil to British Fabian thinking, which did us incalculable harm. One can now say with some conviction that Fabian socialism failed everywhere, and that the Japanese model succeeded everywhere (notwithstanding East Asia's troubles a few years ago). The fact, of course, is that we also inherited a democracy from Britain. If it came to a trade-off between East Asian capitalism and liberal democracy, most Indians today would still opt for democracy. However, there need not have been a trade-off. If Nehru had not been mesmerized by the Soviet Union's economic success, or if Indira Gandhi had changed course when Korea and Taiwan did and opened our economy in the late 1960s, we might have lifted our growth rate and become an economic success without in the least bit compromising democracy.
Men like my grandfather and my father were typical of a new professional middle class that emerged in the nineteenth century under British rule with the introduction of the English language and Western education. This class produced not only clerks for the East India Company but also lawyers, teachers, engineers, doctors, bureaucrats--all the new professions that were required to run a country. Since passing an exam was the only barrier to entering this class, its members came from various castes and backgrounds. Although opportunities were open to all, the upper castes were the first to seize them and hold on to them. Once they learned English, acquired an education, and cleared an exam, rewards and prestige were showered upon them. They became the new elite and closed ranks.

The rise of a new Westernized urban elite matched the decline of the landed gentry. The Mughal aristocracy was the first to be destroyed, beginning in the late eighteenth century. Then came the gradual fall in the status of the regional Muslim and Hindu nobility. To be sure, local landlords, chieftains, and zamindars continued to hold sway, but men of new learning like my grandfather and father threatened their social position. Equally, this new middle class endangered the intellectual monopoly of the Brahmins. But the Brahmins were clever. With their traditional agility, many of them took to English education, passed exams, and became part of the new middle class. Though English administrators spoke contemptuously of natives talking the language of their masters and aping the manners of their betters, as time passed and one generation succeeded another, the apparent contradiction of a Brahmin talking about equality and fraternity also became reconciled. They could now rant in English and chant in Sanskrit.

With the Congress outlawed after the Quit India movement, its leaders in jail, its funds seized, and its organization decimated, Mohammed Ali Jinnah, the Muslim leader, saw the political vacuum and seized this opportunity to create a campaign of fear and emotion among the Muslim masses. Without the sane voice of Gandhi, who passionately spoke for one India, Muslims and Hindus rapidly drifted apart. Throughout my early childhood there was growing intolerance and increasing incidents of violence between the two communities.
I was four years old when one day my aunt pulled me away from the window and closed the shutters because a Muslim mob in Lyallpur had begun to throw stones at our Hindu neighbor's house. By the end of the war, Jinnah's politics of divisiveness had succeeded and the Muslim League's demand for Pakistan had become real. Gandhi was to pay a heavy price for Quit India. Unwittingly, he had paved the way for the partition of India and the death of more than half a million people in one of the bloodiest atrocities of the twentieth century. To many, the split was inevitable. The deeper reasons were ancient, and there is no use blaming anyone for what happened. The horrendous massacres of 1947 that followed the division of the country between India and Pakistan brought to the surface the tragic history of the relations between the Hindus and Muslims ever since the thirteenth century.

Western education provided the stimulus for the most dramatic change in the minds of Indians in a thousand years. Alberuni, the Muslim traveler who came to India around a.d. 1000 in search of India's legendary philosophical and mathematical knowledge, remarked that Indians were "know-it-alls." They kept themselves aloof from the outside world, he said, and were ignorant of the arts and sciences of the West. English education changed all that in a couple of generations. Indians embraced Western knowledge with vigor. Because of their Brahminical heritage, they showed a marked preference for theoretical over practical learning. Unlike the Japanese, for example, they were more attracted to the pure sciences than to technology. As in Alberuni's time, many Indians continue to suffer from intellectual arrogance.

To my grandfather the English language was a treasured possession. He prided himself on its mastery. I was confused by his strange attachment to a foreign language, but I now realize that it was his window on the world. My uncle used to enjoy pointing out the rich irony of the British teaching us English. It introduced Indian minds to liberal ideas and the ideals of the French Revolution while the British Empire was practicing the opposite through colonial rule. Schools and colleges taught liberty and equality while the rulers practiced subjugation and inequality. After college, the same students joined the nationalist movement. By introducing English in India, the British dug their own graves. It is ironic that some state governments after Independence have done everything possible to make Indians forget English. Yet more and more Indians speak and write English today with confidence, freely mixing it with Indian words as though it were their own language.

