Paradiplomacy: Can India learn from Macau and China?

macauOwing to the growing engagements that India has with countries around the world, a discussion on the importance of paradiplomacy forms not just a quintessential part of the country’s foreign policy analysis but also makes space for a subsequent and crucial shift in India’s strategies in conducting international relations. As opposed to conventional diplomatic relations, which fall under the exclusive domain of sovereign nation states exercised by central governments, paradiplomacy, a ‘neologism’ makes space for ‘external relations’ of sub-national or federal units which might indulge themselves in international activism in order to promote their own interests. While, broadly, the aims of subnational diplomatic interactions have been to outsource business on account of good governance and to attract investments at a regional level, the advantages of paradiplomacy are many when one speaks of the Indian turf.

Though not Prime Minister Modi’s brainchild in terms of its inception, the concept of ‘constituent diplomacy’ certainly appeals and gains importance in the context of India, which has a highly centralised foreign policy. Never less than incisive in his choice of actions, PM Modi articulated and espoused a greater role for states in boosting India’s economic growth even before assuming office at the Centre. Having competently tested and executed his vision of such decentralisation in Gujarat even within the constraints of the Indian foreign policy scene, Modi indicated a paradigm shift in India’s foreign policy making by appreciating the consequential role that States can and will play in the conduct of diplomacy.

More than being just another noticeable change, paradiplomacy is now gaining ground in global politics for it offers States a chance to advance their interests by means of direct investments, outsourcing of business and also cultural exchange. Realising the economic potential of subnational governments and adding their voices to global governance is the need of the hour. In the context of India, the federalisation of foreign policy is thus a development of significant import.

Given India’s size, there seems to now be a definitive need for decentralisation of foreign policy implementation. Being better equipped to enhance diplomatic relations, provincial governments are likelier to gauge ground realities in their neighborhoods given geographical proximity and historical ties with other regions. Local involvements and tie-ups with countries abroad could advantage Indian States presence on the global arena by bolstering regional economies.

A case in point here could be a comparison of Goa and Macau. Even after having shared the same colonial past, the difference in the economies of both regions remains regrettably stark. Goa was under Portuguese rule for almost 450 years before it was liberated by India in 1961. Emerging from a similar Portuguese yoke after almost 450 years, Macau gained sovereignty only in 1999. The joint-declaration between China and Portuguese allowed Macau to enjoy a “high degree of autonomy except in foreign and defence affairs” which was to remain the responsibility of the Central People’s Government. Remarkably, the provision of Art 136 of the Basic Law of Macau (Basic Law, 1993), the Special Administrative Region (SAR, i.e. Macau) “[…] may on its own, using the name: Macao, China, maintain and develop relations and conclude and implement agreements with foreign states and regions and relevant international organization in the appropriate fields, including the economic, trade, financial and monetary, shipping, communications, tourism, cultural, science and technology and sports field.”

It is worth noting that at the time of handover in 1999, Macau (SAR) was a “small economy with no specific role either in the world economy or in the regional one”. However, after gaining control over Macau, China was quick to exploit the historical and cultural relations that Macau had with the former Portuguese colonial empire and other South East Asian countries. Giving shape to its master plan of having Macau operate as a “one country and two systems” model, China allowed Macau to operate with a high degree of autonomy while the overarching ‘capitalist’ structure was carefully retained. As per Macau’s Basic Law, the city was to maintain its own legal and monetary system and could also have its own custom and immigration policies. As of today, Macau not only conducts cross border relations but also participates in international organizations like the WTO, IMF and in events not requiring members to possess national sovereignty.

Employing its sophisticated paradiplomacy model, Macau has established itself as the world’s leading gaming hub and one of the most sought after tourist destinations. Owing to its highly vibrant subnational diplomacy, Macau now stands among the wealthiest regions of the world. Hosting 22 million tourists as opposed to the 4.5 million who visit Goa, Macau’s per capita GDP amounted to a hefty US $28,436 in 2006. Contrastingly, Goa contributes far less to the Indian economy.

The phenomenal rise of the city’s gambling industry and its revenue has made Macau the world’s top casino market, even surpassing Las Vegas. It is estimated that Macau earns approximately US $45 billion annually from gambling alone as opposed to Goa’s US $1.32 billion. With more than 78 nations having established consular services on its territory, Macau has signed 62 bilateral treaties (data from 2009) and also enjoys independent status in 13 intergovernmental organizations.

The comparison of Macau and Goa regrettably ends at the historical legacy that both regions share in being former colonies of the Portuguese. Despite being liberated almost 38 years earlier, Goa’s growth is only slightly better than other States of India. Although Goa boasts of natural sea beaches (54 in number), long coastal lines, an educated population (including a sizeable Portuguese-speaking population), its economic and diplomatic growth remains far less amplified as compared to other regions. Even though the Goan government has opened offshore and onshore casinos, the lack of autonomy to establish representations abroad by means of cooperative efforts has hindered the State in exploiting its full potential. While it is true that the liberation of Goa from the Portuguese Salazar was acrimonious, even after 55 years of its liberation, the success story of Macau could very well be replicated in Goa by allowing paradiplomatic relations to flourish.

Introducing a decentralised dimension to foreign policy affairs could become, in some ways, the only means of a more effective delivery of diplomatic measures that India seeks to capture. In such an era of globalisation, appreciating domestic competencies will prove to be the turning point in the realm of India’s economic diplomacy for it could not only bolster the nation’s interests but also place the individual economies of its federal States on the global map.


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