Monday, June 30, 2008
Greening of Asia should be halted
The following comment by me appeared in today’s issue of Fund Strategy:
The trend towards the "greening of Asia" represents one of the most retrograde developments of our time. Asia has benefited enormously from its rapid economic growth and could gain a lot more in the future. Anything that threatens such growth should be resisted staunchly.
It is only because of the deeply pessimistic times we live in that the greening of Asia is taken seriously. The benefits of growth tend to be grossly under-appreciated while the prospect of environmental damage prompts panic.
From the relative comfort of a developed nation it is easy to forget how beneficial growth has proved. Among other things it has led to greatly improved longevity, lower infant mortality, increased education, vastly better infrastructure, more consumer goods and more leisure time.
Yet much of Asia remains relatively poor. Even China, although it has grown rapidly over the past 30 years, still has much lower income per head than developed economies.
Under such circumstances, growth should remain a top priority. If the region chooses to use "dirty energy", rather than go to the extra expense of "going green", it should be free to do so. Fossil fuels are legitimate ways of meeting Asia's energy needs.
As it happens, growth generally provides the resources to clean up the environment. Typically, countries go through an "environmental transition" as they industrialise.
The early days of industrialisation are often heavily polluting. But as the economy grows it becomes able to generate the resources to produce goods and services more cleanly.
The developed world has already experienced this transition. America and Britain produce more than ever in absolute terms, yet the environment is generally much cleaner than it was in the earlier industrial period.
If the developed world is that worried about dirty energy it can always provide the latest technology to developing countries. No doubt if it is freely or even just cheaply available to them they are likely to make good use of it.
But it is important not to lose sight of the over-riding importance of growth. It would be wrong, from both an economic and moral perspective, to impose the use of particular technologies deemed "green" in the West.
The trend towards the "greening of Asia" represents one of the most retrograde developments of our time. Asia has benefited enormously from its rapid economic growth and could gain a lot more in the future. Anything that threatens such growth should be resisted staunchly.
It is only because of the deeply pessimistic times we live in that the greening of Asia is taken seriously. The benefits of growth tend to be grossly under-appreciated while the prospect of environmental damage prompts panic.
From the relative comfort of a developed nation it is easy to forget how beneficial growth has proved. Among other things it has led to greatly improved longevity, lower infant mortality, increased education, vastly better infrastructure, more consumer goods and more leisure time.
Yet much of Asia remains relatively poor. Even China, although it has grown rapidly over the past 30 years, still has much lower income per head than developed economies.
Under such circumstances, growth should remain a top priority. If the region chooses to use "dirty energy", rather than go to the extra expense of "going green", it should be free to do so. Fossil fuels are legitimate ways of meeting Asia's energy needs.
As it happens, growth generally provides the resources to clean up the environment. Typically, countries go through an "environmental transition" as they industrialise.
The early days of industrialisation are often heavily polluting. But as the economy grows it becomes able to generate the resources to produce goods and services more cleanly.
The developed world has already experienced this transition. America and Britain produce more than ever in absolute terms, yet the environment is generally much cleaner than it was in the earlier industrial period.
If the developed world is that worried about dirty energy it can always provide the latest technology to developing countries. No doubt if it is freely or even just cheaply available to them they are likely to make good use of it.
But it is important not to lose sight of the over-riding importance of growth. It would be wrong, from both an economic and moral perspective, to impose the use of particular technologies deemed "green" in the West.
Labels: Asia, environment, Fund Strategy
Sunday, June 29, 2008
Growth scepticism and economic slowdown
A couple of people have asked me what impact I think the current economic slowdown will have on growth scepticism. The assumption behind the question seems to be that economic restraint will somehow make people see the benefits of growth again. In my view the answer is not straightforward but, on balance, the growth sceptics are likely to be strengthened.
It is true that cuts in living standards, or even slow increases in living standards, can generate resentment among those involved. Worrying about the consequences of wealth in the abstract is one thing but adjusting to the reality of lower living standards is another.
But in the current cultural climate it is likely that growth scepticism will be strengthened on balance. For example, striving for growth is likely to be seen as coming into conflict with environmental limits. Or it could also lead to fears of the destabilising consequences of inequality.
