Sunday, July 1, 2012

Global Power Shift Since Industrial Revolution

The Industrial Revolution marked the beginning of a major shift in economic, military and political power from East to West.

  A research letter written by Michael Cembalest, chairman of market and investment strategy at JP Morgan, and published in the Atlantic Magazine shows how dramatic this economic power shift has been. The size of a nation's GDP depended on the size of its population and labor force in agrarian economies prior to the Industrial era.  With the advent of  the Industrial revolution, the use of machines relying on energy from fossil fuels dramatically enhanced labor productivity in the West and shifted the balance of power from Asia to America and Europe.

The shift in power was not just in economic terms. Enabled by machines such as steamboats and weapons like the repeating gun, the West engaged in long distance trade and warfare that led to the colonization and exploitation of Asia and Africa. The new colonies were used as a source of  cheap raw materials for European factories and the colonized people served as captive customers for their manufactured products.

History of Per Capita GDP of Selected Countries. Source: Angus Maddison

While development of Asian and African nations stagnated and their share of world GDP dropped precipitously, their colonial rulers in the West prospered. Social indicators like literacy and life expectancy showed little improvement in the colonies, according to data compiled by Professor Hans Rosling.  For example, his animations show that life expectancy in India and Pakistan was just 32 years in 1947.  In Pakistan, it has  jumped to  67 years in 2011, and per Capita inflation-adjusted PPP income has risen from $766 in 1948 to about $3000 in 2011. Similarly, literacy rate in undivided India was just 12% in 1947. It has increased to about 67% in India and 62% in Pakistan for people 15 years and above.

Indicators such as per capita energy consumption and Internet usage confirm the rise of Asia, particularly Asian giant China's. China's per capita energy consumption now stands at 68 million BTUs, about a fifth of US per capita energy consumption, but it's rising rapidly. Pakistan is at 15 million BTUs per capita, Bangladesh at 6 million BTUs and Sri Lanka at 10 million BTUs.In terms of Internet access, China now tops the world with over 500 million users, more than twice the number of Internet users in the United States.  Among the world's top 20 are South Asian nations of India with 120 million Internet users and Pakistan with 30 million users, according to Internet World Stats.

While there has been progress on economic and social fronts in South Asia, the combined GDP of SAARC nation is still  accounts for less than 4% of the world GDP. China has significantly increased its share and now accounts for more than 10% of the world GDP marking the biggest economic shift since the Industrial Revolution. China's growing economic clout will ultimately translate into political and military power in the international arena.

All indications are that the pendulum of power has just begun its swing  eastward in the last decade. It could be a century or more before the effects of this swing are truly felt in terms of the exercise of economic, military and political power on the world stage. Meanwhile,  the 21st century is shaping up to be another American century in which United States'  extraordinary power will not go entirely unchallenged by multiple potential adversaries, including China.

Here's a video discussion on the subject:

Vision 2047: Political Revolutions and South Asia from WBT TV on Vimeo.

Here's a video of a BBC documentary about Al Andalusia or Muslim Spain:


Related Links:

Haq's Musings

Pakistan Military Industrial Revolution

China's Checkbook Diplomacy

Education Attainment in South Asia

Pakistan Needs Comprehensive Energy Policy

Social Media Growth in Pakistan

Is America Young and Barbaric?

Godfather Metaphor for Uncle Sam


Anonymous said...

Notice that pre islamic India was the world's largest economy by far!
Also as per Agnus Maddison the per capita income was 133% that of Europe!

In Islamic times India by and large was the world's second largest economy but per capita income at its zenith of prosperity(Akbar) was about 70% of Europe.
By Aurangzeb's time it was down to about 50% of Europe when he died in 1707.

But in any case this is very lazy journalism.

1.History does not progress in straight lines.

2.The past is absolutely no indicator of the future.Greece?Egypt?Iraq?

Riaz Haq said...

Anon: "its zenith of prosperity(Akbar) was about 70% of Europe.
By Aurangzeb's time it was down to about 50% of Europe when he died in 1707."

So what is India's per capita GDP now in post-Islamic period? 5-6% of Europe's after 65 years of independence?

Doesn't India now have more poor, hungry ad illiterates than any other nation on earth?

Mahesh said...

