My course Global Political Economy and Regional Business Environment has really opened my eyes and ears to Political behaviors and International relations.
US: US has been in a mess caught between India and Pakistan. India obviously is at the wrong ends with respect to Kashmir but India has a sound excuse - Terrorism and the violent effects of an untrusty neighbour, Pakistan. US has been losing its face in the muslim world and Pakistan is now the center of the world's attention. Pakistan's co-operation to destroy the Taliban setup is vital for US. At the same time, US's involvement in the Pakistan affairs, such as with India on Kashmir, spoils its reputation. Pakistan public is convinced now than ever that India, US and the West are forces of oppresion, Anti-Pakistan. So US reacts mildly to the release of India's most wanted terrorist,Jamaat -ud-Dawa's chief Hafiz Saeed, while India is unhappy at the release of from house arrest. Pakistan has no plans to go back to the Lahore court with more evidence against Hafeez. US's war on terror has also become more famous or infamous as a war on Islam. So US wants Pakistan to do the dirty so that the religius view is ruled out.
China: Chinese are really everywhere. So are the Indians but then China is than India the leader in East-Asia and China's closeness to Pakistan equals if not is stronger in the muslim world. With active help from China and North Korea, Pakistan has surged well ahead of India in the missile arena. The only nuclear-capable ballistic missile in India’s arsenal which can be said to be 100% operational as of now is the short-range Prithvi missile. China has been supporting naxals in East India and Pakistan to weaken India.
China has naval bases in Pakistan, Sri Lanka, Myanmmar. China is coming closer and closer to India's border and in many cases has infringed beyond!
Pakistan: The country is in a mess. LeT, State-backed terror network is now stabbing the state. LeT and Al Quaida came closer and did carry out Anti-Indian activities for decades. However, with Pakistan co-operating (?) with US to vanquish the terror networks (really? yeah, whatever, that's the latest from Pakistan), LeT has had to fight with Pak to help Al Qaida. Pakistan has been lying to its people for long long time. Pakistan has blamed India forever and sucessfully fed the Pakistani minds with seeds of Anti-India. Now, even a cleaning job is seen by the public as an act of compulsion towards US and other so called, Anti-Pakistan forces. Pakistan knows the terror networks it has setup, which operates behind the scenes, but dismantling it
would lose the government, not only its face but lead to public outcry. Again, Pakistan which has about 60 nuclear warheads, primarily targeted towards India, is continuing production of fissile material for weapons and adding to its production facilities and delivery vehicles, a US Congressional report has said.
India: India has been under-playing the Chinese threat for a long time. SM. Krishna's appointment, immediately saw increased troops in the Indo-Chinese border. India is realizing China is day-by-day moving towards a regional hegemon. India really needs to get on the act and face up to China's threat. US has been asking India to take an active role in Pakistan because US thinks India should join the party if it wants to hear the music. India is worried as it feels, it would lead to increased attacks in India. It may also antagonize the muslims in India. Will India ever join Pakistan for help. Never! I would say its right thing to do too, you never know when Pakistan will turn against India! Sometimes standing still may be, the best move you ever made! India has been purchasing defense weapons from Israel and Pakistan has hence pinned India-Israel nexus as Anti-Pakistan!
Mike - the MBA blogger
Thursday, May 28, 2009
Wednesday, May 27, 2009
The story of Gastarbeiters
While the Oil Boom has yet to make Siberia a magnet for Russia's knowledge class, it is attracting many other newcomers: impoverished immigrants from beyond Russia's borders. Every morning, in a vacant lot just off the highway to Filipenko's showcase capital, it is common for a group of shabbily dressed men ranging in age from their 20s to their 40s, waiting for offers of menial work. A car usually pulls up, and several of the men walk over to talk to the driver, who is looking for a few hands to dig potatoes. But his offering price, just under ten dollars a day, isn't enough, and he drives away without any takers.