Growth scepticism can be seen, at least in part, as a negative and fearful response to the circumstances in which we find ourselves. For example, it was the economic crisis of the early 1970s that played a key role in first popularising the idea of the “limits to growth”.
It is true that cuts in living standards, or even slow increases in living standards, can generate resentment among those involved. Worrying about the consequences of wealth in the abstract is one thing but adjusting to the reality of lower living standards is another.
But in the current cultural climate it is likely that growth scepticism will be strengthened on balance. For example, striving for growth is likely to be seen as coming into conflict with environmental limits. Or it could also lead to fears of the destabilising consequences of inequality.
Growth scepticism can be seen, at least in part, as a negative and fearful response to the circumstances in which we find ourselves. For example, it was the economic crisis of the early 1970s that played a key role in first popularising the idea of the “limits to growth”.
Labels: consumption, economics, growth
Friday, June 27, 2008
American pundit joins China bashers
Evidently Fareed Zakaria, one of America’s most influential commentators on international relations, expresses concern about the impact of China’s economic growth on the global environment in his new book. Although he welcomes poverty reduction in China he is concerned that rapid growth will lead to such problems as climate change and water shortages. According to Sean Collins writing in the latest spiked review of books:
“In viewing growth as problematic and potentially destructive, Zakaria raises a common theme of our time. Rather than celebrate the benefits of growth, such as a reduction in poverty, Zakaria and others emphasise the downsides that accompany development. This gloomy outlook reveals more about the commentator than the reality on the ground. Zakaria refers to the predicted increase in the number of cars in China from 26million to 120million in 2020 as an environmental problem rather than a cause of celebration, as the Chinese people gain greater freedom of movement. In doing so, Zakaria joins in with today’s growing China-bashing chorus.”
“In viewing growth as problematic and potentially destructive, Zakaria raises a common theme of our time. Rather than celebrate the benefits of growth, such as a reduction in poverty, Zakaria and others emphasise the downsides that accompany development. This gloomy outlook reveals more about the commentator than the reality on the ground. Zakaria refers to the predicted increase in the number of cars in China from 26million to 120million in 2020 as an environmental problem rather than a cause of celebration, as the Chinese people gain greater freedom of movement. In doing so, Zakaria joins in with today’s growing China-bashing chorus.”
Labels: America, climate, environment, review, spiked
Indians and chickens
After writing my piece on the campaign against the use of Indian child labour by suppliers to Primark (see 24 June post) an interesting parrallel occurred to me. It seems to me there are similarities between the campaign to “save” Indian children with Hugh Fearnley-Whittingstall’s campaign for chicken welfare at Tesco. Both sets of campaigners see themselves as superior beings protecting lower creatures from the forces of greed.
Labels: consumption, ethics, food, india, television
Tuesday, June 24, 2008
Against ethical consumerism
Spiked has published an article by me on the recent documentaries on child labour in India. It argues that ethical consumerism is nauseatingly elitist.
Labels: consumption, ethics, india, spiked, television
Sunday, June 22, 2008
On consumerism and globalisation
Benjamin Barber, a professor at the University of Maryland, writes that the contemporary world as besieged by two forces: consumerism and globalisation. Both of them, in his view, lead to the erosion of national autonomy. Consumerist capitalism is driven by an ethos of infantalisation which encourages narcissism and an obsession with consumption (he identifies key critics of this trend as David Riesman, Theodor Adorno and Jean Bauldrillard). Meanwhile, globalisation encourages privatisation This again, in his view, leads to an unhealthy atomisation of society.
Although much is wrong with Barber’s arguments there are elements of truth. For example, there is certainly a strong sense of powerless about what nation states can achieve. There is also an erosion of sovereignty of weaker states. In addition, there is an obsession with consumption in contemporary society.
However, his arguments are also one-sided. Nation states in the developed world are in many respects more powerful than ever. Indeed privatisation can be understood as in some ways representing an extension of state activity rather than its diminution. And obsession of consumption is itself a result of a more fundamental trend: the diminished subject. In other words the pervasive sense that people can do little to control their own lives.