UNDP overall literacy rates show India at 75.6% and Pakistan at 58.2%. Your blog data (which refers to another blog of yours!) show that, 15 years and over, India is at 67%. This makes sense because literacy rate is increasing and higher among the younger population.

Pakistan on the other hand, for 15 years and over, has a literacy rate of 62% which indicates that literacy rate among the youth is 54%(50% of population) - literacy is declining!

Shams said...

The energy consumption data that shows Norther countries using a higher number of BTUs per person is quite misleading. The fact is that the Northerners have to burn a lot of fuel to keep themselves warm in their very long winters.

Riaz Haq said...

Shams: "The energy consumption data that shows Norther countries using a higher number of BTUs per person is quite misleading. The fact is that the Northerners have to burn a lot of fuel to keep themselves warm in their very long winters."

Hot climates also require huge per capita energy consumption for air-conditioning & cooling. In fact Saudi Arabia (257 million BTUs) and Arizona (220 million BTUs) both use a lot of energy....about 3.5-4X of the world average of 70 million BTUs.

Mayraj said...

21st century American century. Now way!

Power shift in US started in 2011-year white babies became the minority. The downward drift from this will be felt as soon as they start to join labor force (will be before high school period eds as they will not graduate from it in majority) and more white residents and look for government aid (as they have no savings)! At this stage will stop trying to project itself outwards. This is warning to all counties relying on US market. Its days as being a market for their gods is going to be much reduced.

Riaz Haq said...

Mayraj: "21st century American century. Now way!"

Don't be so sure.

The key to America's dominance has been and continues to be its technological prowess.

It's on display nowhere better than in multi-ethnic and multi-cultural Silicon Valley which is predominantly nonwhite. Enable by top talent and risk capital, there is huge research & development going on here on everything from biotechnology to nanotechnology and advanced AI. If you get a chance, please read about the work of Singularity University. Abundance, a recent book by Peter Diamandis, sheds some light on it.

This is what will maintain significant US lead over competitors in the 21st century.

Riaz Haq said...

Mahesh: "UNDP overall literacy rates show India at 75.6% and Pakistan at 58.2%."

You are overstating India's literacy rate from UNDP.

UNDP data is outdated and shows 56% (2008) for Pakistan and 63% (2006) for India. For youth literacy it shows 71% in Pakistan and 81% for India.

Harvard researchers Robert Barro & Jhong-Wa Lee have much more detailed ad more recent data for 2010. It shows 38% of Pakistanis and 32.7% of Indians age 15 and above have had no schooling. That leaves 67% of Indians and 62% of Pakistanis 15 and above who can be considered schooled and literate.

Anonymous said...

no it is you who are overstating PAkistan's.

Literacy is not exclusively schooling.

MAny informal schooling programs exist.

When I was a school student back in the 1990s I had to teach a poor sweeper how to read and write Hindi COMPULSARILY,my social sciences grades were based on how well he scored so this wasn't a can write my name only type of eyewash.Many such 'each one teach one' initiatives have been around for atleast the past 30 years.

Mayraj said...

Do not think past will be prologue to future. That tide will not return. US basically built itself up in era its rivals were not competitive.
What technology prowess do you think will happen in future with little funding? Venture capital goes primarily to IT and biotech.
And IT scales up outside US! Govt will have little money to spare. Spends most on entitlements or defense-the crumbs go to rest.
Tide started turning the moment they started becoming competitive.
And it is harming itself by its malinvestment. Right now US has about same middle class amount as Mexico-just under 50%! Middle class has plunged in US. The hey days were when US economy was doing well there were no economic rivals. Since then less students will enter college, far fewer will even graduate high school. Ad the seniors will be looking to Government for more entitlement spending than even now!

Shams said...

I guess you missed my point, again.

The issue is that the numbers used in your article make one believe that simply measuring how many KW-hr you consume in a year represent something of value. They do not. For example, the temps range from 35-65 deg. F round the year where I live. We rarely use heat or airconditioning. All my light bulbs are LED and use no more than about 12W.

Therefore, there is a grave need to normalize your article's statistical data in a manner somewhat similar to the one done for GDP vs. purchasing power parity adjusted GDP.

Riaz Haq said...