These men are what Russians, borrowing a German word, call gastarbeiters—guest workers. They are nearly everywhere in Khanty-Mansi. Most are Muslims from Tajikistan, the former Soviet republic in Central Asia whose economy was shattered by civil war in the mid-1990s. They come here in spring and return home before winter arrives. It's not every day they find a job, but when they do they can earn about $20 lugging bags of cement for a construction crew or doing household cleaning. They wire funds back to their families, and their employers avoid paying taxes on the wages.
The men are supposed to obtain registration papers certifying their place of residence, but, as they tell me, they have no authorized place to live, bunking instead in unheated garages illegally rented to them. A work boss—a kind of Mafia figure—obtains papers for them by bribing the registration office, but those documents, listing a false address, leave the gastarbeiters at the mercy of the police. When they are found out, they're sometimes forced to pay a spot "fine" (read "bribe"), and repeat offenders may face deportation. Russia's federal government recently put the burden on employers to register the workers and check their identifications, but such measures are unlikely to stem the tide so long as the oil boom continues.
A FLOOD OF RUSSIANS from economically depressed cities west of the Urals is also swelling the oil towns of western Siberia. Forty years ago Surgut was a collection of wooden hovels, in a place where temperatures can plunge to minus 60 degrees Fahrenheit and midwinter darkness lasts for all but a few hours a day. Today Surgut is one of western Siberia's largest cities, with 300,000 people. The new arrivals are voting with their feet, a sign that Russia's new market economy is actually working.
Mike - the MBA blogger
These men are what Russians, borrowing a German word, call gastarbeiters—guest workers. They are nearly everywhere in Khanty-Mansi. Most are Muslims from Tajikistan, the former Soviet republic in Central Asia whose economy was shattered by civil war in the mid-1990s. They come here in spring and return home before winter arrives. It's not every day they find a job, but when they do they can earn about $20 lugging bags of cement for a construction crew or doing household cleaning. They wire funds back to their families, and their employers avoid paying taxes on the wages.
The men are supposed to obtain registration papers certifying their place of residence, but, as they tell me, they have no authorized place to live, bunking instead in unheated garages illegally rented to them. A work boss—a kind of Mafia figure—obtains papers for them by bribing the registration office, but those documents, listing a false address, leave the gastarbeiters at the mercy of the police. When they are found out, they're sometimes forced to pay a spot "fine" (read "bribe"), and repeat offenders may face deportation. Russia's federal government recently put the burden on employers to register the workers and check their identifications, but such measures are unlikely to stem the tide so long as the oil boom continues.
A FLOOD OF RUSSIANS from economically depressed cities west of the Urals is also swelling the oil towns of western Siberia. Forty years ago Surgut was a collection of wooden hovels, in a place where temperatures can plunge to minus 60 degrees Fahrenheit and midwinter darkness lasts for all but a few hours a day. Today Surgut is one of western Siberia's largest cities, with 300,000 people. The new arrivals are voting with their feet, a sign that Russia's new market economy is actually working.
Mike - the MBA blogger
The Power of Dreams
There once was a sheikh who dreamed big. His realm, on the shores of the Persian Gulf, was a sleepy, sun-scorched village occupied by pearl divers, fishermen, and traders who docked their ramshackle dhows and fishing boats along a narrow creek that snaked through town. But where others saw only a brackish creek, this sheikh, Rashid bin Saeed al Maktoum, saw a highway to the world.
One day in 1959, he borrowed many millions of dollars from his oil-rich neighbor, Kuwait, to dredge the creek until it was wide and deep enough for ships. He built wharves and warehouses and planned for roads and schools and homes. Some thought he was mad, others just mistaken, but Sheikh Rashid believed in the power of new beginnings. Sometimes at dawn, with his young son, Mohammed, by his side, he’d walk the empty waterfront and paint his dream in the air with words and gestures. And it was, in the end, as he said. He built it, and they came.
