Here are a couple of new articles on India from mckinsey Quarterly in case you are interested. (sort of long, I did not copy all of them, you need to register to read them and it is free.)
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Freeing India's textile industry
The country’s government holds the key to helping its apparel manufacturers compete in the global market.
Asutosh Padhi, Geert Pauwels, and Charlie Taylor
The McKinsey Quarterly, 2004 Special Edition:What global executives think
India's apparel-export industry is facing a moment of truth. The removal of world trade quota restrictions in January 2005 could bring a huge increase in India's annual exports and make it the big winner in the global market, after China. This breakthrough will occur, however, onlyif the government accelerates the pace of reform and local manufacturers adopt measures to improve their competitiveness, a study shows.1
Productivity, labor costs, and quality, at least for higher-end goods, will determine which countries win or lose once the Arrangement on Textiles and Clothing (ATC) quota restrictions on apparel exports expire. China is likely to capture almost all of the resulting growth in global exports. Regardless of whether the United States and the European Union allow brand owners and retailers to buy freely or impose transitional safeguard mechanisms and increase duties, Asian countries that want to increase exports will have to take market share from one another and from countries outside Asia (exhibit).
mckinseyquarterly.com
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Battling AIDS in India
The head of the Bill & Melinda Gates Foundation’s Indian initiative on AIDS explains the importance of creating a vast network of public-private partnerships to tackle the problem.
Joydeep Sengupta and Jayant Sinha
The McKinsey Quarterly, 2004 Number 3
Some problems are too big to be handled alone. AIDS in India is one of them.
In a country of a billion people, about 4.6 million are HIV positive. If the problem is left unchecked, that number could reach 20 million to 25 million by the decade’s end. A single country could have an HIV-positive population larger than the total populations of London, New York, and Tokyo combined. Ashok Alexander is the director of Avahan (Sanskrit for "call to action"), the India AIDS initiative launched in April 2003 by the Bill & Melinda Gates Foundation. He believes that India’s epidemic can be stopped before it approaches the proportions seen today in sub-Saharan Africa—but only by building a vast network of public-private alliances on a scale rarely attempted. With each partner bringing distinct skills and assets to bear on the crisis, careful coordination is essential.
Conditions in India could promote the rapid spread of AIDS in coming years. Although among adults its prevalence1 is only 0.8 percent—compared with almost 39 percent in Botswana and 33 percent in Zimbabwe, the two most heavily stricken countries—overpopulation and widespread poverty are already straining the government’s resources. The public-health infrastructure, facing a variety of gigantic health challenges, can’t cope. Public and private attitudes continue to stigmatize people with AIDS and obstruct efforts to combat it. Already, it is spreading beyond the high-risk populations.
So far, India’s response has been fragmented. The government spent about 11 cents a person on AIDS-related programs in 2003, compared with past expenditures of about $1.85 in Uganda and 55 cents in Thailand, two countries that have had some success in fighting the pandemic. Non-governmental organizations (NGOs) often lack the scale or management capabilities to face such a Herculean task and generally work in isolation from one another.
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mckinseyquarterly.com
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The truth about foreign direct investment in emerging markets
Developing countries think they must not only offer incentives to attract foreign direct investment but also protect their local economies by restricting the way multinationals operate. Are these countries wrong on both counts?
Diana Farrell, Jaana K. Remes, and Heiner Schulz
The McKinsey Quarterly, 2004 Number 1
A surge in activity by multinationals in the developing world has opened a new chapter in globalization. What was once a marginal activity in emerging markets has now become essential to the competitiveness and growth of many foreign companies. In 2002 they invested $162 billion in the developing world, up from just $15 billion in 1985. Today their investments are worth more than $2 trillion and growing.
Governments in emerging markets are understandably eager to have their share of this foreign capital, along with the technology and management skills that accompany it. Foreign companies get a smorgasbord of tax holidays, import duty exemptions, subsidized land and power, and other enticements, all offered by developing countries in the belief that this is the way to attract multinationals. For every job created, the incentives may add up to tens of thousands of dollars annually—in some cases, more than $200,000 in net present value.
Yet even as developing nations dole out lucrative incentives to attract foreign investment, they are often wary of multinational companies. Attempting to protect domestic industry and to ensure that foreign investment benefits the local economy, many of these nations restrict the way foreign companies can operate.
But new research from the McKinsey Global Institute (MGI) finds that both the incentives used to attract foreign direct investment and the restrictions placed on it are largely ineffective.1 Worse, they are frequently counterproductive, costing governments millions of dollars annually, protecting inefficient players, and lowering living standards and productivity. Our research shows that regardless of the policy regime, the industry, or the period studied, foreign direct investment can benefit developing nations greatly. To make the most of it, however, they must strengthen the foundations of their economies, including the infrastructure, the legal and regulatory environment, and the level of competition.
It’s good for emerging markets
Foreign direct investment by multinational companies in emerging markets is perhaps the most controversial form of globalization. Critics, who charge that foreign companies exploit poor workers and flout labor laws, tend to focus on the reported abuses. Defenders, arguing that foreign investment brings new capital, technology, and jobs to countries that need them, rely on macroeconomic data and econometric approaches that at best yield qualified answers.
To bring new facts to this often emotional debate, we calculated the impact of foreign direct investment on local industries—manufacturing and service alike—in Brazil, China, India, and Mexico. The industries included automotive, banking, consumer electronics, food retailing, and IT and business-process outsourcing. In each of our 14 industry studies, we looked at industry dynamics, sector productivity, output, employment, and prices before and after foreign companies entered the market. We also conducted interviews with foreign and local executives.
In 13 of our 14 cases, foreign direct investment unambiguously helped the receiving economy (Exhibit 1). It raised productivity and output in the sectors involved, thereby raising national income while lowering prices and improving the quality and selection of services and products for consumers. Rather than being beneficial only in certain cases, foreign investment nearly always generated positive spillovers for the rest of the economy.
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mckinseyquarterly.com |
