The terrorist atrocities in Mumbai this week serve as another reminder of two fundamental issues for India:
- India’s future will always be imperiled as long as relations with Pakistan remain on a hair-trigger. The terrorist group that attacked the city may have no official ties to Pakistan, yet still managed to raise tensions between the two states. All India’s hopes could disappear in nuclear fire if each crisis could lead to war.
- The problem of Kashmir — a predominately Muslim area ruled by India, which stations hundreds of thousands of troops there — is also likely to bedevil India’s future. There are signs that the terrorists were motivated by the Kashmir problem, and Kashmir will continue to generate crises until India resolves the issue. It is also the most dangerous flashpoint for Indo-Pakistani relations.
Parag Khanna, author of The Second World: Empires and Influence in the New World Order, offers some tips for a new US president in the October issue of Wired, in an article by Daniel Pink.
- The United States can avoid decline by “tightening trade and energy ties to the rest of the hemisphere, pursuing economic innovation at home, and establishing a ‘diplomatic-industrial complex.’”
- The US should create “an energy partnership with Mexico, Canada, Venezuela, and Brazil,” reducing dependence on oil from the Middle East.
- The US should treat Mexico as the EU does Turkey, “integrating, elevating, and partnering with it.”
- Egypt is “ripe for revolt. We should make friends quickly with other power centers in the country, including the Muslim Brotherhood.”
- The US should offer Iranians a deal: oust President Ahmadinejad, and they will get “everything they want in terms of of Western investment in energy, freer trade, diplomatic recognition, and increased cultural and student exchanges.”
- Uzbekistan merits attention, as the most populous and industrialized country in Central Asia, and the only state that shares borders with all the other “stans.”
- “India will never rival China . . . It’s not a superpower.”
- China’s rise will not be hindered by “demands for such niceties as transparency or free expression,” as “the Chinese people have a preference for stability over another revolution.”
- Russia has more problems than potential: it is “in demographic free fall” and “Chinese immigration is blurring the border.”
India’s vast film industry has generated relatively little cultural power for the country over the decades: its productions have tended to be formulaic and simplistic, and have found only limited audiences beyond South Asia and its diasporas.
That may begin to change. Buoyed by India’s rising wealth, Bollywood is gaining resources, professionalizing, and linking to the global entertainment industry, reports indicate. Indian films are starting to attract global talent, and movies are taking on more diverse and serious subjects, while simultaneously becoming more accessible to non-Indian audiences.
The result may be that India’s values and views will be shared with the world more broadly and more convincingly, the hallmark of a great power.
ChangeWaves last week noted that the landscape of the world economy has changed overnight.
With a recalculation by the World Bank, China’s and India’s economies are now much smaller, at least as measured by purchasing power.
This is how things used to look (click on the graphic to activate):
With the recalculation, the developing Asian economies are rather less imposing:
The upshot that the age of American (and Western) economic dominance may persist longer than people thought.
The Boston Consulting Group has released a report on 100 emerging-market companies with global competetive potential, according to the Daily Telegraph.
Firms from China (44 companies), India (21), Brazil, and Russia constitute most of the group, with Mexico also making a good showing.
Companies like these will be the shock troops for the redistribution of global economic power. In the process, they will transform their home countries’ global roles and interests.
An emerging market expert points out that the developed world may balk at the process:
“The whole pace of globalisation may have to slow or it could set off a wave of protectionism. So far the West has mostly been losing jobs at the low end, and the process has been mutually beneficial. There is now a big risk of losing jobs at the high end too now that China and India are moving move swiftly up the ladder, as we have already seen in software. This means that incomes in the West may have to adjust downwards, and the workforce is not going to tolerate this.”
[Via Social Technologies; image: Social Technologies]
The Economist Intelligence Unit released its 2006 e-readiness rankings yesterday. The index is a measure of a country’s readiness for e-business, judged by Internet access, broadband penetration, innovation, information security, and other factors. More telling than the ranking is the country’s distance from a score of 10.
The ratings are a good indicator of general abilities in IT, and thus an important component of present and future competitiveness.