His son, Sheikh Mohammed bin Rashid al Maktoum, now rules Dubai, and around that creek has built towering dreams of his own, transforming the sunrise vision of his father into a floodlit, air-conditioned, skyscrapered fantasy world of a million people. With its Manhattan-style skyline, world-class port, and colossal, duty-free shopping malls, little Dubai now attracts more tourists than the whole of India, more shipping vessels than Singapore, and more foreign capital than many European countries. The people of 150 nations have moved here to live and work. Dubai has even built man-made islands—some in the shape of palm trees—to accommodate the wealthiest of them. Its economic growth rate, 16 percent, is nearly double that of China. Construction cranes punctuate the skyline like exclamation points. Welcome to Dubai!
Mike - the MBA blogger
Thursday, May 21, 2009
Top 10 Geography Mistakes :)
Here's the collection of Top 10 Geography mistakes caught on tape. I have seen some of these videos. It was great fun to laugh at them again!
Mike - the MBA blogger
Mike - the MBA blogger
Tuesday, April 28, 2009
Notorious Pakistan
So Pakistan finally agreed that the lone terrorist, Kasab is a Paki. This is one thing the world never doubted and the Pakistan’s acceptance was a huge surprise for me. But Pakistan is again playing the game by its own rules. President Zardari attracted a lot of flak for calling Kasab, a terrorist. Afterall, he was fighting for Kashmir. How can anyone who fights for Kashmir, no matter how many lives you take, be a terrorist? I can see a lot of people jumping enthusiastically and aggressively to answer me. Relax, I would like to clarify your opinion does not matter. What matters is that of Pakistan! Some things never change!
Mike - the MBA blogger
Mike - the MBA blogger
Monday, April 27, 2009
Rising Giant - Russia
There is only one joy for us,
And this is all we need,
To wash our faces in the new oil,
Of the drilling rig.
Little wonder Russians are toasting oil: These are boom times. Global oil prices have increased tenfold since 1998, and Russia has pulled ahead of Saudi Arabia as the world's top crude oil producer. The Kremlin's budget now overflows with funds for new schools, roads, and national defense projects, and Moscow's nouveau riche are plunking down millions of dollars for mansion-scale "dachas." Oilers' Day, an annual holiday, honoring the hard labor of the oil workers, is perhaps celebrated only in this part of the world. The pumping heart of the boom is western Siberia's boggy oil fields, which produce around 70 percent of Russia's oil—some seven million barrels a day.
But the opportunity presented by oil could slip through the region's fingers. Despite the remarkable surge in oil prices, oil production in western Siberia has leveled off in recent years. Output barely rose from 2004 to 2007—a period when the rulers of the Kremlin, a cold-eyed and control-oriented crew, seized choice fields once held by private oil barons. The oligarchs, as they were known, were rapacious sorts who jousted among themselves for spoils. But they also heavily invested in the fields in order to maximize production and profits. The Kremlin, by contrast, aims to exploit oil not only as a source of national wealth, but also as a political tool for making Russia a great world power once again. Its heavy-handed tactics have made foreign investors wary and could undermine the boom—and with it Khanty-Mansi's chances for a brighter future.
When Siberia's oil lands came under development, native people were forcibly herded into villages and cut off from their hunting and fishing grounds. Following the breakup of the Soviet Union, the nomads won legal status as "aboriginal people," with the right to roam the oil fields. Rural Russia is also being depopulated by the flight of young people to Moscow and other cities.
To counter these trends, Filipenko has implemented ambitious plans to turn Khanty-Mansi into a place young people will choose to live in rather than leave. And this effort, he boasts, is working. He notes that Khanty-Mansi has the third highest birthrate among provinces in Russia, and unlike the country as a whole, whose population is in decline, Khanty-Mansi's has increased 18 percent since 1989, from a combination of births and immigration.
