the key to prosperity

It's time India realises that it is trade and not merely technological innovation that holds...

By Bharat Jhunjhunwala
Published: Thursday 15 September 1994

-- it is generally presumed that countries that lead in technological innovations will also reap the economic benefits arising from them. But history reveals that rarely have the innovators of technology done well economically. Interestingly, it also reveals that India has excelled in putting technology developed by others to her own economic benefit.

Let us consider the Bronze Age technologies. Jericho in Palestine developed the technology of building masonry walls. Although we do not know exactly where gold was first discovered, it was certainly not in India. Copper and bronze followed gold. We may, therefore, presume that the technology to extract all these metals was developed elsewhere. The first wheeled cart is also reported to have been developed in ancient Iraq.

These technological developments -- masonry walls, metals and carts -- were known to the Bronze Age civilisations, but India appears to have contributed little to these innovations. And yet her Bronze Age cities of Harappa, Mohenjodaro, Lothal and Kalibangan became far more developed than their counterparts.

How was this economic feat achieved? The secret of India's prosperity lay in trade. It appears that India was importing only raw materials and gold and exporting manufactured commodities. An imprint of an Indus civilisation seal has been found on a bale of cloth near the West Asian town of Lagash. It indicates that textiles constituted an important item of export in those times. Other items included beads, statues, stone vessels, ivory, pearls, spices and perfumes.

While a large number of commodities manufactured in India have been discovered in Iraq, almost nothing manufactured in Iraq has been unearthed in India. The evidence for the argument that India controlled the trade between the Indus civilisation and Iraq are the large number of Indian seals found in Iraq. Foreign seals have only rarely been discovered in India. It was this pattern of exporting manufactured commodities and importing raw materials and gold that made the Indus civilisation greater than its contemporaries. This, we must remember, was achieved by utilising the technological innovations made by others.

We find a similar pattern in the Iron age. Iron was first smelted in Central Asia around 1,500 BC. Cast iron was manufactured in China in 2 BC. The first blown glass objects were made in Egypt. The Romans contributed little to these technological innovations. Yet, it was they who established the first world empire.

Like Rome, India also contributed little to the technological improvements of the Iron Age. Nevertheless, it developed a booming trade with the western world. The exports from India to Greece and Rome included spices, perfumes, jewels, fine textiles, sugar, rice, ivory, live animals and birds. India also exported some iron which was esteemed for its purity and hardness. In return, India imported gold, gold and more gold, along with some pottery and slave girls. But the basic pattern of trade was an unmistakable repeat of the Indus civilisation -- the export of manufactured commodities and the import of gold.

More important, Indian manufactures were undertaken under the guild, or sub-caste, system. Although income differentials existed, the essential needs of the masses were met. The kind of exploitation prevalent in Rome did not exist here. This policy of building an economy on the basis of trade in manufactured commodities enabled the Indian civilisation to survive for nearly 2,000 years. While Rome collapsed, India prospered.

Twice in the past, in the Bronze and Iron Ages, India had contributed little to technological developments and yet created a stable and humane civilisation. The same pattern seems to be repeating itself. Strange as it may seem, some of the areas in which India's exports are buoyant are precisely those in which she has been exporting for more than 5,000 years -- cotton textiles, diamonds, steel, milk products, spices and rice. Indians also seem to have rediscovered their inexhaustible lust for the yellow metal. Gold prices continue to remain high despite liberalised imports.

The technological lead of the West may have little meaning in this historical perspective. Ultimately, the success and failure of a civilisation in the Machine Age will be determined by those who put these technologies to commercial use. So far, it seems that history is repeating itself and India is on its way to yet another exemplary performance.

Bharat Jhunjhunwala formerly taught at the Indian Institute of Management, Bangalore

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