In neighboring Bangladesh, female workers have played a crucial role in helping develop the garment industry—although the country’s factories have drawn charges of safety issues and worker exploitation. Bangladesh had a female labor-force participation rate of 38% last year, up from 28% in 2000. Its GDP per capita has surpassed India’s since 2019.
Economists say compared with India, Bangladesh has looser labor laws that have allowed factories to expand quickly and doesn’t have as many strong caste rules that encourage social conformity.
Reading about what has happened in urban Bangladesh due to the employment of young women in textiles is like reading about New England towns in the early 19th century. It’s basically history repeating itself. As I was reading the article I did wonder about caste and communalism; in many nations worries about who young women would meet at factories in particular was and is a massive concern. Could this really be an issue?
India is changing. For years the BJP has been banging drums, tolling bells, and blowing conches to signal a New India. A mammoth mandate in 2019 was an early smoke signal for the fire that had erupted in the Indian market, but now a flurry of foreign praise answers the call of the drums, bells, and conches previously labeled as empty and enemy propaganda. Ironically, the newly found foreign admirers just a few years back cried wolf as they predicted India to turn into a hellscape due to what they saw as economic mismanagement, not listening to “experts,” religious tensions, some random picture they saw on the internet, or any other reason a comprador elite would pass on from the home country. What changed?
There are plenty of articles about India’s rise, but very few about why. The reason for this is that they would have to associate with someone untouchable in their ivory towers. The government primarily responsible for this rise is not only the arch-nemesis of the narrators of India to the West but also has a terribly difficult time presenting their case in a manner that doesn’t involve frothing at the mouth. There have been many mistakes made along the way. There are many critiques worth their weight. But one has to start acknowledging that something special is occurring in India. Let’s explore why.
The United Nations estimates that India has now surpassed China as the world’s most populous country — or, as we colloquially say, the world’s “largest” country.
Obviously, crossing this threshold doesn’t mean much in practical terms. Being a tiny bit bigger than China doesn’t really change anything, and India has just about as many people as it did a year ago. But the flurry of news stories accompanying the event is a wake-up call for the world: India has arrived on the world stage, in a big way.
What does that mean? Well, a whole lot of stuff. More stuff than I can summarize or even mention in a single blog post. There was a quote attributed to Napoleon two centuries ago: “Let China sleep, for when she wakes, she will shake the world.” Well, China did wake up, and the world has been shaken. The whole economic landscape of the planet, the geopolitical balance of power, and even the Earth’s environment have been irrevocably changed in the last three decades by the addition of 1.4 billion human beings to the ranks of the (more or less) developed world. Now India brings another 1.4 billion, eager to join those ranks. Get used to seeing a lot more graphs with this basic format…
It’s a long post, but I think the major takeaway from the viewpoint of an economist is agglomeration. The co-location of producers and consumers and resources at such massive scale nations like China, India and the USA, result in a level of synergistic economic growth and power that smaller nations cannot match structurally. This is probably one reason that Britain punches below its weight vis-a-vis the US, it cannot scale.
But Smith is aware of human capital concerns, and this is probably the a signifier of the number one issue: Worthless Degrees Are Creating an Unemployable Generation in India. Fake credentialing just means firms will have to re-train or do their own intake (the obsession with credentialing shows up in funny ways on even on this blog; I don’t care what your credential is if you are a moron, something is common-sense to Americans working in tech).
Another issue that is focused on in the post is that India needs to focus on productivity growth through manufacturing. I actually thought a bit about India when I read this long and excellent piece in Palladium on the century-long failure of the British ruling-class on updating their nation for the 20th century.
A giant Indian conglomerate couldn’t stop the freefall in its shares and bonds set off by an American short seller in what has grown into a bitter fight over the empire created by one of India’s richest and most politically connected businesspeople.
Adani Group, an energy and infrastructure company, released its 413-page rebuttal to the short seller’s claims just as the trading week began in Asia. Investors weren’t convinced and dumped shares of the company on Monday, bringing the total value lost to $64 billion since last week.
