19 Replies to “Economic data on South Asia”

  1. I’m curious as to why Sri Lanka didn’t do any better and go the Taiwan way w.r.t. high tech manufacturing, civil war reasons aside.

    It sits on the main artery of freight travel from the Suez canal to the Malacca straits, and had massive potential as a value-add low-cost industrial region for higher-end products. The early boost in education could have helped, and excess transport costs would be near zero, esp. compared to inland regions. The location is a godsend for a large-scale shipbuilding industry. And yet its export matrix is still majority textiles, tea, and rubber products.

    As for the rest, this graph stops at 2018. I’m quite sure Vietnam is doing better than India atm, and so is Bangladesh. Pakistan has structural issues they haven’t dealt with, and a majority of its budget is allocated for defence and debt servicing. Nepal is a sad case of a disaster-prone landlocked country with fractious politics being located next to the poorest states of India, so the main source of revenue sans tourism is exporting labour.

    It would make sense to have a graph including Indian states individually and comparing it to the above countries, south + west Indian states would cluster near Sri Lanka levels, and north + east India will cluster near Pakistan/Bangladesh, with UP and Bihar at near Nepal levels.

    4+
    1. Reasons I could think for lack of shipbuilding in India:

      1) Just two IITs (M and Kgp) have departments of Naval Architecture. Most of their graduates go to do naval design for Navy, Indian Navy designs world-class ships inhouse. This investment did paid off in the form of Bharati shipyard(now insolvent but 5 years ago India’s top shipyard) which was started by a couple of Kgp people. Sheer bad luck and over-ambitiousness sunk Bharati.
      2) It takes a lot of money to set up world class shipyards, no one builds shipyards in other countries(mostly foreign owned shipyards were acquired after insolvency of local owners eg the now-insolvent STX Europe).
      3) India has no culture of trade-education. There is massive shortage of welders, I have seen foreigners coming in to operate heavy construction equipment.
      4) There is a massive used-ship market, this along with (somewhat) measurable quality hierarchy i.e. EU>Japan>SK>Taiwan>PRC, makes it difficult to compete on price alone (Nano vs used-WagonR?)
      5) Everyone has some anchor clients: Europeans have oil people and Cruise ships, Koreans/Japanese have oil carriers…. Some of the companies like Hyundai and Sumitomo are fierce and simply cannot be beaten.
      6) India doesn’t have the management/OR manpower to put together complicated things, our government shipyards take more money and more time to build ships than even the Europeans. Look at any other sufficiently complex system of systems type thing and see for yourself. We can do things at scale (expressway, big dams, bridges) but when a lot of moving things come together we soil our pants(ex. Transport/traffic flow design, scaling education/healthcare etc.).
      7) Metallurgy! Metallurgy! Metallurgy! can’t stress this enough, it is impossible to earn dollars(i.e. outsourced work) doing metallurgy in India because of low number of metallurgists required in west and metallurgy being a largely on the job training kind of field and to a lesser extent secrecy . No American/European dollars means a stymied steel industry incapable of ‘creating’ products as per real-world requirements not as per manuals.
      8) No engine manufacturers(Kirloskar makes really puny ones), no transmission manufacturers, no electronics manufacturers, no specialized wiring manufacturers, …. basically hardly any top tier suppliers.
      9) L&T might pull something off but I don’t have high hopes.

      3+
      1. India didn’t develop coastal regions more also due to Population Mass dynamics.

        India like China was a land power. China transitioned to a Coastal center of mass for its population by moving people there or rather allowing for that to happen. Indian population mass is still inland and movement of people is trivial plus socio-politically senstive.

        Imagine places like Andhra, TN having 50 Million people from UP & Bihar. The central Govt was too weak to force this, the Federal structure on this regard was too strong, States could, did and do prevent this movement at this scale and with India Scale is everything because having 10-20 Million rich/upper middle class is simply irrelevant.

        1+
    2. Comparing Taiwan and Sri Lanka needs to start with history. Short summary.

