Daily Archives: December 11, 2006

New Economics and the Rise of Asia

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Manmohan Singh, the prime minister of India, is an economist by training. His recent speech to the London School of Economics Asia Forum.

The most important development of the 21st century will be the rise of Asia. China has already trebled its share of world GDP over the past two decades and India has doubled it. Both these giant economies of Asia are bound to regain a considerable part of their share of world GDP that they had lost during the two centuries of European colonialism. While Japan will continue to be at the top in the foreseeable future, the newly industrializing economies of East and South East Asia will also grow, even if not at rates we witnessed in the past two decades.Taken together, the rise of these Asian industrial economies will alter the balance of income distribution at the global level. This need not worry the West, since a dynamic Asia can power global growth and provide new opportunities for growth for Europe and North America.There are questions pertaining to the globalization of lifestyles, and its consequence for consumption, and their impact on the environment. Is growth sustainable if development in the developing world merely mirrors the experience of the developed? It is not just that Third World households may not be able to afford western consumption standards, our planet would not be able to do so.

If every consumer in India and China, totaling up to almost 3 billion, want to live like people in San Francisco, Stockholm or Singapore, can they afford to? Can nature afford it? If not, how do we alter lifestyles and consumption patterns so that growth is sustainable in a more globalized world?

I believe a new generation of economists and social scientists have to once again write and draw on blank slates, like IG’s generation did. There are no textbook solutions. There are no pet answers, no clever models. The rise of Asia, and of the developing world in general, presents us with new challenges – new intellectual challenges, new technological challenges, new organizational and political challenges.

Liberalizing the Indian education system

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Atanu Dey, my friend and my erstwhile boss at Deeshaa, writes about the need to liberalize the education sector in India.

If you want to understand the problems facing India and the way to solve them, do read Atanu’s blog. His commentary and insight is the best that is available.

I am confident that Indians are no less smart than any other group. Indians are poor because they lack freedom to act, to perform to the best of their abilities. Given the opportunity, in free societies Indians do just as well as the others. It is time for Indians to build world-class schools and universities. It is time for Indians to have real freedom from the government of India, not just the political freedom won from a colonial power over half a century ago.

Atanu explains the need to free the market to improve quantity and quality in the education sector. A related post by him is Desperately Seeking India’s Google.

Tomorrow’s markets

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The World Resources Insititute’s Tomorrow’s Markets is a great introduction to the world’s pressing problems and its implications for business.

Identifies and outlines nineteen powerful trends that are reshaping global markets and changing the role and strategies of corporations. Presents leading indicators of world economic, environmental and social conditions to international business audiences

The preface is written by Michael Porter from the Harvard Business School, considered the foremost experts on corporate and competitive strategy. No MBA student finishes his education without bumping into Porter’s ideas several times. I do not agree with everything that porter says, but he makes a strong case for business here.

ChessHe asks, “What is the relationship between corporate strategy and societal issues such as environment, poverty, health, population, and international development?”.

Business leaders have a tendency to see “social” concerns as having little relevance to competing. Instead they fall under the headings of corporate citizenship or corporate philanthropy, or are left to managers to address as matters of individual conscience.It is becoming more and more apparent, however, that treating broader social issues and corporate strategy as separate and distinct has long been unwise, never more so than today. Seeing strategy narrowly leads to missed opportunities and bad competitive choices.

It can also cause managers to overlook potential competitive advantages.The same disconnect between social and corporate is common among leaders in the social sector. There is a tendency to view firms as adversaries – not allies in advancing social causes.

Yet we are learning that the most effective way to address many of the world’s pressing problems is to mobilize the corporate sector where both companies and society can benefit.

In clear words, Porter explains the need to connect business strategy to sustainability which ofcourse is the theme of this website.

Yunus on Doing well and doing good

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Muhammad Yunus is the Nobel Peach Prize winner for 2006 and founder of the Grameen Bank. I wrote a piece on Microfinance in the just released book – WorldChanging : A User’s Guide for the 21st Century.

Business is about problem-solving, but it does not always have to be about maximizing profit. When I went into business, my interest was to figure out how to solve problems I see in front of me. That’s why I looked at the poverty issue. I got involved in lots of things to address it, and one of them was money lending with loans and credits and savings accounts, and in the process I created Grameen Bank. So you can also have social objectives. Ask yourself these questions: Who are you? What kind of world do you want?

Source: Business 2.0