India's economy is now the second-fastest growing of any large country in the world, albeit still much slower than the 9.9% that China recorded in 2005. What is interesting is how quickly the mainstream media went from having a blind spot on India to speaking of it in the same sentence as China.
As recently as 1998, most of the mainstream press was spoke of China as an emerging superpower, while India was still spoken of merely in the context of its nuclear tests, rivalty with Pakistan and its poverty. Most articles spoke of India and Pakistan under a suggestion that they were equals.
Now, almost all articles about China being a rising economic superpower also include India. India has, in just eight short years, changed its entire 'brand' from being one of austere poverty and an intractable, stalemated dispute with Pakistan, to being one of the two rising superpowers in this world, a place with an endless supply of knowledge workers promises to reshape the global economy.
That there are even articles like this, which compare India and China to see which has more promise, is telling. Such comparisons were nearly unheard of in the late 1990s.
What has enabled a country as large as India to revamp its entire 'brand', its perception in the eyes of the world, so completely, in such a short time?
I attribute this to four factors :
1) The rise of Internet usage and bandwidth speeds, permitting more business collaboration between India and the United States.
2) The War on Terror, where a stable, thriving democracy, containing 150 million Muslims, is seen as a model and positive influence on nascent democracies in Afghanistan and Iraq, thus receiving indirect moral support from the US, UK, and Japan.
3) The Indian community in the US reaching critical mass. Their numbers have more than doubled from 1990 to 2000, and continue to grow. They are also the highest-income ethnic group in the US, and are developing many business ventures between the US and India.
4) The gradual, ongoing replacement of older generation Indians with a new generation that is globally aware, tech-savvy, better educated, less xenophobic, and has higher self-esteem. Older generation Indians kept India under socialist stagnation for decades, and kept Indian society at a lower level of Maslow's hierarchy for far too long. They were, frankly, an embarassment in many aspects of human existence, and their passing on can only lead to massive progress.
Prediction : India becomes the foremost economic and political 'fad' of 2006, with at least five cover stories on India in major magazines, in 2006.
If you want to find an American high technology, then go to India.
Posted by: jeffolie | January 31, 2006 at 04:20 PM
Jeffolie,
True. The reason for this is the rise in new-generation Indians with technical skills, unlike their parents. The country becomes a different country.
Posted by: GK | January 31, 2006 at 04:30 PM
Indian work cheap and corporations outsource as fast as they can.
Posted by: jeffolie | January 31, 2006 at 04:34 PM
Most of the outsourcing that can be done has been, however. People have been talking about outsourcing for 5 years, and the US unemployment rate is currently 4.9%.
4 million more jobs in the US than 2 years ago.
Plus, more and more news that salaries in India are rising very fast.
No worries for the US economy at all. It helps us, not hurts us.
Posted by: GK | January 31, 2006 at 04:41 PM
"Most of the outsourcing that can be done has been done..."
Not true. Among very large firms, it is likely finished *until technology allows more transfers*. Among medium sized firms, however, outsourcing is just starting to take off. Look for outsourcing to wipe out significant portions of the worforce in the next 10 years, as more modest companies seek lower input costs (driven by demands from their larger multi-national customers).
"US unemployment rate is currently 4.9%"
Probably grossly undercounted. I heard a credible report today that the actual rate is at least 1.1% higher, and probably more realistically at 6.3+%. Also, workforce participation rates are hovering around 62-63% last I checked, which is absolutely abysmal, and at least partially explains low unemployment numbers.
"4 million more jobs in the US than 2 years ago..."
1) What types of jobs were gained? A large proportion of the US job gains are in low- or unskilled jobs (paying minimum wage). These jobs don't really help the US long-term, as they add little value.
2) Of all jobs "gained" in the US, how many are going to illegals? I have seen speculation (on Brad DeLong's weblog) that something like 2 million of those jobs are being filled in this manner. Every employed illegal is an American citizen that is unemployed. As an added bonus, illegals push down wages across sectors, as they will work at or below [a US citizen's] subsistence wages.
"Plus, more and more news that salaries in India are rising very fast..."
Doesn't help Americans very much. We don't export many consumer products, or luxury goods, so don't expect much out of increased [Indian]buying power. We do export some IT, some building materials, advanced industrial materials, and Ag. However, these are consumed by gov't/industry, not end users. Besides, these are also the same areas that India is trying to compete in, but with wage inputs that are 1/10 the US norm; other inputs being equal, and absent tariffs, US domestic comanies can't compete using domestic production. Our economy may get lower priced goods, but import competing domestic companies and workers will get badly harmed.
Posted by: Jason | February 02, 2006 at 06:23 AM
Jason,
You have a typically pessimistic left-wing view, which is obviously wrong for many reasons.
'Outsourcing' has been going on for 4 years, yet the US has created 4 million jobs in the last 2 years.
What is funny is how the left insists all these jobs are low-wage jobs, yet all the gains in economic growth are going to the upper-class. How can both be true? They are mutually exclusive.
Plus, *average* wages are rising in the US anyway.
No matter how hard you try to insist that the economy is terrible just because Bush is President, that won't make it true. Your own pessimism is inhibiting your own chances of success in this economy.
Posted by: GK | February 02, 2006 at 09:37 AM
Jason,
To corroborate on what others have said, but to provide a more micro/single-corporation view if that may be more helpful -
I work for a global Management Consulting firm known for expertise in Operations Strategy, and 3 of the 5 cases I've worked on since joining have been focused on offshoring backoffice functions to India.
I can tell you specifically - the first was a major retail and investment bank that saved $42 Mn in the first year of the offshoring effort. These savings allowed them to free up cash which they have since pumped back into marketing, geographic expansion and other growth triggers. What did this translate to? 100s of new job opportunities in "next wave" type work available to US people as this bank fuels its growth faster due to the savings achieved from offshoring backoffice stuff to India.
Similarly, I worked on a case that saved a dying printing & publishing company by helping them achieve $6.1 Mn in cost savings from offshoring.
I am currently assisting a leading cosmetics company based out of NY offshore their call-center to India, which is expected to save them just south of $13 Mn. Their first priority for 2007 after realizing these savings is to launch a new line of cosmetics geared towards teens. Is that not a classic case of a "trade" so to speak of outsourcing the low-level jobs to create wealth which in turn leads to higher-level jobs in the U.S.?
Posted by: Kosha | February 03, 2006 at 11:46 AM