Patel’s remarks came as a response to a question on protectionist tendencies.
The Reserve Bank of India Governor Urjit Patel on Monday cautioned against protectionism. Patel said that the US tech giants like Apple, IBM and Cisco would have been in a tight situation if they had not been able to source good products and skilled workers from across the world.
“I don’t think that we have heard the last word on the US policy talk about this as there was an international push back because the world has benefited from an open trading system,†Patel said, while speaking at Columbia University’s School of International and Public Affairs.
His remarks came as a response to a question on protectionist tendencies after delivering the Third Kotak Family Distinguished Lecture, sponsored by the Raj Center on Indian Economic Policies.
“Where would Apple be, where would Cisco be, where would IBM be if they were not sourcing the best products and talent from across the world. And if policies come in the way of that, then the big wealth creators in a country that advocates protectionism are ultimately affected,†Patel said, PTI reported.
He said that the calls for protectionism in the United States is because of equity and domestic distribution issues that “textbook economics tells us should be addressed through domestic fiscal policy,†for instance taxation and income transfers.
“Using trade instruments like customs duties, border tax etc is not most efficient way to do this. In fact you could end up at somewhere else. You do not know what are the implications of some of these policies on equity and distribution besides objectives that you want to address,†the RBI governor said.
“It should be a domestic policy issue, using domestic fiscal policy if those are the objectives that need to be addressed,†he added.