Oil composes 90 percent of the capital's economy, which is not surprising given the surge in oil prices. But it points to a problem shared by all resource-dependent economies: At some point the resource will be exhausted, and new sources of prosperity will have to be found.
Mike - the MBA blogger
And this is all we need,
To wash our faces in the new oil,
Of the drilling rig.
Little wonder Russians are toasting oil: These are boom times. Global oil prices have increased tenfold since 1998, and Russia has pulled ahead of Saudi Arabia as the world's top crude oil producer. The Kremlin's budget now overflows with funds for new schools, roads, and national defense projects, and Moscow's nouveau riche are plunking down millions of dollars for mansion-scale "dachas." Oilers' Day, an annual holiday, honoring the hard labor of the oil workers, is perhaps celebrated only in this part of the world. The pumping heart of the boom is western Siberia's boggy oil fields, which produce around 70 percent of Russia's oil—some seven million barrels a day.
But the opportunity presented by oil could slip through the region's fingers. Despite the remarkable surge in oil prices, oil production in western Siberia has leveled off in recent years. Output barely rose from 2004 to 2007—a period when the rulers of the Kremlin, a cold-eyed and control-oriented crew, seized choice fields once held by private oil barons. The oligarchs, as they were known, were rapacious sorts who jousted among themselves for spoils. But they also heavily invested in the fields in order to maximize production and profits. The Kremlin, by contrast, aims to exploit oil not only as a source of national wealth, but also as a political tool for making Russia a great world power once again. Its heavy-handed tactics have made foreign investors wary and could undermine the boom—and with it Khanty-Mansi's chances for a brighter future.
When Siberia's oil lands came under development, native people were forcibly herded into villages and cut off from their hunting and fishing grounds. Following the breakup of the Soviet Union, the nomads won legal status as "aboriginal people," with the right to roam the oil fields. Rural Russia is also being depopulated by the flight of young people to Moscow and other cities.
To counter these trends, Filipenko has implemented ambitious plans to turn Khanty-Mansi into a place young people will choose to live in rather than leave. And this effort, he boasts, is working. He notes that Khanty-Mansi has the third highest birthrate among provinces in Russia, and unlike the country as a whole, whose population is in decline, Khanty-Mansi's has increased 18 percent since 1989, from a combination of births and immigration.
Oil composes 90 percent of the capital's economy, which is not surprising given the surge in oil prices. But it points to a problem shared by all resource-dependent economies: At some point the resource will be exhausted, and new sources of prosperity will have to be found.
Mike - the MBA blogger
Wednesday, April 8, 2009
Some Politics!
Part of my MBA coursework is a subject Global Political economy. Let me tell you, I thought it was one of the most boring and theoritical subjects. I was so wrong! Now lets interpretate how India and Pakistan have acted/ behaved with each other.
I request every reader to lose your sense of nationality and read the rest of this post, unbiasedly.
The Indian Angle:
The Partition meant India and Pakistan as two separate entities and then India had to deal with a fearful neighbour, Pakistan, which shared borders on both sides. East Pakistan was a worry for India and India used the native sentiments, sentiments of neglect by West Pakistan that led to a growing resentment and sense of separation. And our actions will be remembered, until India gets paid by the same coin! Afghanistan war though condemned by India, especially the enormous innocent lives lost, helped India to protect itself by weakening the Taliban-Pakistan nexus along with securing the border with Afghanistan. News is, India has set up its administrative offices along the Pak-Afghan border lines, just to secure the region. Pakistan has never been cramped for space.
The Pakistan angle:
Kashmir. Kashmir is a 90% Muslim occupied place and Pakistan could not tolerate Kashmir under India. And when Jinnah couldn't get access to his beloved tourist place in his last days, he felt hurt. And so did Pakistan. Ever since India freed East Pakistan as Bangladesh, Pakistan has intensified its activities on Kashmir. Now who is to blame! The war on terror on Afghanistan has radicalized Pakistan community. The pressure on Pakistan has led to poor spending on education. This inturn meant, drop-out ratio is very high. And poor quality schools has forced the students to madrasas, religious schools. Its no secret that a high percentage of this crowd join Taliban, to fight against US forces. Afghanistan and the Pakistan tribal areas has become the breeding place of the world's terror network!
