Updated: April 27, 2010 15:45 IST

And now, a tripolar world

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After holding some key positions in the country — such as Chief Economic Adviser, Ministry of Finance; Principal Adviser, Planning Commission; and Director, Indian Council for Research on International Economic Relations — Arvind Virmani has moved to the International Monetary Fund, where he is serving as Executive Director.

The first two chapters of this book, he says, summarise the analysis done during 2004-05 and 2005-06 on the “economic foundations of a nation's global power.” They spell out the author's notion of the power of nations using an index he has developed — Virmani's Index of Power, VIP for short. In the rest of the chapters, barring two, there are repetitive elaborations and restatements of this theme. In fact, the volume is just a compilation, without careful editing, of papers presented by him over a decade.

Of the two exceptions, the chapter on China's socialist market economy is a self-contained piece, having some bearing on the main theme. However, the other, on “proliferation by nuclear weapons states and NNWS NPT partners”, provides an account of Pakistan's explorations into the nuclear arena, and is at best only tangentially related to the theme.


The theme itself is simple, but daring: in terms of economic power, by around 2040, the world which is currently unipolar, with no other nation to match the United States, will become tripolar, the other two being China and India. This goes against conventional wisdom, says the author, which visualises a multi-polar world that will include the European Monetary Union plus the United Kingdom, Japan, and Russia as well.

How does Virmani arrive at his projected vision? First, he departs from the traditional procedure of ranking countries in terms of per capita income. Instead, he examines separately the two components of per capita income — the gross domestic product (GDP) and population. Secondly, he evaluates the GDP of various countries not in terms of actual exchange rates, but in terms of purchasing power parity (PPP) — that is, the value of national currencies adjusted by the domestic prices of a basket of goods.

The point is that when national currencies are adjusted by the PPP, the gap between the per capita incomes of poorer countries such as India and China and that of the U.S. will get considerably reduced.

On this basis, it can be seen that while the U.S. now accounts for about 22 per cent of the sum of all the national GDPs, it has only less than five per cent of the global population. On the other hand, China, with just 12 per cent of the world GDP, has almost 21 per cent of the global population.

Similarly, India that has a share of around six per cent in the global GDP accounts for about 17 per cent of the world's population. Turning now to the future, neither the GDP nor the population of the U.S. will grow at the rate at which China's and India's can, and will. To put it differently, the per capita GDP of both China and India will grow much faster than that of the U.S. in the two or three decades ahead, and all the three will have 20 per cent or more of the world GDP. Neither Japan nor Russia will be anywhere close to these three and the European Union is unlikely to become a single nation for it to be taken into reckoning. For a nation to emerge as a superior power in the global arena, it has to command, apart from economic strength, military superiority backed by nuclear capability. Virmani's contention is that only the U.S., China, and India can attain that stature. Among the three, he has some misgivings only about India, not because it lacks the capability but because it is somewhat diffident about exploiting that potential.

Natural allies

In the tripolar configuration, what is likely to be the inter-power balance among the three? According to Virmani, the U.S. and India will get closer. Already, America has realised that India provides an “ideal hedge to overdependence on China” in strategic and economic matters. Also, the two countries are natural allies because of the many values they share. So, the future Virmani projects is of a world where the U.S. and India, as democratic political systems with market-dominated economies and nuclear power, will handle China of whatever complexion it may be by the middle of the century. Whether this is just a technical projection or a fond hope, the ‘Virmani doctrine' will certainly be talked about in the days ahead. For, among administrators, politicians, corporate leaders and opinion makers, there are sections that firmly believe that the power of the nation is more important than the welfare of the people. Watch out.

FROM UNIPOLAR TO TRIPOLAR WORLD: Arvind Virmani; Academic Foundation, 4772-73/23, Bharat Ram Road, Darya Ganj, New Delhi-110002. Rs. 995.

Keywords: Unipolor world

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