Academic journal article Indian Journal of Industrial Relations

Corporate Social Responsibility for Inclusive Growth

Academic journal article Indian Journal of Industrial Relations

Corporate Social Responsibility for Inclusive Growth

Article excerpt

Inclusive Growth

Till the dissolution of the Soviet Union, formally in 1989, in academic and popular discussions, the world used to be divided into three parts--the First; Second; and Third worlds. From an economic structure point of view, the First world economies consisted of the market economies, with freedom for entrepreneurs domestically, and relatively free trade in exports and imports. The US, EU and Japan were the main constituents.

The Second world was made up of centrally planned and administered economies, with state ownership of enterprises, and limited exports and imports; mainly through bilateral relations. Russia, the East European and Central Asian countries, were the main parts. The Third world consisted of all other countries, mostly in Asia, Africa and Latin America.

Some countries of the third world adopted an export-led growth model in the 1960s and 70s. They achieved high economic growth, and got new labels such as the Newly Industrialized Countries (NIC); and the Asian Tigers. After the death of Mao in 1976, Deng began economic reforms in China in 1979, based on Special Economic Zones (SEZ), dedicated to exports. China has been growing at more than 10% per annum since then. In the Soviet Union, Gorbachev implemented Glasnost and Perestroika. Russia and the ex-CIS countries have also implemented changes towards a market economy.

India began with a mixed economy consisting of a state-owned public sector, and a private sector subject to industrial licensing and many administrative controls on imports; exports; foreign exchange etc. Between 1950 and 1990, the economy grew at only 3.5% per annum. In 1991, India also was forced to reform her economy. The reform has had three main strands--LGP--Liberalisation; Globalisation; and Privatisation. The first reform has helped the rapid expansion of the existing and new private enterprises. The second has led to a sustained growth of exports, both in services like IT, and in manufactures like drugs and engineering goods. The third reform of privatisation has faced more social and political resistance. However, it has benefitted the consumer and job seeker in telecom; banking; airlines; electricity etc. The resistance has been more to the selling of the government stake in state owned enterprises, SoE.

All the above reforms have taken the Indian economy to a high growth path of 8%. In the peak year of 2007-08, it exceeded 9%. But questions have arisen on the quality and contents of the growth in India. Inflation rose above 12%. It hurts the poor more. Disparities of income and wealth have widened. The better performing companies have raised their market share and profits. Under liberalisation, corporate survival is not guaranteed, resulting in some closures and job losses. In the competition for talent, companies have raised the total managerial compensation, consisting of salaries, allowances, bonuses, benefits, stock options etc. The outcome of the 2004 parliamentary elections was partly influenced by the argument that the benefits of high growth had not reached the common man. Even within the ruling UPA Coalition, the debate favoured growth not for its own sake. Industry Chambers and Professional Associations have been holding Conferences on Inclusive Growth; its challenges; and action needs.

Global Concern

This concern for Inclusive Growth has now become global. It has been a major issue in the 2008 US presidential campaign. Against a mood of despair and hopelessness, Obama has won by offering hope of change for the better. The US economy is reeling under recession, hit by three main problems--the home mortgage defaults; bank losses; and considerable credit card dues. Some fear even a Depression 2, revisiting the horrors of Depression 1 of the 1930s.

In the early stages of the 2008 US financial crisis, there was a perception in the EU that it was more of an American problem. But, it is now clear that Europe is also in recession. …

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