Shams: "The issue is that the numbers used in your article make one believe that simply measuring how many KW-hr you consume in a year represent something of value. They do not. For example, the temps range from 35-65 deg. F round the year where I live. We rarely use heat or airconditioning. All my light bulbs are LED and use no more than about 12W."

While I agree that climate control and efficient light bulbs make a difference in energy consumption, I find that your explanation still doesn't account for 20X difference between South Asia & US or the 4.5X difference between China and the US.

The bulk of the difference can only be explained based on the difference in the level of industrialization in these societies.

Let me give you a simple example.

When I was in Pakistan recently, I saw a couple of gardeners trim a hedge for days with just manual shears. In the US, I have seen a similar job done by one man in a couple hours using motorized hedge trimmer that uses gasoline.

Similarly, I have seen human sweepers using manual brooms working on large areas just shuffling dirt in India and Pakistan..a task that a machine does much better and faster routinely in the US.

Everything from transportation and communication to cooking and cleaning and recreation uses more energy in industrialized societies than in developing nations.

You can find hundreds of similar examples of how every day work is done in developed countries using machines that require more energy consumption.

That's what industrial revolution replaced human and animal labor with energy-hungry machines.

It's often said that it would take several hundred slaves in the age of slavery to do the work each American gets done using energy-consuming machines these days.

Riaz Haq said...

Anon: "no it is you who are overstating PAkistan's.Literacy is not exclusively schooling."

In that case, I'm understating Pak literacy rate by only counting those as literate who have had the benefit of schooling.

Riaz Haq said...

Here's an Indian Express story on Gurgaon power cuts:

Morning traffic was brought to a standstill on Tuesday by Gurgaon residents protesting acute shortage of power and water.

The city has been battling severe power and water crisis, made worse by the delay in arrival of monsoon and the heatwave.

As per official estimates, the power demand in the city has surpassed previous records and continues to rise.

On June 28, the demand was to the tune of 1,528.33 lakh units (the highest demand for one day), against 1,127.45 lakh units on the same day last year, said Amit Kumar Agrawal, Managing Director of Dakhshin Haryana Bijli Vitran Nigam (DHBVN).

To rein in the shortfall, the Nigam has announced that starting Wednesday, all industries will be given just eight hours of power. They will be supplied power from 8 am to 12 pm and 3 pm to 7 pm.

Residents, on the other hand, blame the sharp rise in demand to the mushrooming of small guesthouses in buildings meant for a single family.

“In front of my house there is a 120 sq yard area, which has been turned into living quarters for 20-odd families. The power demand will automatically shoot up,” said Anthony Cruz, a resident of DLF Phase-III.

Residents of both old and new Gurgaon claim outages stretch to as long as 16 hours a day. This, in turn, has affected the water situation in the city.

“The Basai water plant is supplying very little water, while the private water plant is almost dry. Power cuts leads to non-storage of water and residents have to buy water. We shell out Rs 800 for around 5,000 litres of water,” said Cruz.
DHBVN Superintendent Engineer Sanjiv Chopra told Newsline, “There has been a 20-22 per cent shortfall in power supply in Gurgaon. While the demand is around 200 lakh units, we have been able to supply 150 lakh units. Sometimes the supply went down to 130 lakh units. We are trying to make the situation normal.”

Power officials said supply could dip further as Yamuna Nagar units I and II of 300 MW each and Hisar unit-I of 600 MW are closed. Hisar unit-II of 600 MW and Jharali (Jhajjar) units I and II of 500 MW each had tripped, resulting in sharp reduction in availability of power in the state.

About 150 MW power from Lanco Amarkantak Project is also not available due to non-availability of coal, officials said.

Indian said...

The share of Japan has reduced in the last decade and so has the share of Russia and Germany. If you look carefully, Indian share is expanding but at a much slower rate when compared to China.

Riaz Haq said...

Indian: "The share of Japan has reduced in the last decade and so has the share of Russia and Germany. If you look carefully, Indian share is expanding but at a much slower rate when compared to China"

India's share of world GDP has been flat at about 2.7%....$1.8 trillion out of nearly $65 trillion in 2011.

Anonymous said...

China and India, the US EIA predicts will account for nearly half the growth in world energy use by 2035.

"Energy consumption in non-OECD Asia, led by China and India, shows the most robust growth among the non-OECD regions, rising by 91 percent from 2010 to 2035."

