Category: India

Low Interest Rates Cannot Substitute for Needed Deeper Reforms

(p. B3) MUMBAI, India — Three years before the 2008 global financial crisis, an Indian economist named Raghuram G. Rajan presciently warned a skeptical audience of top economic thinkers that excessive risk threatened the entire global financial system.
As Mr. Rajan stepped down on Sunday [Sept. 4, 2016] as India’s top central banker, following intense criticism at home, he offered a new warning: Low interest rates globally could distort markets and would be difficult to abandon.
Countries around the world, including the United States and Europe, have kept interest rates low as a way to encourage growth. But countries could become “trapped” by fear that when they eventually raised rates, they “would see growth slow down,” he said.
Low interest rates should not be a substitute for “other instruments of policy” and “various kinds of reforms” that are needed to encourage growth, Mr. Rajan said in a recent interview with The New York Times. “Often when monetary policy is really easy, it becomes the residual policy of choice,” he said, when deeper reforms are needed.
. . .
In discussing the Indian economy in the interview, Mr. Rajan offered a less-than-ringing endorsement of the government’s emphasis on manufacturing in India — what the prime minister has called his Make in India campaign.
Mr. Rajan said he did not support the view of critics that it was too late in world economic history for India to become a manufacturing hub. But he also said that he would not focus exclusively on manufacturing as the solution to joblessness.
If India improves infrastructure and reduces government regulations, manufacturing might take off in a big way, but it “could also be services. It could be value-added agriculture also.”`

For the full story, see:
GEETA ANAND. “A Departing Central Banker’s Warning.” The New York Times (Mon., SEPT. 5, 2016): B3.
(Note: ellipsis, and bracketed date, added.)
(Note: the online version of the story has the date SEPT. 4, 2016, and has the title “Raghuram Rajan, India’s Departing Central Banker, Has a New Warning.” The online version is somewhat longer than the print version, and has minor differences in the last three paragraphs quoted above. The last three paragraphs quoted above, are from the online version.)

Indian Government Scientists Fight Global Warming by Reducing Cow Belches

(p. A10) Let no one say that India isn’t doing its bit to fight global climate change: Government scientists are working hard to reduce carbon emissions by making cows less flatulent.
Consider the numbers: India is home to more than 280 million cows, and 200 million more ruminant animals like sheep, goats, yaks and buffalo. According to an analysis of satellite data from the country’s space program, all those digestive tracts send 13 million tons of methane into the atmosphere every year — and pound for pound, methane traps 25 times as much heat as carbon dioxide does.
. . .
Scientists at the Cow Research Institute in Mathura, around 100 miles south of New Delhi, are tinkering with cattle feed, seeking a formula that will create less gas for the cows to belch out. (That is how most of it is released, by the way; scientists say much less comes from farting.)
But a team of researchers in the southern state of Kerala is working on a long-term answer.
. . .
. . . dwarf animals, which are about one-quarter the weight of crossbred cows, produce only one-seventh as much manure and one-tenth as much methane.

For the full story, see:
ELLEN BARRY. “What in the World; Cows: India’s Reply to Global Warming.” The New York Times (Thurs., MAY 5, 2016): A10.
(Note: ellipses added.)
(Note: the online version of the story has the date MAY 3, 2016, and has the title “What in the World; India’s Answer to Global Warming; Cows That Belch Less.”)

In India’s Public Education System, Teachers Are Often Truant

Matt Ridley has a chapter in his recent The Evolution of Everything, where he cites evidence the low quality of public education in much of the less-developed world. The quality is so low that many poor parents scrimp to pull together modest funds to send their children to modest private schools where the teachers actually show up.

(p. A1) DEORIA, India — The young man, having skipped school, was there to plead his case, but Manoj Mishra was having none of it. When the truant offered a letter from a relative of a government minister pleading for leniency, Mr. Mishra grabbed it and, with a frown, tore it in half and dropped it to the floor.