      Taiwan was occupied by Imperial Japan from which it gained in terms of literacy and inherited its bureaucratic and organizational systems. After WW II, Taiwan was an “aircraft carrier” for the US in terms of threatening and monitoring developments in Communist China. As a result, the US invested in Taiwanese infrastructure, and Taiwanese students flocked to the US long before students form India and China. The US also opened up its market to Taiwanese products in order to fight the “domino theory” of all of East Asia falling to Communism.

      After China opened up to the world, Taiwan (and Hong Kong) became a major investor in China. As China grew rapidly, so did Taiwan and in particular Taiwanese (technology) companies investing in China. A classic case is Taiwan Semiconductor Corporation.

      OTOH, Sri Lanka was a British colony, exploited for agricultural resources similar to India. Unlike India, Sri Lanka never developed an industrial base. Big brother India was always a bug-bear for Sri Lanka and the “Tamil problem” continued to vexed relations. The Indian Ocean was a backwater during the cold war. US did not need to invest in the strategic location that Sri Lanka afforded. In fact, Sri Lanka’s politicians had the same pro-Soviet leanings as India.

      When India opened up economically in the late ’90’s, Sri Lanka saw no real reason to engage closely with India’s vast market. They only saw the likelihood that they would be swamped by Indian products. The continuing Tamil conflict vexed relations. To balance India, Sri Lanka turned to China for investments and got caught in a debt trap.

      1+
      1. Sri Lanka’s politicians had the same pro-Soviet leanings as India.
        Depended on govt.
        1970-77 was “non aligned”, i.e. more pro China and Russia. First woman PM in the world Sirimavo and Indira were buddy buddies.

        1977 a hard pivot to the West/US under JR Jayawardena. VOA station built. Trincomallee harbor* (I think the biggest, deepest natural harbor in Bay of Bengal) was about to be leased to the US. Thats when Indira Gandhi started training the LTTE/Tamil Tiger.

        Sri Lanka turned to China for investments and got caught in a debt trap.
        Maybe looks so to others. Much like the 1977 pivot to the US, to balance India, this too is a move to contain India’s ideas/ambitions re SL. The expectation being that China will protect its “investments” in Sri Lanka.

        It is also bet on which economy and military is going to dominate, Asia at the very least.

        *
        Note Author: PK Balachandran
        Trincomalee has immense significance in this age of nuclear weaponry and nuclear submarine-based missile systems also, points out Romesh Somasundaram, who has written on the strategic value of Trincomalee. “Given the depth of the harbour, nuclear submarines are able to dive low within the inner harbour

        http://www.dailymirror.lk/154647/Why-are-US-Japan-and-India-making-a-beeline-for-Trincomalee-

        0
    3. I’m curious as to why Sri Lanka didn’t do any better and go the Taiwan way w.r.t. high tech manufacturing, civil war reasons aside.

      Lower human capital. The World Bank has a good database which shows that Sri Lanka is doing worse than Vietnam, despite being poorer.

      This means that the likely candidate to become the next ‘growth champion’ is already visible for us: Vietnam.

      1+
    4. First and foremost one must take into account, Sri Lankas center is very much to the left. I would think even more so than say Kerala.

      No govt will survive long without catering to the rural population (80% of country), i.e. land, housing, health and education. Free education and socialist policies were in place since independence. Other than that early govts focused more on Urban and rural elite and middle classes. It was not enough, resulted in two civil wars over 30 years.

      After the first civil war, draconian land reform and housing policies were implemented.
      Renovating ancient reservations and irrigation systems and new huge irrigation systems* were accelerated.

      Sri Lanka had a choice, investments in large industry or in free health, education, agriculture . SL chose the latter option. When one takes the net of casualties of war vs reduction in infant mortality and increased life expectancy, it is a huge plus the second numbers.

      The other industrialization might have issues finding consistent manpower. Sri Lankan in Sri Lanka like their leisure. Thats over and above their 150+ days of holidays/year. 3 weeks vacation+ weekends+Full moon days+ Buddhist, Christian, Muslim and Hindu holiday.