The top countries
Rank. Country — score out of 10 (2005 rank)
1. Denmark — 9.00 (1)
2. US — 8.88 (2)
3. Switzerland — 8.81 (4)
4. Sweden — 8.74 (3)
5. UK — 8.64 (5)
6. Netherlands — 8.60 (8)
7. Finland — 8.55 (6)
8. Australia — 8.50 (10)
9. Canada — 8.37 (12)
10. Hong Kong — 8.36 (6)
11. Norway — 8.35 (9)
12. Germany — 8.34 (12)
13. Singapore — 8.24 (11)
14. New Zealand — 8.19 (16)
14. Austria — 8.19 (14)
16. Ireland — 8.09 (15)
17. Belgium — 7.99 (17)
18. South Korea — 7.90 (18)
19. France — 7.86 (19)
Other countries of interest
Rank. Country — score out of 10 (2005 rank)
21. Japan — 7.77 (21)
22. Israel — 7.59 (20)
23. Taiwan — 7.51 (22)
25. Italy — 7.14 (24)
30. United Arab Emirates — 6.32 (X)
31. Chile — 6.19 (31)
35. South Africa — 5.74 (32)
37. Malaysia — 5.60 (35)
39. Mexico — 5.30 (36)
41. Brazil — 5.29 (38)
42. Argentina — 5.27 (39)
45. Turkey — 4.77 (43)
46. Saudi Arabia — 4.67 (46)
48. Venezuela — 4.47 (45)
49. Romania — 4.44 (47)
51. Colombia — 4.41 (48)
52. Russia — 4.30 (52)
53. India — 4.25 (49)
55. Egypt — 4.14 (53)
56. Philippines — 4.04 (51)
57. China — 4.02 (54)
60. Nigeria — 3.69 (58)
61. Ukraine — 3.62 (57)
62. Indonesia — 3.39 (60)
64. Kazakhstan — 3.22 (62)
65. Iran — 3.15 (59)
67. Pakistan — 3.03 (64)
Regional standouts in the developing world are Chile, South Africa, and the United Arab Emirates. The low scores of some countries, notably India, China, and Russia, disguise significant specialized capabilities in infotech.
The Maoist insurgency in India may still be a low-intensity conflict, but “looks increasingly like a civil war,” according to the NYT (IHT version here).
It is surprisingly widespread, “with toeholds in 13 of 28 Indian states,” from the far south to the Nepalese border, and some influence in a fourth of the country’s 600 districts, by one estimate.
Says an Indian security analyst, “Unless something radical is done in terms of a structural revolution in rural areas, you will see a continuous expansion of Maoist insurrection.”
That may be a bit bold, given that the conflict has been sputtering for 38 years, but the war is another reason that India’s future success is dependent on achieving a more equitable, inclusive society.
PriceWaterhouseCoopers has released a study of potential growth in the world’s 17 largest economies out to the year 2050.
The study forecasts the eclipse of the current developed economies. The E7, largest emerging market economies (China, India, Russia, Brazil, Indonesia, Mexico, Turkey), were only 20% of the size of the G7 economies at market exchange rates in 2005, but would be 25% larger than the G7 by 2050. By purchasing power, the E7 economies were only 75% as large as the G7 in 2005, but would be 75% larger by 2050.
In purchasing power terms, the shifts in relative GDP would be stark:
COUNTRY — relative econ size 2005 / 2050
US — 100 / 100
Japan — 32 / 23
Germany — 20 / 15
China — 76 / 143
UK — 16 / 15
France — 15 / 13
Italy — 14 / 10
Spain — 9 / 8
Canada — 9 / 9
India — 30 / 100
South Korea — 9 / 8
Mexico — 9 / 17
Australia — 5 / 6
Brazil — 13 / 25
Russia — 12 / 14
Turkey — 5 / 10
Indonesia — 7 / 19
Note that the values are relative within their respective years, but not across them; all economies are projected to be larger in 2050 than at present.
Purchasing power suggests, among other things, the military power the economy can afford to buy, suggesting that the realignment of power toward Asia will have substantially occurred. It will no longer be possible for the US to massively outspend all potential rivals.
The study also offers some startling numbers for per capita income. The figures suggest that the developed countries could have universal prosperity, and the emerging markets could achieve levels of wealth like those of developed countries today, eliminating dire poverty.
COUNTRY — 2005 / 2050 purchasing power GDP per capita (constant 2004 dollars)
US — $40,339 / $88,443
Japan — $30,081 / $70,646
Germany — $28,770 / $68,261
China — $6,949 / $35,851
UK — $31,489 / $75,855
France — $29,674 / $74,685
Italy — $28,576 / $66,165
Spain — $25,283 / $66,552
Canada — $31,874 / $75,425
India — $3,224 / $21,872
South Korea — $21,434 / $66,489
Mexico — $9,939 / $42,879
Australia — $31,109 / $74,000
Brazil — $8,311 / $34,448
Russia — $10,358 / $43,586
Turkey — $7,920 / $35,861
Indonesia — $3,702 / $23,686
These numbers suggest massive value shifts: countries reaching these wealth levels have shifted toward democracy, social freedom, and humane governance.
There is an underlying problem in these hopeful figures: sustainability will be strained with far more of the planet living at developed levels of wealth.