Similar scenes played out repeatedly in Mr. Mishra’s fluorescent-lit office recently, as one truant after another appeared before him, trying to explain an absence from school.
But these were not students who had been pulled in for truancy. They were teachers.
Mr. Mishra, a district education officer in India’s most populous state, Uttar Pradesh, is fighting one of the biggest obstacles to improving the largest primary school system in the world: absent teachers. His tough punishments and refusal to back down, chronicled in the local newspapers, have turned him into a folk hero. As he walks along the dusty streets of the wheat-farming villages a couple of hours’ drive from Nepal, older people touch his feet in a sign of respect. Young women pull out their phones and take selfies by his side.
When Mr. Mishra arrived in Deoria in 2014, 40 percent of the district’s teachers were absent on any given day from its 2,700 schools, he said in a recent interview. Nationwide, nearly 24 percent of rural Indian teachers were absent during random visits for a recent study led by Kar-(p. A6)thik Muralidharan at the University of California, San Diego. Teacher absences run as high as 46 percent in some states.
. . .
With the largest population in the world under the age of 35, India is trying to grow by leveraging what is often called the “demographic dividend.” To prepare more than 200 million primary school children for jobs in a modern work force, India passed legislation a decade ago that more than doubled education spending, increased teacher salaries and reduced class sizes.
But children’s already low performance has fallen. Pratham Education Foundation, a nonprofit that conducts an annual household survey, reported that in 2005 about 60 percent of fifth graders in rural India — where most people live — could read at a minimum second-grade level, but that in 2014 less than 50 percent could.
Teacher truancy is among the more prominent causes of that failure, experts say. Teaching jobs pay well and are sometimes obtained through political connections. But those who get them often do not want to travel to the remote areas where many schools are. In areas with weak local governance, not showing up has become the norm, and people feel powerless to complain.

For the full story, see:
GEETA ANAND. “Saturday Profile; Truant India Teachers, Meet Your Nightmare.” The New York Times (Sat., FEB. 20, 2016): A1 & A6.
(Note: ellipsis added.)
(Note: the online version of the story has the date FEB. 19, 2016, and has the title “The Saturday Profile; Fighting Truancy Among India’s Teachers, With a Pistol and a Stick.”)

The Ridley book mentioned above, is:
Ridley, Matt. The Evolution of Everything: How New Ideas Emerge. New York: Harper, 2015.

Hunter-Gatherers Use Division of Labor

(p. D4) The division of labor in hunter-gatherer communities is complex and sophisticated, and crucial to their economic success, researchers report.
A paper in the journal Philosophical Transactions B looks at two hunter-gatherer groups: the Tsimane game hunters of lowland Bolivia, and the Jenu Kuruba honey collectors of South India.
“In contrast to the simple cave man view of a hunter-gatherer, we found that it requires a tremendous amount of skill, knowledge and training,” said Paul Hooper, an anthropologist at Emory University and one of the study’s authors.
. . .
When Jenu Kuruba men go in search of honey, Dr. Hooper said, “there’s one man who specializes in making smoke to subdue the bees, another that climbs the trees, and others that act as support staff to lower combs.”

For the full story, see:
SINDYA N. BHANOO. “Observatory; Nothing Simple About Hunter-Gatherer Societies.” The New York Times (Tues., OCT. 27, 2015): D4.
(Note: ellipsis added.)
(Note: the online version of the story has the date OCT. 26, 2015.)

The academic article mentioned in the passage quoted above, is:
Hooper, Paul L., Kathryn Demps, Michael Gurven, Drew Gerkey, and Hillard S. Kaplan. “Skills, Division of Labour and Economies of Scale among Amazonian Hunters and South Indian Honey Collectors.” Philosophical Transactions of the Royal Society of London B: Biological Sciences 370, no. 1683 (Oct. 2015), DOI: 10.1098/rstb.2015.0008.

Dogged Dreamers Developed Deadly Dirigibles

(p. C7) “Dirigibility” means the ability to navigate through the air by engine power, unlike balloon flight, which is captive to the wind. Beginning and ending with the Hindenburg vignette, C. Michael Hiam gives in “Dirigible Dreams” a concise but comprehensive history of the airship and its evolution. With style and some flair, Mr. Hiam introduces a cast of dogged visionaries, starting with Albert Santos-Dumont, a Brazilian whose exploits from 1901 onward usually culminated in our hero dangling from a tree or a high building, shredded gas bags draped around him like a shroud. For all of these pioneers, problems queued up from the outset: Insurance companies, for example, refused to quote a rate for aerial liability. (Try asking your broker today.) And to inflate the craft the engineers were stuck with hydrogen, since non-flammable helium was too scarce and hot air has insufficient lifting force.
. . .
In 1929, British engineers pioneered a giant dirigible–at 133 feet in diameter, Mr. Hiam notes, it was “the largest object ever flown”–powered by six Rolls-Royce Condor engines. But too many died as the still-flimsy crafts plunged to the ground in flames. His Majesty’s secretary of state for air perished in a luxurious airship cabin on the way to visit the king’s subjects in India. One by one, nations gave up their dirigible dreams, especially after 35 souls burned to death on the Hindenburg in Lakehurst, N.J., one of the first transport disasters recorded on film. After that tragedy, commercial passengers never flew in an airship again, and by the start of World War II just two years later “the airship had become entirely extinct.”