The fight could have wide implications for India’s power industry and for its transition to clean energy. It has also caused billions of dollars in losses for Indian investors who have helped drive up the company’s share price to stratospheric levels.
Most large companies hire credible, well-known external auditing firms in order to give investors confidence that their financials are being independently reviewed by a capable team.
Given the complexity of Adani Total Gas and, particularly, Adani Enterprises, with 156 subsidiaries and many more affiliates and joint ventures, one would expect a large, highly experienced team to be monitoring its labyrinthian corporate structure.
But Adani Group has apparently shunned this approach, choosing a tiny auditor named Shah Dhandharia to oversee the audits for these two public companies.
Shah Dhandharia’s website has gone offline during our investigation and now appears to have no website. Archived versions of the website as of February 2020 show that the firm was comprised of only 4 audit partners and 7 support staff.
Of the partners featured on its team page, we found that 3 were in their 20s – hardly the level of experience or seniority needed to seriously scrutinize one of the world’s wealthiest and most powerful businessmen.
Apparently, the Adani group has a 413-page rebuttal to the short-sellers. Rebuttals often take more time/space…but I not going to lie, I am not surprised at the length here…
(though some short-sellers have done sketchy things, my own view is short-sellers are an essential part of af functioning market and discourage crony-capitalism)
A potential watershed event in India’s modern economic history passed by recently. A state of the art, globally recognized, electronic product is to be made in India for export to the world.
Apple announced plans to make its latest phone model – iPhone 14 – in India, a significant milestone in the company’s strategy to diversify manufacturing outside of China.
Five percent of iPhone 14 production is expected to shift to the country this year, much sooner than analysts had anticipated.
While Apple is big, a more telling example of India’s potential is at the end of this post. But before that, how did India, a country that struggled to feed itself in the 1950s, get into the running for ‘factory of the world’ ?
In 1950, less than 1% of Indian college students studied science and engineering. By 2022, this number had risen to more than 30%. In fact, science and engineering have become so popular in India today, that a counter culture has arisen in the form of movies like 3 Idiots. Back in 1950, India’s best students were focused on subjects like law and social sciences, primed to manage the Empire. In fact, some have remarked that the independence movement was a result of the British producing too many lawyers in India.
Since independence, a concerted effort has been made by the Indian state to popularize science and engineering. This was done under the aegis of spreading a ‘scientific temper’, starting with the establishment of Vigyan Mandir in 1953. Subsequently, following in the legacy of medieval India’s Jantar Mantars, Nehru planetariums were established in major Indian cities. Further, the establishment of the IIT system gave a formal structure and high standard to engineering education. In 1976, the cultivation of scientific temper was included as a fundamental duty in the Constitution.
By the late 1970s, India’s growing pool of scientists and engineers had attracted attention from abroad, specifically Japanese automakers. This resulted in a dramatic increase in India’s automobile production, more than doubling from 700,000 to 2 million in the 1980s.An entire ecosystem of vendors producing automobile components came up around Suzuki’s Gurgaon factory. It is perhaps surprising that the Indian government did not think about replicating this success in the electronics sector. This oversight turned out to be an enormous missed opportunity.
The post 1990 period saw an acceleration in India’s economic growth, with the software and IT sector taking a prime position both in the export numbers and the economic narrative. However, India was a manufacturing star as well, particularly its pharma, petrochemical and automobile industries.
However, its potential in the wider manufacturing arena remained unrealized and indeed unrecognized. The late 2010s produced new exigencies in the global order, with Western countries trying to pivot away from their dependence on China. In this process, India has emerged as the only real alternative to achieve the technical complexity and economies of scale demanded by modern industry.
An equally important turn of events has been the precipitous decline in India-China relations. If Chinese support for Pakistan had made Indians wary of the CCP, its direct clashes with India on the border have made China enemy number one in the Indian public’s eye. There is a determination at the political and public level to not depend on Chinese manufacturing imports. This mark has already been achieved for toys, cell phones and PPE. Make no mistake, India wants to bring Chinese imports down to zero. This is what ‘Atma Nirbhar Bharat’ (self reliant India) really means.
