BARNETT - India: almost too high-tech for its own good
¦"General Electric Sells 60% Of Indian Back-Office Unit," by Saritha Rai, New York Times, 9 November 2004, p. W1.
¦"Indian Economy Leaves Workers Behind," by John Lancaster, Washington Post, 3 November 2004, p. A8.
India's service economy has matured to the point where major corporations like G.E. are selling off the units they once created there to handle their "off-shoring" in-house. That says that big American companies no longer feel the need to own their back offices on site (called "captives" in the industry), instead preferring now to deal with independent local Indian companies. That's a sign of trust in what India has become over the last generation. It's a sign that India's really in the Core.
But the service economy can only account for so much growth and no more:
Notwithstanding the recent growth in industrial output, manufacturing companies in India employ just 7 million people, a tiny share of the country's estimated 406 million workers, according to the World Bank. Software and other information-based services account for fewer than 2 million additional jobs. More than 90 percent of Indian workers are employed as farm laborers and in other menial, mostly unregulated jobs, such as brick-making and rickshaw-pulling.
The situation contrasts with that of China, where foreign investment has given rise to thousands of new factories churning out such consumer goods as toys and clothes for overseas markets. China's manufacturing boom has provided jobs for tens of millions of semi-literate peasants and has created a middle class that is growing as fast as any in the world.
Many economists predict that India will not achieve similar success in manufacturing, or in alleviating poverty, until it becomes more hospitable to foreign investors. They say that achieving those goals would require scrapping a 1947 law requiring medium-size and larger companies to seek government permission before firing workers. It also would require major improvements in such infrastructure as roads and power, which is so unreliable that many companies are forced to generate their own.
"We're a couple of major reform steps away," from a manufacturing boom, said Subir Gokarn, chief economist of Crisil, an Indian credit-rating and research agency.
Hell, just having an Indian credit-rating and research agency tells you how close they are to making India the next China.
Think Ethiopia has one of those? No point in having a rule-set enforcer unless you got the rules.
thomaspmbarnett.com |
