Arnold Kling  

India Fact of the Day

The 1920's and the 1990's... Bank Regulation and Public Cho...

From an article by Radha Chaurushiya in the Milken Institute Review.

The information technology sector employs only one million people – a quarter of a percent of a labor force of more than 400 million. Output in the services sector as a whole has been growing by more than 8 percent per year since 1994, and represents more than half of India’s GDP. But this sector employs less than a quarter of the workforce.

The majority of Indians are still in its relatively backward agriculture sector.

The article paints a sobering picture. India's lack of infrastructure discourages manufacturing. How will unskilled and low-skilled labor share in economic growth?

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Bill Stepp writes:

This comment from the Oct. 31 issue of Fortune, "India's Bumpy Ride," says it all, succinctly:

...China's economic miracle was achieved by getting the basics right--building good roads, educating women and young girls, loosening labor restrictions, and opening the economy to competition and foreign trade.
India, by contrast, is the global economy's idiot savant. It excels at the impossible, turning out hundreds of thousands of brilliant engineers a year. Its software houses manage complex data across thousands of miles of undersea cable for the world's most sophisticated clients. India has world-class business leaders and, unlike China, solvent banks. And yet India flubs the obvious stuff. The national railroad network is a shambles and the power grid even worse. Nearly a third of India's population--and more than half its women--can't read or write. India has moved grudgingly to lower tariffs and balked at turning money-losing state-owned enterprises over to the private sector. Red tape and corruption discourage foreign investment, as do restrictions on how firms deploy workers.
This bi-polar development is reflected in the crazy-quilt of wealth and squalor in cities like Mumbai, where billboards touting Mallya's Kingfisher beer and Standard Chartered Bank's investment-planning experts tower above sprawling slums, and urchins approach cars at gridlocked intersections hawking copies of Harvard Business Review. In Bangalore, executives visiting the immaculate campuses of software firms like Infosys and Wipro marvel that while their datat can travel to the other side of the earth at the speed of thought, they must crawl along in bumper-to-bumper traffic for more than an hour to get to their hotels.
It goes on to relate some horror stories, like how a 75-mile trucking route takes three--count 'em--days to complete!

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