The Neutral view:
Kashmir cannot go to India completely. Kahsmir cannot go to Pakistan completely.
Kashmir cannot be an independent country. If so, any change in demography would be seen by India (or Pakistan) as a strategy to forcefully occupy. Imagine, Kashmir becomes a neutral country, open to both. Millions of People, I bet and perhaps rightfully so, would move from Pakistan to Kashmir and breed. This would be seen by India as a occupying strategy and any imbalance in the region would lead to the never-ending blame game. So does it solve the problem, NO! How about this! US says, Kashmir is free and makes it like Taiwan. It guarantees security, in case of any attack from India and Pakistan. A very good neutral response? True! Would India agree? Never! Would Pakistan agree? Never!
As long as Pakistan continues to send negative vibes and news to the world, India would be very happy to claim splitting Kashmir or accepting LOC would be a security nightmare. So if Pakistan wants any claim over Kashmir, it needs to follow peace. Not for 6months, not for a year but atleast, i am guessing, 5-6 years. And if there is no taliban activity or infiltration and bombs exploding, the pressure would then be shifted to India! Would any soul in Pakistan understand! hmmm....don't think so!
Mike - the MBA blogger
I request every reader to lose your sense of nationality and read the rest of this post, unbiasedly.
The Indian Angle:
The Partition meant India and Pakistan as two separate entities and then India had to deal with a fearful neighbour, Pakistan, which shared borders on both sides. East Pakistan was a worry for India and India used the native sentiments, sentiments of neglect by West Pakistan that led to a growing resentment and sense of separation. And our actions will be remembered, until India gets paid by the same coin! Afghanistan war though condemned by India, especially the enormous innocent lives lost, helped India to protect itself by weakening the Taliban-Pakistan nexus along with securing the border with Afghanistan. News is, India has set up its administrative offices along the Pak-Afghan border lines, just to secure the region. Pakistan has never been cramped for space.
The Pakistan angle:
Kashmir. Kashmir is a 90% Muslim occupied place and Pakistan could not tolerate Kashmir under India. And when Jinnah couldn't get access to his beloved tourist place in his last days, he felt hurt. And so did Pakistan. Ever since India freed East Pakistan as Bangladesh, Pakistan has intensified its activities on Kashmir. Now who is to blame! The war on terror on Afghanistan has radicalized Pakistan community. The pressure on Pakistan has led to poor spending on education. This inturn meant, drop-out ratio is very high. And poor quality schools has forced the students to madrasas, religious schools. Its no secret that a high percentage of this crowd join Taliban, to fight against US forces. Afghanistan and the Pakistan tribal areas has become the breeding place of the world's terror network!
The Neutral view:
Kashmir cannot go to India completely. Kahsmir cannot go to Pakistan completely.
Kashmir cannot be an independent country. If so, any change in demography would be seen by India (or Pakistan) as a strategy to forcefully occupy. Imagine, Kashmir becomes a neutral country, open to both. Millions of People, I bet and perhaps rightfully so, would move from Pakistan to Kashmir and breed. This would be seen by India as a occupying strategy and any imbalance in the region would lead to the never-ending blame game. So does it solve the problem, NO! How about this! US says, Kashmir is free and makes it like Taiwan. It guarantees security, in case of any attack from India and Pakistan. A very good neutral response? True! Would India agree? Never! Would Pakistan agree? Never!
As long as Pakistan continues to send negative vibes and news to the world, India would be very happy to claim splitting Kashmir or accepting LOC would be a security nightmare. So if Pakistan wants any claim over Kashmir, it needs to follow peace. Not for 6months, not for a year but atleast, i am guessing, 5-6 years. And if there is no taliban activity or infiltration and bombs exploding, the pressure would then be shifted to India! Would any soul in Pakistan understand! hmmm....don't think so!