      Another (possibly very important) is the Mahavamsa mentality. Kings/Leaders were and recorded in the Mhavamsa based on the number of irrigation system the constructed or renovated, plus their contributions to sustaining Buddhism. So most PM or Presidents were interested in getting their name written in the Mahavamsa, so build gigantic (for SL) irrigation systems.

      Sri Lanka will never be a Singapore (or Taiwan/Korea), with most of the peoples nose to the grindstone. More like easygoing Malaysia is probably an attainable goal.

      The largest of many Irrigation projects is Mahaveli project, ongoing since 1964. The latest part (last ?) is to take Mahaveli waters to Jaffna
      https://en.wikipedia.org/wiki/Mahaweli_Development_programme

      2+
  2. Bangladesh will pass India in nominal GDP per capita in FY20-21. They ended their fiscal year this summer, and they had a positive number, despite including the worst COVID period (March-June) into the previous fiscal year. Truly mindboggling.

    This fiscal year they will likely record even higher growth, whereas India will witness ~10% GDP decline.

    I wrote a long-ish comment in the newer thread on Bangladesh specifically on the factors that led it to become the leading country in South Asia (outside of Sri Lanka, whose reliance on tourism and small size makes comparisons iffy at best). I will not repeat what I wrote there, but I will add something I forgot: persistence.

    Something which economists are spending more time writing about lately. The latest John Bates Clark laurate, Melissa Dell, has written at length on historical persistence. One could view the rise of Bangladesh above India as simply a reversion to the historical mean. Of course, the long-term challenge for Bangladesh will be if it can emulate the East Asian growth tigers, rather than merely becoming the richest South Asian state. The latter is a rather low bar to cross.

    1+
    1. Most data i’ve seen places tourism as a share of SL’s GDP at somewhere between 8-13%, nothing exceptional that would explain their relative prosperity by itself. Even composite India’s figure is around 9%. SL has remittances that might be nearing ~.8-1% of GDP as well, which go directly into household saving or consumption, which is quite a lot.

      1+
  3. Surely Burma\Myanmar should be in the graphs, not Vietnam which has never been described as being part of South Asia. I had not realised Sri Lanka was doing that well. It was taking off as a tourist destination pre-Covid.

    1+
  4. (Why? the dollar has been volatile the last few decades)

    Why Sri Lanka’s success? Story telling may have something to do with it.

    Millenium IT in Sri Lanka was started because the government wanted a new exchange and none of the global suppliers could get their people to go to Sri Lanka during the civil war .

    So a group of local people built one. In a few years, their exchange won the competition for the new London Stock Exchange software.

    And the LSE bought the company.

    It’s a great success story and one that inspired a lot of people. Global level success is possible starting in Colombo.

    I haven’t visited since 2013 or so, but Millenium IT was thriving then. Local young people educated themselves in software engineering and thought they could make it since people a lot like them had done it.

    if you think you can make it, you have a lot better chances than if you are sure you can’t.

    0
  5. Apropos discussion on coasts and ship building above:

    India’s total coastline is pretty small for a country of its size. While the land area is comparable to Europe, even tiny individual countries like Italy have a longer coastline than India by some measures.

    I wonder what historic effect this might have had on maritime culture in the Deccan versus comparable regions like the Mediterranean.

    1+
    1. @prats
      Coastline measurement depends on the Hausdorff dimension of the physical topology of the coastline, and therefore a strong function of coarse-graining applied. Non-convex topologies/maps are much more likely to have a longer coastline measure. So a longer coastline is not necessarily more useful.

      0
      1. @slapstik

        It’s true that coastline measurements can vary a lot based on granularity.

        The point I was making might be captured better using a metric like:
        Percentage of population living within X km of the coast

        I’ll have to go check the data on it.

        0
    2. Maritime culture does have an impact on shipbuilding as we see Europe, Japan and South Korea killing it. But we don’t need 10 big commercial shipyards, 2-3 that are constantly growing would do, a few years ago Bharati and to a lesser extent Pipavav(Reliance) and ABG were on the way to meet that requirement. Now all three are going to be liquidated! for pennies and all this capacity would be lost. If we can have refineries without any oil why not shipyards without any coast?

      1+

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.