Industrial countries need to keep trade and immigration open in order to address the problem of ageing population, said former RBI governor Raghuram Rajan.
“The wrong solution for industrial countries right now, as their populations age, is to shut off trade because where are the other markets going to be, they are going to be in the rest of the world; they are not going to be here," said Rajam in an exclusive conversation with CNBC's Steve Leisman.
Rajan said the US could face the same fate of the ageing population as Japan if it follows the immigration policies Japan had followed.
, he spoke about capitalism in countries like India and China and also gave his views on the Fed and trade war concerns. "We have a much younger population because we allowed immigration. So let’s think about how we get effective immigration rather than let’s shut it off,” Rajan added.
In his new book titled 'The Third Pillar', Rajan argues the idea that policy today is not taking the people and the community into account. “I think some of the problems translate to emerging markets also. People have to sense that they have a chance in the capital system and when they sense they do not have a chance they want to shut it down,” he said.
“One of the dangers at this point in time is precisely that whether you coming from the left or you coming from the right, you are seeing the markets aren’t working for you and therefore you want to constrain the markets. We have to make sure that first, they have better opportunities and that is where the focus of the book that these communities which are declining, where people do not feel they have a chance, we have to focus on reviving them and that means targeting them rather than the broad country,” he further added.