By the time my father went to Roorkee, the premier engineering college, in 1931, there was a growing middle class that had gone through the same education system across India and had attained a general unity of vision. It had a liberal humanistic outlook which was tolerant of ambiguities and shy of certainties. It shared a community of thought, feeling, and ideas, and this partly built up a sense of Indian nationality. Freedom was its first objective. It had produced a reasonably competent nationalist leadership who wanted to socially transform India and wipe away poverty and illiteracy. Mahatma Gandhi had said on many occasions that freedom would have no meaning unless it delivered the three fundamentals--bread, clothes, and shelter. How to achieve this was not as clear.

There were two competing visions. Mahatma Gandhi had a vision of self-reliant villages, with a reinvigorated agriculture and craft production. He opposed modern urban industry because it dehumanized man. Jawaharlal Nehru had a modern scientific mind, and he was much impressed by the economic gains of the Soviet revolution; but he was also committed to democracy. He had a vision of democratic socialism with the state leading the process of industrialization. He spurned capitalism because it exploited and it created inequalities. Both Gandhi's and Nehru's dreams were flawed, however, and we have spent a long time chasing after them. Gandhi distrusted technology but not businessmen. Nehru distrusted businessmen but not technology. Instead of sorting out the contradictions, we mixed the two up. We have had to deal with holy cows: small companies are better than big ones (Gandhi); public enterprises are better than private ones (Nehru); local companies are better than foreign ones (both). They so mesmerized us that the succeeding generation, whose job was to jettison these foolish ideas, failed to do so and did us incalculable harm.

Six months after I was born, the government transferred my father to a canal colony in the wilds of Hissar district in East Punjab. He was asked to supervise the maintenance of an irrigation canal. On the way, they stopped at his guru's ashram at Beas so that their child could have the guru's blessings. My father explained to my mother that a true guru's eyes had the power to protect: his glance, alighting on the child, would give the boy an auspicious start in life. At the ashram, he placed his child at the guru's feet and requested him to give his son a name. "Since you have put him at my feet, let us call him Guru Charan Das, the servant of the guru's feet. It will remind him to live his life with humility," said the guru with a smile. He added, "It is an appropriate name, don't you think?" And he laughed at his own joke. The first two parts of my name became gradually condensed, but it did nothing to make me humble or spiritual.

Religion was closely interwoven in our lives. Depending on our persuasion, we either went to a temple, a mosque, or a gurdwara, or attended discourses of holy men. It was common to speak of truth, illusion, and the meaning of human life. People were not ashamed to intersperse their conversations with their frustration with the human situation, or truisms on the inevitability of death. They regarded man as a microcosm of the divine. "God is in man and man is in God" was the way people talked about it. Man's mind and his selfish nature were the cause of his problems, making him feel that he was separate from God. Everyone believed in karma--that actions mattered and determined what sorts of lives we would lead in future births; equally, our lives today were a result of our actions in past births. The aim of life was to achieve unity with God. Thus, day-to-day conversation had a philosophical edge to it.

As a subdivisional officer, my father was an important official of the British Raj. We lived in a brick bungalow in the Public Works Department style--whitewashed inside, with a flat roof and a wide veranda--and the canal flowing at the back. My father's mission was to maintain the canal. He made sure that water flowed efficiently through the main canal as well as the smaller distribution channels which watered the farmers' fields. He also had to provide the water fairly to all the farmers. This was difficult at times because some farmer would invariably divert his neighbor's water to his own field, and this would lead to quarrels, fights, and even murder. In such a situation, my father often became a judge.

My father provided water for the crops, and the farmers overwhelmed him with gifts from their fields. He returned them, however, because he knew that they were a bribe. So as not to hurt the feelings of the giver, he would take one piece of fruit or vegetable from a whole basket or a glass of milk from a bucketful and return the rest. The villagers were surprised at this, for some of his predecessors not only had accepted gifts but had not hesitated in asking for cows and horses.

Nine months later, the government promoted my father to a "desk job" in the irrigation department at the district headquarters at Rohtak. Whereas he had been a "big sahib" in the canal colony, here he was a "small sahib" on the lowest rung of the district officialdom. At the top of the ladder was the collector, followed by the district heads of police, medical services, railways, forestry, irrigation, and other functions. Some of these officials were English, although the Indianization of the services had advanced quite far by 1943. Whereas his colleagues were envious that he had an administrative job, my father missed working with his hands on the canal. Years later, he told me that he found it strange that Indian engineers always preferred solving conceptual design problems rather than working with machines.