Mike - the MBA blogger
Friday, March 27, 2009
Orlando and Disney's Love Affair
Orlando was the county seat of Orange County, but it wasn't citrus groves that prompted Disney's secret aerial reconnaissance. During his flyover, he focused on a wasteland southwest of Orlando where alligators outnumbered people. Porous limestone underlay the vegetal muck. What passed for dry land was speckled with shallow, brown-watered catchments, some the size of station wagons, others the size of suburbs.
Over the next two years, with the collusion of Orlando's top leaders, Disney secretly acquired more than 25,000 acres (10,000 hectares). People were glad to sell dirt cheap. This sludgy terrain was useless for agriculture. Who would want to vacation in such a place? Disney was certain most Americans would, once he worked his marketing magic on them. By the 1960s, all over America, suburbs were replacing old neighborhoods. Malls were driving Main Street out of business. There was hardly a new ranch home or split-level that didn't have a TV antenna on the roof. Disney realized that in the coming decades shows like The Mickey Mouse Club, not climate and geology, would determine what the majority of Americans would consider a safe and enjoyable place to take a family vacation. That day, flying over central Florida, Disney decided that he, not reality, would define what constituted the Magic Kingdom in the minds and spending habits of millions of Americans in the years to come.
The interstate highway system, started by the Eisenhower Administration as part of the Cold War defense effort against communism, was already crisscrossing America. Disney chose Orlando because it was at the confluence of two of the most important of these new thoroughfares, what today are Interstate 4 and Florida's Turnpike. There was also a deeply personal reason he located Disney World there—the same one that still lures people to Orlando today. In Florida's boggy, buggy, empty midsection, Walt Disney perceived a second chance.
His original theme park—Disneyland, in southern California—covered fewer than 300 acres (120 hectares). It soon was ringed with the suburban blight that its success inevitably attracted—motels, strip malls, copycat amusement parks. Disney never forgave himself for not making Disneyland big enough, but in Florida he hoped to rectify that mistake. He set out to create an Adventureland where nothing was left to chance. Arriving visitors would not be permitted to choose their own parking spaces; smiling Disney characters would do that for them. In this new, bigger, better Magic Kingdom, water could not be the tannic brown common in central Florida. So Bay Lake was drained, the sludge removed, and clear water pumped into the resulting lagoon. Even dry land would be turned into another Disney illusion: As you traverse the theme park, you are actually walking on the roof of an immense, underground control building from which the operation is run, staffed, and supplied.
Disney's new empire in central Florida would be marketed as Disney World. Its official name was, and remains, the Reedy Creek Improvement District. Thanks to a sweetheart deal with the state legislature, the lands Disney purchased were detached from the rest of Florida to form a Magic Kingdom, above and outside the law. Even now, Disney World's rides are exempt from state safety inspections. Democratic process is excluded, too. Power remains in the hands of a board of supervisors composed of Disney allies.
Mike - the MBA blogger
Over the next two years, with the collusion of Orlando's top leaders, Disney secretly acquired more than 25,000 acres (10,000 hectares). People were glad to sell dirt cheap. This sludgy terrain was useless for agriculture. Who would want to vacation in such a place? Disney was certain most Americans would, once he worked his marketing magic on them. By the 1960s, all over America, suburbs were replacing old neighborhoods. Malls were driving Main Street out of business. There was hardly a new ranch home or split-level that didn't have a TV antenna on the roof. Disney realized that in the coming decades shows like The Mickey Mouse Club, not climate and geology, would determine what the majority of Americans would consider a safe and enjoyable place to take a family vacation. That day, flying over central Florida, Disney decided that he, not reality, would define what constituted the Magic Kingdom in the minds and spending habits of millions of Americans in the years to come.