For the full review, see:
SARA WHEELER. “Inflated Hopes; Early airship experimenters found that insurance companies refused to quote rates for aerial liability.” The Wall Street Journal (Sat., Oct. 18, 2014): C7.
(Note: ellipsis added.)
(Note: the online version of the review was updated on Oct. 23, 2014.)

The book under review, is:
Hiam, C. Michael. Dirigible Dreams: The Age of the Airship. Lebanon, NH: ForeEdge, 2014.

World Inequality Declines

(p. 6) Income inequality has surged as a political and economic issue, but the numbers don’t show that inequality is rising from a global perspective. Yes, the problem has become more acute within most individual nations, yet income inequality for the world as a whole has been falling for most of the last 20 years. It’s a fact that hasn’t been noted often enough.
The finding comes from a recent investigation by Christoph Lakner, a consultant at the World Bank, and Branko Milanovic, senior scholar at the Luxembourg Income Study Center. And while such a framing may sound startling at first, it should be intuitive upon reflection. The economic surges of China, India and some other nations have been among the most egalitarian developments in history.

For the full commentary, see:
TYLER COWEN. “The Upshot; Economic View; All in All, a More Egalitarian World.” The New York Times, SundayBusiness Section (Sun., JULY 20, 2014): 6.
(Note: the online version of the commentary has the date JULY 19, 2014, has the title “The Upshot; Economic View; Income Inequality Is Not Rising Globally. It’s Falling.”)

Is There “a Fortune to Be Made” in Selling to the Poor?

(p. B1) For years, multinational companies had little interest in lower-end consumers, figuring no money was to be made. Now, they are increasingly attractive to all types of industries, from consumer product makers to technology businesses. Google just announced plans to sell a stripped-down, cheaper version of its Android phone in India.
A decade ago, C. K. Prahalad, a University of Michigan business professor, in his book “The Fortune at the Bottom of the Pyramid,” detailed the potential, contending that such households were every bit as discriminating and aspirational as their counterparts at the other end of the income spectrum.
Mr. Prahalad, now dead, estimated there were four billion such consumers in a market worth $13 trillion. “People were saying, ‘There’s a fortune to be made. Let’s go,’ ” said Mark B. Milstein, director of the Cen-(p. B6)ter for Sustainable Global Enterprise at Cornell University.
But many of the first efforts failed. “There was not much thinking about what those consumers needed or wanted or how they might be different from consumers with more disposable income,” Mr. Milstein said.

For the full story, see:
STEPHANIE STROM. “Billions of Buyers.” The New York Times (Thurs., Sept. 18, 2014): B1 & B6.
(Note: the online version of the story has the date SEPT. 17, 2014, and has the title “Multinational Companies Court Lower-Income Consumers.”)

The book highlighted in the passage quoted is:
Prahalad, C. K. Fortune at the Bottom of the Pyramid Eradicating Poverty through Profits. Revised ed. Philadelphia, PA: Wharton School Publishing, 2009.

China May Have Higher Incomes, But India Has Freedom and Hope

(p. A11) The author remains generally optimistic about India’s prospects. Economic reforms that began in 1991 have quickened growth. On average, GDP has grown nearly 7% a year since then. Thanks to a media revolution that began in the 1990s and has exploded over the past decade, a state-owned monopoly over television news has given way to upward of 450 raucous channels that make Fox News look staid by comparison. The author argues that together these two trends have sparked a kind of virtuous cycle: Better-educated and better-fed Indians are demanding more from their politicians. A take-no-prisoners media will keep them on their toes.
. . .
Educated Indians can’t stop complaining about the politicians who lead them. Yet, echoing the historian Ramachandra Guha, Mr. Denyer argues that India’s main success since its independence in 1947 has been political rather than economic. It has strengthened its democratic institutions and nurtured religious and cultural pluralism. Despite the fact that the average Indian earned $1,500 last year, less than a fourth of the average Chinese, it is in New Delhi, not Beijing, that you can afford to call the president (or prime minister) a blithering idiot without worrying about a midnight knock on the door.