On the other hand, Western business seems keen to move out of China. The LA Times describes the experience of one European manufacturer to move away from China,
In 2019, he began assessing the possibility of moving some manufacturing capabilities to Vietnam. But he abandoned the plan eight months later after price increases for about half of the company’s projects upset his customers. Product development also took longer — one prototype that would have been completed in three weeks in China required six months in Vietnam.
A review of other countries in Southeast Asia proved even less fruitful, he said.
By late 2020, Gaussorgues turned farther afield — to India. The local electronics and automotive ecosystem offered lower manufacturing costs and easy access to parts. With five employees so far, he aims to start assembly work next year, and hopes to host the majority of manufacturing there after five years.
What is important to note here is that India being able provide an alternative to China is not about the population. SE Asia, where the person in the article first when to has enormously populated countries, all with fantastic port access. India is able to provide an alternative because of the consistent emphasis on science and technology education over the past 70 years.
What are the broader takeaways from the apparent success of India trained CEOs in the US ? The usual Darwinian (best and brightest) or ‘sheer population’ arguments are attractive but dont withstand scrutiny. A broader explanation is that India has been disproportionately successful in producing corporate leaders (much like certain populations in the past were successful at producing generals or merchants), and due to trade and immigration links, some of its success has overflowed to the US as well.
Since 1984, India’s stock exchange has provided returns of an astounding 10,000%. Even the Dow Jones (3700%) has returned a fraction of the BSE’s returns.
This is a nearly forty year period, enough to average over most bear arguments. It spans the fall of the Berlin Wall, Kuwait War, 9/11 attacks, the Great Recession, the arrival of the internet, AI and smartphones. Given India’s strictly mediocre economic fundamentals in the 1980s, the success of listed Indian companies over an extended duration points to successful resource and work management.
Corporate India has played a much bigger role in India’s economic expansion than corporate China in China’s meteoric rise. The US tech sector has reaped an unanticipated reward of this fact. Globally though, the much more important economic implication is that India’s GDP rise is likely to be felt via private corporations, in contrast to China’s SOE heavy BRI.
Every time I used to play a strategy video game, my mind was firstly on money. Creating an income stream as well as buildings and units to magnify that income stream was the primary priority of my gameplay. Only then could I exercise my will and wrath on the codes of computer programming that were my enemies. I think recent history has shown us this is a powerful stratagem, especially on this side of the Atlantic.
The figure above shows that Indian American women make $1.21 for every $1.00 that a white man makes. I knew this data, but the infographic was brought to my attention to illustrate that not all South Asians are privileged. Pakistani women make $0.84 and Bangladeshi women $0.69.
Here’s the “problem” – 84% of “South Asians” are Indian American.
The reason that Indian Americans do so well is pretty obvious: human capital. They’re educated, they’re entrepreneurial, etc. At least to me. What if you believed that all outcome differences between nonwhites are due to white supremacy?
What have you heard about this? How is it people who now accept The Narrative explain how brown-skinned Indian Americans do so well while brown-skinned Pakistanis don’t? What have you heard?
The Indian capital, which just weeks ago suffered the devastating force of the coronavirus, with tens of thousands of new infections daily and funeral pyres that burned day and night, is taking its first steps back toward normalcy.
Officials on Monday reopened manufacturing and construction activity, allowing workers in those industries to return to their jobs after six weeks of staying at home to avoid infection. The move came after a sharp drop in new infections, at least by the official numbers, and as hospital wards emptied and the strain on medicine and supplies has eased.
Life on the streets of Delhi is not expected to return to normal immediately. Schools and most businesses are still closed. The Delhi Metro system, which reopened after last year’s nationwide lockdown, has suspended service again.
But everyone has to focus on the future. So what’s going on? How’s Modi’s going to supercharge the economy? I’m not Indian, I’m American. A strong India is good for America. An economically vibrant India is good for humanity.