The interstate highway system, started by the Eisenhower Administration as part of the Cold War defense effort against communism, was already crisscrossing America. Disney chose Orlando because it was at the confluence of two of the most important of these new thoroughfares, what today are Interstate 4 and Florida's Turnpike. There was also a deeply personal reason he located Disney World there—the same one that still lures people to Orlando today. In Florida's boggy, buggy, empty midsection, Walt Disney perceived a second chance.
His original theme park—Disneyland, in southern California—covered fewer than 300 acres (120 hectares). It soon was ringed with the suburban blight that its success inevitably attracted—motels, strip malls, copycat amusement parks. Disney never forgave himself for not making Disneyland big enough, but in Florida he hoped to rectify that mistake. He set out to create an Adventureland where nothing was left to chance. Arriving visitors would not be permitted to choose their own parking spaces; smiling Disney characters would do that for them. In this new, bigger, better Magic Kingdom, water could not be the tannic brown common in central Florida. So Bay Lake was drained, the sludge removed, and clear water pumped into the resulting lagoon. Even dry land would be turned into another Disney illusion: As you traverse the theme park, you are actually walking on the roof of an immense, underground control building from which the operation is run, staffed, and supplied.
Disney's new empire in central Florida would be marketed as Disney World. Its official name was, and remains, the Reedy Creek Improvement District. Thanks to a sweetheart deal with the state legislature, the lands Disney purchased were detached from the rest of Florida to form a Magic Kingdom, above and outside the law. Even now, Disney World's rides are exempt from state safety inspections. Democratic process is excluded, too. Power remains in the hands of a board of supervisors composed of Disney allies.
Mike - the MBA blogger
Wednesday, March 18, 2009
Imran Khan - the Future of Pakistan
Another nice video, must see
http://www.youtube.com/watch?v=L9fW9jPnjgE
Mike - the MBA blogger
Monday, March 2, 2009
China vs India
In an article published in 2003 called “Can India overtake China?” Tarun Khanna of Harvard Business School and Steve Hamm argued that India’s domestic corporate sector – strengthened by the country’s rule of law, its democratic processes and relatively healthy financial system – was a source of substantial competitive advantage over China. At that time, the notion that India might be more competitive than China was laughed at. Few years later, India appears to have permanently broken out of its leisurely “Hindu rate of growth”– an annual gross domestic product increase of around 2 to 3 per cent – and its performance is beginning to approach the east Asian level. From April to June 2005, India’s GDP grew at 8.1 per cent, compared with 7.6 per cent in the same period the year before. More impressively, India is achieving this result with just half of China’s level of domestic investment in new factories and equipment, and only 10 per cent of China’s foreign direct investment. While China’s GDP growth in the last two years remained high, in 2003 and 2004 it was investing close to 50 per cent of its GDP in domestic plant and equipment – roughly equivalent to India’s entire GDP. That is higher than any other country, exceeding even China’s own exalted levels in the era of central planning. The evidence is very clear: China’s growth stems from massive accumulation of resources, while India’s growth comes from increasing efficiency.