For the full review, see:
SADANAND DHUME. “BOOKSHELF; Book Review: ‘Rogue Elephant’ by Simon Denyer; The average Indian earns less than the average Chinese. But it’s in New Delhi–not Beijing–where you can call the prime minister an idiot without worrying about a knock on the door.” The Wall Street Journal (Mon., July 28, 2014): A11.
(Note: ellipsis added.)
(Note: the online version of the review has the date July 27, 2014, and has the title “BOOKSHELF; Book Review: ‘Rogue Elephant’ by Simon Denyer; The average Indian earns less than the average Chinese. But it’s in New Delhi–not Beijing–where you can call the prime minister an idiot without worrying about a knock on the door.”)

The book being reviewed is:
Denyer, Simon. Rogue Elephant: Harnessing the Power of India’s Unruly Democracy. New York: Bloomsbury Press, 2014.

Companies Do Less R&D in Countries that Steal Intellectual Property

The conclusions of Gupta and Wang, quoted below, are consistent with research done many years ago by economist Edwin Mansfield.

(p. A15) China’s indigenous innovation program, launched in 2006, has alarmed the world’s technology giants more than any other policy measure since the start of economic reforms in 1978. A recent report from the U.S. Chamber of Commerce even went so far as to call this program “a blueprint for technology theft on a scale the world has not seen before.”
. . .
A comparison with India is illustrative. India has no equivalent to indigenous innovation rules. The government also is content to allow companies to set up R&D facilities without any rules about sharing technology with local partners or the like.
These policy differences appear to have a significant influence on corporate behavior. Consider the top 10 U.S.-based technology giants that received the most patents from the U.S. Patent and Trademark Office (USPTO) between 2006 and 2010: IBM, Microsoft, Intel, Hewlett-Packard, Micron, GE, Cisco, Texas Instruments, Broadcom and Honeywell.
Half of these companies appear not to be doing any significant R&D work in China. Between 2006 and 2010, the U.S. PTO did not award a single patent to any China-based units of five out of the 10 companies. In contrast, only one of the 10 did not receive a patent for an innovation developed in India.

For the full commentary, see:
Anil K. Gupta and Haiyan Wang. “How Beijing Is Stifling Chinese Innovation.” The Wall Street Journal (Thurs., September 1, 2011): A15.
(Note: ellipsis added.)
(Note: the online version of the commentary has the title “Beijing Is Stifling Chinese Innovation.”)

Mansfield’s relevant paper is:
Mansfield, Edwin. “Unauthorized Use of Intellectual Property: Effects on Investment, Technology Transfer, and Innovation.” In Global Dimensions of Intellectual Property Rights in Science and Technology, edited by M. E. Mogee M. B. Wallerstein, and R. A. Schoen. Washington, D.C.: National Academy Press, 1993, pp. 107-45.

Mansfield’s research on this issue is discussed on pp. 1611-1612 of:
Diamond, Arthur M., Jr. “Edwin Mansfield’s Contributions to the Economics of Technology.” Research Policy 32, no. 9 (Oct. 2003): 1607-17.

“Inflexible Labor Laws” Lead Indian Firms “to Substitute Machines for Unskilled Labor”

(p. A19) . . . , India is failing to make full use of the estimated one million low-skilled workers who enter the job market every month.
Manufacturing requires transparent rules and reliable infrastructure. India is deficient in both. High-profile scandals over the allocation of mobile broadband spectrum, coal and land have undermined confidence in the government. If land cannot be easily acquired and coal supplies easily guaranteed, the private sector will shy away from investing in the power grid. Irregular electricity holds back investments in factories.
India’s panoply of regulations, including inflexible labor laws, discourages companies from expanding. As they grow, large Indian businesses prefer to substitute machines for unskilled labor.

For the full commentary, see:
ARVIND SUBRAMANIAN. “Why India’s Economy Is Stumbling.” The New York Times (Sat., August 31, 2013): A19.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date August 30, 2013.)