My father seemed to lead two separate lives, neatly divided into two compartments. During the day, at work, he wore Western clothes, spoke English, and followed the rational, individualistic life of an official of the British Raj. In the evening he wore a loose-fitting kurta, spoke Punjabi, ate Indian food, listened to Indian music, and meditated like a good Hindu. Years later, Prakash Tandon, author of Punjabi Century, introduced me to the expression "cultural commuter," which, as I think about it, fitted my father and his generation quite well. However, it does not quite capture the price they must have paid and the disorientation and alienation they must have experienced.

A visit from my father's big boss, the English superintending engineer (SE), was a major occasion. The entire staff of the local irrigation department assembled at the canal rest house to "pay their respects" and garland the SE with bright marigolds. My mother found this display embarrassing ("After all, the man was here on official business"). However, this was how it had been done for two generations. The SE's staff, a dozen strong, arrived in advance to see to his comforts: two clerks, two orderlies, two guards, two bearers to serve him food, a cook, a dhobi to wash his clothes, a hamal to sweep the floors, all under the supervision of a khidmatgar. It was a brilliant spectacle, recounted my mother, to see them lined up beside the chrysanthemums, in their gleaming white uniforms, with green bands on their turbans and green cummerbunds.

After eighteen months, we were again transferred, this time to Lahore. My mother was thrilled to be finally "going to civilization," to the cosmopolitan and cultured city where she had gone to college. However, there was a severe shortage of housing, and they decided that it was best for my mother and me to go to Lyallpur until my father found a proper house. The days passed into months, and he did not succeed in finding a house in Lahore. I was now four years old. After the winter came the unbearable hot weather, and finally to everyone's relief came the rains in early July. One late afternoon in August 1946, I was in my mother's dressing room watching her comb her hair. My mother was sitting at a heavy teak dressing table. There were sounds of footsteps. They were quick and urgent, up the small staircase. My grandfather burst in. In an excited voice, he said that the British were quitting India. Mountbatten had been appointed the last viceroy to liquidate the empire. "I didn't think I would live to see the day. The British Raj is finally come to an end!" he said. My mother nervously dropped the bottle of coconut oil. She jumped with joy and hugged me. "My grandson is going to grow up in a free country," said my grandfather.

Although Indians gloss over it, the British Raj was the most important event in the making of modern India--for better and for worse. Britain gave us democracy, the rule of law, an independent judiciary, and a free press. It built railways, canals, and harbors, but it could not bring about an industrial revolution. It could not raise economic growth or lift the people out of poverty. It could not avert famines. The truth is that the Raj was economically incompetent. It just did not know how to "develop" a country. Had it known it, Britain could have gained much from having a larger market for its manufactures. It introduced modern education and helped create a small middle class, but it did not educate the mass of the people. This was its other failure and linked to the first, for development is not possible without mass literacy.

The British gave us a hundred years of peace--the so-called Pax Britannica--but they also consciously pursued a divide-and-rule policy which made Hindus and Muslims conscious of their separate identities. This led to a tragic division of the country. Had India remained united, billions could have been saved in defense expenditures and invested instead in improving the lives of ordinary people in both countries. Whether an undivided India could have survived the Muslim-Hindu animosity is another counterfactual of history.

The Raj gave us modern values and institutions, but it did not interfere with our ancient traditions and our religion. India has therefore preserved its spiritual heritage and the old way of life continues. Many Indians despair over the divisiveness of caste and would prefer to wish it away. However, the hold of the Indian way of life is also a bulwark against the onslaught of the global culture. The British gave us the English language, which allowed us to converse with our compatriots in a country with sixteen official languages. However, English also divided us into two nations--the 10 percent elite who learned English and shut out the 90 percent who did not. Knowing English today, though, gives Indians a competitive advantage in the global economy and is an important factor in our nascent success in the information economy.

The British were different from our other invaders. They did not merge with us and remained aloof to the end. This shook our self-confidence. In school we had learned that the Indian subcontinent was a triangle with the Himalayas, the Arabian Sea, and the Bay of Bengal as its sides. The Himalayas ran from east to west and cut off the cold winds from the north. This allowed agriculture to prosper and created wealth, but it also attracted barbarian invaders from the north. It gave us a warm climate so that no one who came wanted to leave. First came the Aryans, then the Turks, the Afghans, and the Mughals. They came, they stayed, and they merged and became Indian. To accommodate them we merely created a new subcaste each time and they became part of our diversity. The British did not. But now that they have been gone for more than fifty years, our confidence is restored, especially among the young. Our infuriating diversity may also be of some value. Because we have always learned to live with pluralism, it is possible that we might be better prepared to negotiate the diversity of the global economy.


From the Trade Paperback edition.