Riaz Haq said...

Anon: "China and India, the bUS EIA predicts will account for nearly half the growth in world energy use by 2035.

"Energy consumption in non-OECD Asia, led by China and India, shows the most robust growth among the non-OECD regions, rising by 91 percent from 2010 to 2035."

Even with 91% increase in energy consumption, India will still be about 35 million BTUs per capita (even assuming flat population--which we know it will not be), half of today's world average of 70 million BTUs per capita where China is already...OECD nations are all 200 BTUs per capita or higher.

Anonymous said...

You might want to read this
A comprehensive 2009 paper by Harvard Business School looked at India’s more than 40 state-owned science and engineering research laboratories, which have used a similar type of public-private collaboration. It found that the Indian state labs had “more U.S. patents than all domestic [Indian] private firms combined.”

Hopefully one day we will read about Pakistan also the same way.

Anonymous said...

Hopefully one day we will read about Pakistan also the same way.

absolutely just get the CJ of pakistan to pass a farman and the rest will be history!

Everything from animal husbandry to space tech will be done this way.The CJ might as well call himself the new caliph!

Mayraj said...

I didn't hear any mention of Ibn Khuldun in the BBC documentary... he got his real experience in Muslim Spain! I first learned of him by reading the Muqaddimah in college.
Economics of Ibn Khaldun: Revisited
Ibn Khaldun’s Contribution on Modern Economics Development:
An Analysis based on Selected Economic Issues
Ibn Khaldun the father of Economics

Riaz Haq said...

Mayraj: "I didn't hear any mention of Ibn Khuldun... he got his real experience in Muslim Spain! I first learned of him by reading the Muqaddimah in college."

It just shows that the BBC documentary is not comprehensive and the contribution of Muslim Spain is too large to even scratch the surface in a 90 min documentary.

Riaz Haq said...

Here's a Wall Street Journal Op Ed by Prof Walter Russell Meade on the impact of European economic crisis on geopolitics:

The crisis of the euro zone is a geopolitical as well as an economic event. While Europe may yet find a path out of its economic quagmire, it will turn inward for some time as it reorganizes some of its core institutions. The world will not stand still while this happens.

To begin with, Europe's disorder is a grand opportunity for Russia. It is not all good news in the Kremlin—Russia will hurt economically, as the European Union is its most important trading partner and customer for oil and gas. But geopolitically, Russia will have a lot of new opportunities. Ukraine, Moldova and Belarus will feel less pull from the West and more from the East.
Elsewhere, the euro crisis has reinforced Turkey's decision to drop its long courtship of Europe and become an independent actor. Europe looks less and less to the Turks like a model to imitate and more and more like a fate to avoid. Turkey in any case would like to replace the EU as a major political and economic force in the Arab world, and it is likely to use this period of European introspection and preoccupation to advance its agenda.

Between Russia's new geopolitical opportunities and Turkey's detachment from Europe, the situation in the Balkans is going to become much more confused and perhaps even dangerous. If Greece ends up leaving the euro or is deeply embittered with Brussels and the EU over the long term, and if Cyprus is similarly affected (likely, given its close economic ties to Greece), we could see Greece and Cyprus tilt toward Russia.
This is bad news for Americans. An assumption that Europe is in a period of continuing decline is to some degree baked into the cake of American foreign policy. The perception that Europe (and Japan) are no longer the powers they once were has driven the U.S. to look for new partners as it seeks to build a liberal world system in the 21st century.

But Americans expected a slow and gentle decline, with many years in which to make a gradual adjustment to the change. We hoped that the euro and the single market could mitigate or even reverse that decline. We have also taken for granted that the EU would at least be able to manage its own neighborhood, bringing peace, security and integration to the Balkans and drawing countries like Belarus, Ukraine and even Russia toward Western ways. We may now have to adjust to a world in which the EU is retreating faster and farther than anyone expected.

This euro crisis isn't just a banking or a currency issue. It is a serious political crisis that could dramatically alter the geopolitical balance in Europe and Asia.

Riaz Haq said...

Here's BBC's Soutik Biswas on massive power failure in India's northern grid:

A massive power cut has caused disruption across northern India, including in the capital, Delhi.

It hit a swathe of the country affecting more than 300 million people in Punjab, Haryana, Uttar Pradesh, