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Transcript: Harvard's Tarun Khanna and the need for governments to be more inclusive

Tarun Khanna from Harvard Business School

KARL MOORE – This is Karl Moore of the Desautels Faculty of Management at McGill University, with Talking Management for The Globe and Mail. Today I am delighted to be speaking with Tarun Khanna who is a professor at the Harvard Business School and the director of Harvard's South Asia Initiative.

Good afternoon.

TARUN KHANNA – Good afternoon, Karl. It's nice to be here.

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KM – When we look at it, what we have seen is a big shift in the last couple of years of the change in the role of government. How do you see the role of government changing, especially in the emerging economies?

TK – I think governments are coming to terms in a broad sweeping sense with a lot of citizen angst. You have seen this, of course, most famously play out as the Arab Spring. You have also seen dissent with the Sichuan earthquake, the milk contamination scandals from China and a bunch of other issues, worries about monopolizations of economic rents in China, a lot of protests against corruption at all levels of government and in society in general in India, and on and on. You have also seen angst, for instance, in Africans acting out against a so-called "Colonializing Chinese" as the Chinese investment to Africa ramps up quite a bit.

So at all levels there is an issue of whether the fruits of globalization, such as they were, are being adequately shared with the populous at large. Unsurprisingly, since you and I and everyone else are completely committed to Democracy, it is hard to disagree with the notion that those fruits of progress ought to be somehow disseminated. Yet, all the studies seem to show that the levels of income, wealth and equality are rising quite dramatically as countries open up to the rest of the world and that has been a process that has been going on for the last 20 to 30 years. So governments, of course, are the ultimate stewards of this process, or are meant to be the stewards of the process, and charged to be so by the citizenry at large for the most part, except the autocracies, and they are realizing that they better do something about it. That in turn is acting out in a variety of different ways.

KM – So what should governments be doing better?

TK – I think governments should be much more inclusive in their policymaking. In other words they should be responsive to the needs of a broader swath of society and go the extra many miles, as the case might be, to make sure that policymaking is not the province of the select few, which is how things end up usually happening by the natural course of things -- unfortunately it's just how we seem to be wired as human beings.

A second thing I think that governments could do better is to get talent from wherever it is possible to get talent. So I will take the example of my own country, India, as a country that doesn't necessarily do this very well. India has a noisy political economy, a noisy democracy, which I am very proud of as an Indian but it has this strange phobia to get input from people living outside of India. I can't personally complain because I have never been victimized by this but there are a lot of instances where the Indian Press gets very bent out of shape, or the Indian political classes in response to the press and otherwise become really bent out of shape, about input being provided by a foreign entity or an NGO receiving funding from let's say a foundation that is a global foundation. The criticism is often made that, wow that might somehow compromise the work of that organization or company or foundation in India that might otherwise be doing good work.

On the other side there are some other countries that do this very well. The example that jumps to mind, as I am talking to you Karl, is an example in Chile. Chile has been very forthcoming in saying, "Anybody who is having trouble setting up a business somewhere in the world, why don't you apply to us the Chileans and if you have a good idea then we would love to host you as an entrepreneur in Chile." This, as I understand, came about because of tightening immigration norms in the United States so that a lot of people, particularly in California and other entrepreneurial ecosystems in the U.S., were finding trouble because their visas were expiring and were at a loose end because they were in the middle of building something interesting and generating employment as the case might be. But the U.S. immigration system wasn't able to keep up with it, for a variety of reasons that we don't have to go into, but Chile saw an opportunity and said, "Hey, we are open to the best and brightest." A lot of people from the U.S., Europe, Asia as I understand and of course the rest of Latin America have made a bee-line for Santiago saying, "We can build a business here. Why not?" So I think there with the Indian and Chilean examples you have the bad and the good as the case might be in terms of things that could systemically be done a lot better.

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