Today as the world has gone into an economic crisis, India's Inflation which was a 8.5% a month ago, has slipped to 6.5% and the verdict is it might soon reach the controlled zone of 4 and less. When that happens, the world will know that India's potential in comparison to China is manifold. But what is stopping India from acheiving its potential. Strangely, Democracy! Is this good for the country? Strangely again, Yes! Why? Read on! India is a highly attractive destination for FDI but has it aggressively taken the direction as China has- No! The reason is, India is weary of the large number of its businesses which are independent entrepreneurial ventures. A deal between WalMart and Bharti to open retail shops was stalled by the Congress, as it feared it would flood the market and impede the growth of the Indian plaeyrs in the retail market. The advantage, the money is generated by Indians for India. What's different about this model? If one takes a closer look at China, we know why India is truly the country to look out for, it is steadily building a strong foundation. China has become the home for Manufacturers around the world! Why? It offers cheap labor, good infrastructure (aided by Chinese Government) and cheap resources. And "Made in China" labels is omnipresent. But "Made in China" is not necessarily "Made by China". If India needs to compete and win China, it has to improve its Infrastructure. An economic litmus test is not whether a country can attract a lot of FDI but whether it has a business environment that nurtures entrepreneurship, supports healthy competition and is relatively free of heavy handed political intervention. In this regard, India has done a better job than China. From India emerged a group of world-class companies ranging from Infosys in software, Ranbaxy in pharmaceuticals, Bajaj Auto in automobile components and Mahindra in car assembly. This did not happen by accident.The day is not long, when MNCs find an alternative to China. When that happens, China will be drained by much of its capital and its market, left to chinese players, will get very incompetent. This situation is never bound to happen in India. Every Industry, has one or more Indian player in the market. Thus India is building its economy towards becoming a self-sustaining growing economy whereas China is still busy, improving its foreign reserves and comfortable with the headstart it has over other economies.
Unless China embarks on bold institutional reforms, India may very well outperform it in the next 20 years. But, hopefully, the biggest beneficiary of the rise of India will be China itself. It will be forced to examine the imperfections of its own economic model and to abandon its sense of complacency acquired in the 1990s. China was light years ahead of India in economic liberalisation in the 1980s. Today it lags behind in critical aspects, such as reform that would permit more foreign investment and domestic private entry in the financial sector. The time to act is now.
Mike - the MBA blogger
Today as the world has gone into an economic crisis, India's Inflation which was a 8.5% a month ago, has slipped to 6.5% and the verdict is it might soon reach the controlled zone of 4 and less. When that happens, the world will know that India's potential in comparison to China is manifold. But what is stopping India from acheiving its potential. Strangely, Democracy! Is this good for the country? Strangely again, Yes! Why? Read on! India is a highly attractive destination for FDI but has it aggressively taken the direction as China has- No! The reason is, India is weary of the large number of its businesses which are independent entrepreneurial ventures. A deal between WalMart and Bharti to open retail shops was stalled by the Congress, as it feared it would flood the market and impede the growth of the Indian plaeyrs in the retail market. The advantage, the money is generated by Indians for India. What's different about this model? If one takes a closer look at China, we know why India is truly the country to look out for, it is steadily building a strong foundation. China has become the home for Manufacturers around the world! Why? It offers cheap labor, good infrastructure (aided by Chinese Government) and cheap resources. And "Made in China" labels is omnipresent. But "Made in China" is not necessarily "Made by China". If India needs to compete and win China, it has to improve its Infrastructure. An economic litmus test is not whether a country can attract a lot of FDI but whether it has a business environment that nurtures entrepreneurship, supports healthy competition and is relatively free of heavy handed political intervention. In this regard, India has done a better job than China. From India emerged a group of world-class companies ranging from Infosys in software, Ranbaxy in pharmaceuticals, Bajaj Auto in automobile components and Mahindra in car assembly. This did not happen by accident.The day is not long, when MNCs find an alternative to China. When that happens, China will be drained by much of its capital and its market, left to chinese players, will get very incompetent. This situation is never bound to happen in India. Every Industry, has one or more Indian player in the market. Thus India is building its economy towards becoming a self-sustaining growing economy whereas China is still busy, improving its foreign reserves and comfortable with the headstart it has over other economies.
Unless China embarks on bold institutional reforms, India may very well outperform it in the next 20 years. But, hopefully, the biggest beneficiary of the rise of India will be China itself. It will be forced to examine the imperfections of its own economic model and to abandon its sense of complacency acquired in the 1990s. China was light years ahead of India in economic liberalisation in the 1980s. Today it lags behind in critical aspects, such as reform that would permit more foreign investment and domestic private entry in the financial sector. The time to act is now.
Mike - the MBA blogger
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