Obviously such ideas demand a more thorough critique. Earlier posts on Barber were published in posts on 7 May 2007, 13 January 2008. 9 March 2008 and 28 April 2008.
Although much is wrong with Barber’s arguments there are elements of truth. For example, there is certainly a strong sense of powerless about what nation states can achieve. There is also an erosion of sovereignty of weaker states. In addition, there is an obsession with consumption in contemporary society.
However, his arguments are also one-sided. Nation states in the developed world are in many respects more powerful than ever. Indeed privatisation can be understood as in some ways representing an extension of state activity rather than its diminution. And obsession of consumption is itself a result of a more fundamental trend: the diminished subject. In other words the pervasive sense that people can do little to control their own lives.
Obviously such ideas demand a more thorough critique. Earlier posts on Barber were published in posts on 7 May 2007, 13 January 2008. 9 March 2008 and 28 April 2008.
Labels: consumption, economics, ethics, modernity
Economist on energy
The Economist has published a special report on energy in its current (19 June) edition.
New Oxfam book on development
Oxfam has published a book that looks likely to become highly influential in the development debate. Although From Poverty to Power, written by Duncan Green, probably says little original it codifies the current development consensus. It has a foreword by Amartya Sen and is endorsed by, among others, Dani Rodrik of Harvard. An accompanying website includes a full download of the book, background papers and a blog. The New Statesman (23 June) has already carried an article on it.
Labels: book, development, economics, inequality
Friday, June 20, 2008
Happiness essay published in India
Icfai Books in Hyderabad, India, has published Prosperity Index, a collection of articles including my January 2007 spiked essay arguing “There is no paradox of prosperity”. It is edited by Asha B Joshi, a faculty associate at the Icfai Business School Research Centre in Ahmedabad.
Labels: book, happiness, india, spiked
Tuesday, June 17, 2008
Indian cheap labour obsession
It seems that British documentary film-makers are becoming obsessed with cheap labour in India. After the awful Blood, Sweat and T-Shirts on BBC (see 18 April 2008 and 14 May 2008 posts) it seems that Panorama has a programme on the topic next week while Channel 4 is planning one entitled The Devil Wears Primark (see 1 June 2008 post).
In a pre-emptive strike against possible criticism from Panorama it seems that Primark, a bargain clothes retailing chain, has cut ties with Indian suppliers that used child labour.
There seems to be little understanding that simply cutting such ties is likely to make the plight of poor Indians worse. Child labour is a symptom of extreme poverty rather than its cause.
It is reminiscent of the spoilt western fashionistas in Blood, Sweat and T-Shirts hectoring Indian workers about how their working conditions are “disgusting”. Indians are well aware that they are poor - the difficult part is finding ways to make them rich.
The broader context for this discussion is the feigned concern for developing country workers from the likes of Joseph Stiglitz (see 6 May 2008 post).
In a pre-emptive strike against possible criticism from Panorama it seems that Primark, a bargain clothes retailing chain, has cut ties with Indian suppliers that used child labour.
There seems to be little understanding that simply cutting such ties is likely to make the plight of poor Indians worse. Child labour is a symptom of extreme poverty rather than its cause.
It is reminiscent of the spoilt western fashionistas in Blood, Sweat and T-Shirts hectoring Indian workers about how their working conditions are “disgusting”. Indians are well aware that they are poor - the difficult part is finding ways to make them rich.
The broader context for this discussion is the feigned concern for developing country workers from the likes of Joseph Stiglitz (see 6 May 2008 post).
Labels: consumption, ethics, film, india, inequality
Monday, June 16, 2008
The Battle for China
I will be speaking at a session on China and the environment at the Battle for China event on 12 July in London.
Labels: Asia, china, economics, environment, speeches
Sunday, June 15, 2008
Ethics and economics of climate change
The May edition of Scientific American includes a useful primer on the ethics and economics of climate change by John Broome. It includes references to further discussion of the subject by the likes of William Nordhaus, the IPCC and Nicholas Stern. The New York Review of Books (12 June) has also recently carried an article by Freeman Dyson that touches on similar themes.
