Brilliant article** from my friend Tosh on India, China and the global economy (timed with the World Cup)
It has all the brilliance of his trademark style – refreshingly direct combined with penetrating insight…
Tosh makes the point that Europe will do well to consider India more seriously – and not least because it has distinct advantages over the US in this regard…
“…Had India played a fair game of cricket, it would have waited (at least until the Beijing Olympics) before foisting a second, near-alchemical reincarnation of Asia’s rise on an unsuspecting world.
For India has, unexpectedly, joined China in attaining near double-digit economic growth rates. It has done so in violation of that mantra of MBA programmes – that foreign direct investment (FDI) is the recipe for growth in a developing country.
…Few guesses are needed, though, to explain India’s googlies. Unlike China, it did not have to learn about capitalism, or conjure up its accompanying soft infrastructure. Quite the contrary. In IT, for example, it was India – not the US – that invented the offshore business model (one reason for the stratospheric American market valuations of India’s software giants).
Subtler reasons for India’s sudden rise may lie in the latest Forbes rich list. Indian billionaires now control more money than their counterparts in China and even Japan.They were careful to shield India (and their emerging empires) from the disruptive forces of FDI until they were ready. Now, armed with their own global competencies and scale (including those acquired overseas), they are.
…Indeed, what India Inc. has pioneered is a new business paradigm – of combining Indian comparative advantage with the core competency of its corporations, to haul the country up by its bootstraps.
Globalising India’s next phase will provide new opportunities for Europe’s policymakers, as attention shifts to the 800 million Indians living below the Davos horizon, facing 19th-century challenges in a country with many facets of the 21st.
…Though a late entrant to Game India, Europe has distinct advantages over the US in all these areas. In addition, Europe – unlike the US – might work with India to cushion global risks from an overheated or imploding China. In many ways, China increasingly resembles southeast Asia of the late 1990s: an FDI-driven exporting super-miracle run by an authoritarian regime, with real dangers of internal disconnects – of market from industry, leaders from the led, village from city, and imagination from reality.
To me, China’s civilisational élan vitale has one focus: the 2008 Olympics, which its leadership is determined to see through as a Great Power rite of passage. But once the glitter of the Olympics has faded, rising popular expectations, a trillion-dollar overhang of bad debts within the banking system and a grossly undervalued currency may prove a lethal cocktail.
If so, this would be the classic morning after, following a two-decade-long fling between Western finance and know-how on the one side, and Chinese industriousness and hospitality on the other.
The Olympics have in the past been an ominous precedent for non-democratic regimes. Note Berlin (1936) and Moscow (1980).
Come 2009-10, India’s supercharged economy, warts and boils still very much in the open, may well become the toast of Europe, and the world beyond – provided that the Indians, of course, continue to play their own style of cricket.”
* Googly: defined as a delivery by a right arm spin bowler which to a right hand batsman appears as if it will spin from leg to off, however, spins in the opposite direction.