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October 27, 2005

Are India and China really the next super powers?

Surely the current threat of India's IT workers (just a million of them) and China's manufacturing (less than a third of that of either the US or Japan) is exaggerated. Yale Global online seems to think that China and India's common rural/urban inequalities, India's horrible infrastructure and China's totalitarianism, there isn't much to worry about later either.

Meanwhile, the econobrowser explores why China's economic statistics are a bunch of lies and other nonsense.

Posted by OneEyedMan at October 27, 2005 12:32 PM


Ok, So I agree with both of the articles, but I'm going to play devils advocate with the first (Yale Global online). As for the second I hope that its no real shock to anyone that the economic data coming out of a country as authoritarian as china is a load of horse-hockey.

The point that is driven home over and over through the article is that India and China are still small time. They don't make much yet and they are still impoverished countries. The point that everyone else is trying to make is that they are _going_ to be big players not that they are now. Yes China's manufacturing is half that of japan's, but its growing a lot faster. (I think that personally I am more concerned about china getting a big lead in the biotech sector, where they seem to be putting a whole lot of focus.)

Yes much of India is illiterate, and they only have 1 million tech workers, but I think we are not giving credit to just how much 1 million tech workers is. Hell we only have 3.5 million, and we essentially iinvented the tech industry. ( http://www.bls.gov/emp/empmajorindustry.htm ) Though its a tiny percentage of there population, its a huge percentage of ours.

I think that's the point, even if only a tiny percentage of the rising Asian population "gets it", thats a _whole lot_ of people. In the industries where hardware and infrastructure are less important (software comes to mind, but several industries are moving in that direction) even a tiny fraction of India or china's population is going to be something only a fool would ignore.

That said, yeah, we have a really, really, really big economic head start.

Posted by: giblfiz [TypeKey Profile Page] at October 27, 2005 2:15 PM

oh yeah... and while I'm at it...
enforcing debt contracts requires 425 days in India, 241 days in China (69 days in Singapore).
United States... 250 days
Same source... http://www.doingbusiness.org/ExploreEconomies/Default.aspx?economyid=197

Posted by: giblfiz [TypeKey Profile Page] at October 27, 2005 2:20 PM

Nice catch on the US number, I hadn't thought of that. I notice that the rest of the OECD isn't much better at 232. I hope that those numbers reflect historical protections debtors in democracies, not awful business environments. I get the feeling that number is big in China not because of those protections, but because their courts don't really work.

Sure the 1 million Indian IT workers are relevant, but the metric is broad. It includes people who we think of as customer service people here in the states. Likewise, China has had a huge marginal impact in the cost and location of manufacturing. And sure, the money these specialties produce makes a big difference to China and India. But egalitarian and democratic transitions are difficult, and many, if not most countries get this wrong.

Sure taking seriously these threats to our prosperity is important, but worry has its costs too. If we get so worked up over China and India, we risk enacting bad policy that damages our own success in trade and information technologies and even earning their enmity. The most important thing to take from these articles is that there is no iron law of history that will make either country a super power. They have strengths and weaknesses and we should be aware of both.

Posted by: TheOneEyedMan [TypeKey Profile Page] at October 27, 2005 3:30 PM

Briefly, as I'm at work, I just had to say that this is so appropriate for what I'm writing up currently, which is a recommendation to fund scholarships for financially needy physical science & engineering American graduate students, in an attempt to deal with this issue.

Posted by: Jess H [TypeKey Profile Page] at October 27, 2005 7:31 PM

[Goes back to referencing Friedman's "The World Is Flat" for stats...]

Posted by: Jess H [TypeKey Profile Page] at October 27, 2005 7:34 PM

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