Personally I do not see the emphasis on potential conflicts of interest between present and future generations as useful. It seems to me the best we can do for future generations is to encourage as much development as possible.
Personally I do not see the emphasis on potential conflicts of interest between present and future generations as useful. It seems to me the best we can do for future generations is to encourage as much development as possible.
Labels: climate, economics, environment, ethics
Blinkered discussion on agriculture
A roundtable of Nobel laureates hosted by Michael Milken (a financier, philanthropist and man who has served time in jail for securities violations) unwittingly gave an insight into the current food crisis. It seems that even Nobel prize-winners do not think it is possible to transform agriculture in the third world as it would lead to mass unemployment among former peasants. In other words leading economists do not see extensive generalised development as even possible:
“[Michael] Spence [2001 laureate]: The poorest spend 60 percent of their income on food. For now, we need a rapid response to malnutrition whatever the long-term solutions. Over time, productivity can increase, as was the case with the Green Revolution. Yet, 50 percent of Chinese still work in rural agriculture and 70 percent of Indians. Capital-intensive agriculture and higher productivity would displace them from their living. It’s a double-edged sword.
“[Myron] Scholes [1997 laureate]: If you move too fast to improve productivity in food, you create a surplus population that is forced to move to the already over-urbanized cities. That is a huge cost. There are 1.25 billion people in agriculture in India and China. Where will they go?”
Nor are such views restricted to these two eminent economists. A recent article in the Financial Times (Alan Beattie “Seeds of change”, 3 June) quoted a British academic who opposed the introduction of modern agricultural technology because it might replace hand weeding in Africa:
“Andrew Dorward, an academic at London's School of Oriental and African Studies, says that adoption of GM crops resistant to herbicide would, for example, be disastrous for many poor households: the crops would allow the replacement of hand-weeding, which is a big source of income for many.”
Others call for the adoption of “appropriate” – that is primitive – technology:
“Leftwing critics of the idea of a green revolution do not doubt that Africa can increase productivity with new seeds and inputs, but say the benefits will go to large corporations and rich farmers. Raj Patel, a fellow at the left-leaning Institute for Food and Development Policy in the US, recently told a congressional committee that projects such as Agra, "while perhaps well intentioned, are models of unaccountable and unsustainable technological investment". He called instead for "programmes that further the adoption and research into locally appropriate and democratically controlled agro-ecological methods".”
I suggest such “leftwing critics” spend a few months in the baking sun doing some hand weeding themselves. Perhaps they might then change their minds.
“[Michael] Spence [2001 laureate]: The poorest spend 60 percent of their income on food. For now, we need a rapid response to malnutrition whatever the long-term solutions. Over time, productivity can increase, as was the case with the Green Revolution. Yet, 50 percent of Chinese still work in rural agriculture and 70 percent of Indians. Capital-intensive agriculture and higher productivity would displace them from their living. It’s a double-edged sword.
“[Myron] Scholes [1997 laureate]: If you move too fast to improve productivity in food, you create a surplus population that is forced to move to the already over-urbanized cities. That is a huge cost. There are 1.25 billion people in agriculture in India and China. Where will they go?”
Nor are such views restricted to these two eminent economists. A recent article in the Financial Times (Alan Beattie “Seeds of change”, 3 June) quoted a British academic who opposed the introduction of modern agricultural technology because it might replace hand weeding in Africa:
“Andrew Dorward, an academic at London's School of Oriental and African Studies, says that adoption of GM crops resistant to herbicide would, for example, be disastrous for many poor households: the crops would allow the replacement of hand-weeding, which is a big source of income for many.”
Others call for the adoption of “appropriate” – that is primitive – technology:
“Leftwing critics of the idea of a green revolution do not doubt that Africa can increase productivity with new seeds and inputs, but say the benefits will go to large corporations and rich farmers. Raj Patel, a fellow at the left-leaning Institute for Food and Development Policy in the US, recently told a congressional committee that projects such as Agra, "while perhaps well intentioned, are models of unaccountable and unsustainable technological investment". He called instead for "programmes that further the adoption and research into locally appropriate and democratically controlled agro-ecological methods".”
