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In early 2012, India flip flopped over allowing 51 per cent foreign direct investment (FDI) to multi-brand retailers (for instance department stores and retailers like Wal-Mart and Ikea) in the country.Eventually the central government seemed to pass the buck by saying it approved the measure, but would let each state decide whether they wanted these global retailers in their cities.
Opposition parties in India called nationwide strikes to oppose Wal-Mart because of the threat it poses to local businesses. And on a visit to India, Joseph Stiglitz seemed to share this sentiment.
While delivering a speech titled ‘Redefining Capitalism,’ The Hindu reports that Stiglitz warned his audience about certain foreign retailers. While he didn’t name Wal-Mart, it was evident which one he was referred to given the massive controversy it generated. From The Hindu:
“One retailer, which has been widely discussed, has the reputation for bad labour relations, discrimination on the basis of gender, not providing adequate health benefits, and more recently bribery, particularly in the context of Mexico.
…India has to ask before opening its markets to financial products, what they are going to do for promoting growth. The evidence is so overwhelming that these instruments will promote instability that a lot of caution is needed.”
Stiglitz said India needs to be smart about the FDI it attracts and should do it in a way that it gets access to “capital, technology, access to markets and training”. He also said the government needs to pursue policies that are good for its populace and not chase growth “based on crony capitalism”.
Stiglitz warned against chasing after American capitalism since it could lead to great inequalities like we see in the U.S. today.