I suggest such “leftwing critics” spend a few months in the baking sun doing some hand weeding themselves. Perhaps they might then change their minds.
Labels: Africa, economics, food
Friday, June 13, 2008
An eco-toff archetype
Adair Turner, to take up the position of chairman of Britain’s Financial Services Authority (FSA - the main financial regulator) in September, is an archetype “eco-toff”. He is a multi-millionaire member of the establishment with strong environmentalist leanings:
* Toff: chairman of the Cambridge University Conservative Association (later defected to the Social Democratic Party during its brief existence), president of the Cambridge Union, a consultant at McKinsey, director general of the Confederation of British Industry, member of the House of Lords and now FSA chairman.
* Eco: trustee of the World Wildlife Fund and has an organic farm.
His wife, Orna Ni-Chionna, also fits the mould. She graduated from Harvard Business School and did a stint at McKinsey. Now she is chair of the Soil Association (which promotes organic farming) and a director of Northern Foods (brands include Goodfella’s pizza and Fox’s biscuits, it also makes many food products for retailers using their own labels).
Turner’s 2001 book, Just Capital, advocated a “middle way” between free market economics and socialism.
* Toff: chairman of the Cambridge University Conservative Association (later defected to the Social Democratic Party during its brief existence), president of the Cambridge Union, a consultant at McKinsey, director general of the Confederation of British Industry, member of the House of Lords and now FSA chairman.
* Eco: trustee of the World Wildlife Fund and has an organic farm.
His wife, Orna Ni-Chionna, also fits the mould. She graduated from Harvard Business School and did a stint at McKinsey. Now she is chair of the Soil Association (which promotes organic farming) and a director of Northern Foods (brands include Goodfella’s pizza and Fox’s biscuits, it also makes many food products for retailers using their own labels).
Turner’s 2001 book, Just Capital, advocated a “middle way” between free market economics and socialism.
Labels: consumption, environment, finance
Thursday, June 12, 2008
Free marketeers equivocate on growth
Martin Wolf, the chief economics commentator of the Financial Times, argued in a feature in yesterday’s paper that sustaining economic growth is the century’s big challenge.
The article, which was partly a review of the new book by Jeffrey Sachs and partly a discussion of the recent growth commission report, started by asking:
“Is it possible for the vast mass of humanity to enjoy the living standards of today’s high-income countries? This is, arguably, the biggest question confronting humanity in the 21st century. It is today’s version of the doubts expressed by Thomas Malthus, two centuries ago, about the possibility of enduring rises in living standards. On the answer depends the destiny of our progeny. It will determine whether this will be a world of hope rather than despair and of peace rather than conflict.”
As a free marketeer Wolf says that his inclination is to argue that problems raised by economic development can be resolved. But later on he admits to developing some sympathy with environmentalism:
“it has become evident, at least to me, that the human impact on the planet on which we depend has risen to enormous proportions. We have treated the global commons as if they were free. Self-evidently, they are not.”
Evidently free marketeers cannot be relied upon to give an unequivocal defence of economic growth.
The article, which was partly a review of the new book by Jeffrey Sachs and partly a discussion of the recent growth commission report, started by asking:
“Is it possible for the vast mass of humanity to enjoy the living standards of today’s high-income countries? This is, arguably, the biggest question confronting humanity in the 21st century. It is today’s version of the doubts expressed by Thomas Malthus, two centuries ago, about the possibility of enduring rises in living standards. On the answer depends the destiny of our progeny. It will determine whether this will be a world of hope rather than despair and of peace rather than conflict.”
As a free marketeer Wolf says that his inclination is to argue that problems raised by economic development can be resolved. But later on he admits to developing some sympathy with environmentalism:
“it has become evident, at least to me, that the human impact on the planet on which we depend has risen to enormous proportions. We have treated the global commons as if they were free. Self-evidently, they are not.”
Evidently free marketeers cannot be relied upon to give an unequivocal defence of economic growth.
Labels: development, economics, environment, growth, Malthus, progress
Against celebrating indigenous lifestyles
A useful article by Rob Johnston in Tuesday’s spiked on why it is wrong to romanticise the lifestyles of indigenous peoples.
Labels: development, spiked
Tuesday, June 10, 2008
Gap narrows on the road to prosperity
The following comment by me appeared in yesterday’s issue Fund Strategy.
Only a few years ago the emerging markets were considered suitable only for the young and adventurous. The average investor would have at most a few per cent of emerging market stocks in his portfolio.
Times are changing fast. In recent months Fund Strategy has examined the rise of new funds specialising in such areas as Africa, India and the Middle East. Such fund launches reflect a fundamental change in the global economy. Although the developed economies are growing, the developing ones are typically growing much faster.
As a result, a growing proportion of the world economy consists of developing countries. Back in 2000 the advanced economies accounted for about two-thirds of global output on a purchasing power parity basis, according to the International Monetary Fund. By 2013 the advanced economies are projected to account for only about half of the global economy. The advanced economies remain far richer than the developing ones but, on this measure at least, the gap is narrowing.
This trend is to be wholly welcomed. In the past, the benefits of development - including a modern infrastructure and access to consumer goods - were confined to a largely white elite. Now they are becoming more evenly spread.
One of the most potent symbols of this change is the advent of the Tata Nano. The £1,000 people's car is designed to bring motoring to India's masses. Given that the Ford Model T, which made motoring a popular reality in America, was launched a century ago, the development is long overdue. Even in as poor a country as India, with 80% of the population living on less than $2 a day, cars should become more widely available as long as growth continues.
Of course, it may be that one of Tata's rivals ultimately builds a more successful car. However, the key point is not about an individual model of car but the fact that Indians can now realistically aspire to such things. India will also need to sustain a massive roadbuilding programme to ensure that its citizens can enjoy the full benefits of mobility.
If there is a problem, it is that developing economies still have a long way to go to catch up with the West. Sub-Saharan Africa and South Asia in particular remain desperately poor.
The sooner developing economies can be considered mainstream rather than exotic the better.
Only a few years ago the emerging markets were considered suitable only for the young and adventurous. The average investor would have at most a few per cent of emerging market stocks in his portfolio.
Times are changing fast. In recent months Fund Strategy has examined the rise of new funds specialising in such areas as Africa, India and the Middle East. Such fund launches reflect a fundamental change in the global economy. Although the developed economies are growing, the developing ones are typically growing much faster.
As a result, a growing proportion of the world economy consists of developing countries. Back in 2000 the advanced economies accounted for about two-thirds of global output on a purchasing power parity basis, according to the International Monetary Fund. By 2013 the advanced economies are projected to account for only about half of the global economy. The advanced economies remain far richer than the developing ones but, on this measure at least, the gap is narrowing.
This trend is to be wholly welcomed. In the past, the benefits of development - including a modern infrastructure and access to consumer goods - were confined to a largely white elite. Now they are becoming more evenly spread.
One of the most potent symbols of this change is the advent of the Tata Nano. The £1,000 people's car is designed to bring motoring to India's masses. Given that the Ford Model T, which made motoring a popular reality in America, was launched a century ago, the development is long overdue. Even in as poor a country as India, with 80% of the population living on less than $2 a day, cars should become more widely available as long as growth continues.
Of course, it may be that one of Tata's rivals ultimately builds a more successful car. However, the key point is not about an individual model of car but the fact that Indians can now realistically aspire to such things. India will also need to sustain a massive roadbuilding programme to ensure that its citizens can enjoy the full benefits of mobility.
If there is a problem, it is that developing economies still have a long way to go to catch up with the West. Sub-Saharan Africa and South Asia in particular remain desperately poor.
The sooner developing economies can be considered mainstream rather than exotic the better.
Labels: America, Asia, Fund Strategy, india, inequality
Sunday, June 08, 2008
Cars and popular aspiration
The current discussion of the Tata Nano, India’s “people’s car”, reminds me of the brilliant “sculptor” advert by Peugeot a few years ago for its 206. Whoever made the commercial, with a catchy backing track by Bhangra Knights, caught the popular aspiration for a better life in a clever and witty way. Only as an advert it was geared towards selling a particular product rather than making a more general point.
I was also struck to read recently that first production model of the Ford Model T, the car that popularised motoring in America, was assembled in October 1908. In other words India is about a century behind America in that respect. Henry Ford had many faults but he fulfilled his promise to “build a motor car for the multitude”.
I was also struck to read recently that first production model of the Ford Model T, the car that popularised motoring in America, was assembled in October 1908. In other words India is about a century behind America in that respect. Henry Ford had many faults but he fulfilled his promise to “build a motor car for the multitude”.
Labels: America, consumption, development, india, progress
Tuesday, June 03, 2008
Productivity not age key to Indian growth
The following comment by me appeared in yesterday’s issue Fund Strategy.
If demography was key then Zimbabwe, with a median age of only 20.3 years, according to the Central Intelligence Agency, would be a haven of prosperity. Yet it is Africa's worst-performing economy by far. India, too, would have been more dynamic in the past yet it has gone through prolonged periods of sluggish growth.
Conversely, Britain's median age, at 39.9 years compared with 25.1 years for India, might be taken to suggest a relatively poor country. But Britain, although growing more slowly, is vastly more productive and wealthier than India.
The key to a nation's prosperity is its productivity. High levels of productive technology and good infrastructure allow countries to become rich and stay that way. They also tend to lead to older and healthier populations.
Those of working age can produce more, and even the elderly, should they so wish, are in a better position to work, too. The more technology is used, the less need there is for workers to have to draw on sheer physical strength and stamina to perform their tasks.
In contrast, India has a vast population, particularly in rural areas, that is chronically underemployed. Over 60% of the labour force - that is more than 300m people - works in agriculture despite it accounting for only 17.5% of GDP. In this sense it is more closely equivalent to being on the dole in Britain than an efficient form of production.
A key challenge facing India, therefore, is to develop much larger modern industrial and service sectors. Although there is much hype about India's leading-edge technology, particularly information technology, it only accounts for a tiny proportion of the labour market.
For India to continue its economic growth the proportion of employees in modern sectors will have to be increased enormously. A substantial improvement in infrastructure - airports, communications, roads and utilities - will greatly aid the process.
The continuation of India's rapid growth depends on broadening economic development rather than the age of its population.
If demography was key then Zimbabwe, with a median age of only 20.3 years, according to the Central Intelligence Agency, would be a haven of prosperity. Yet it is Africa's worst-performing economy by far. India, too, would have been more dynamic in the past yet it has gone through prolonged periods of sluggish growth.
Conversely, Britain's median age, at 39.9 years compared with 25.1 years for India, might be taken to suggest a relatively poor country. But Britain, although growing more slowly, is vastly more productive and wealthier than India.
The key to a nation's prosperity is its productivity. High levels of productive technology and good infrastructure allow countries to become rich and stay that way. They also tend to lead to older and healthier populations.
Those of working age can produce more, and even the elderly, should they so wish, are in a better position to work, too. The more technology is used, the less need there is for workers to have to draw on sheer physical strength and stamina to perform their tasks.
In contrast, India has a vast population, particularly in rural areas, that is chronically underemployed. Over 60% of the labour force - that is more than 300m people - works in agriculture despite it accounting for only 17.5% of GDP. In this sense it is more closely equivalent to being on the dole in Britain than an efficient form of production.
A key challenge facing India, therefore, is to develop much larger modern industrial and service sectors. Although there is much hype about India's leading-edge technology, particularly information technology, it only accounts for a tiny proportion of the labour market.
For India to continue its economic growth the proportion of employees in modern sectors will have to be increased enormously. A substantial improvement in infrastructure - airports, communications, roads and utilities - will greatly aid the process.
The continuation of India's rapid growth depends on broadening economic development rather than the age of its population.
Labels: Asia, china, Fund Strategy, india
Sunday, June 01, 2008
A devilish mystery
I was planning to watch The Devil Wears Primark, yet another documentary on Indian sweatshops (see posts of 18 April 2008 and 14 May 2008), on Channel 4 this evening. However, despite being trailed last week, it seems to have mysteriously disappeared from the TV listings. Perhaps satanic forces associated with the cheap clothes retailer are at work?
Labels: consumption, film, india, inequality
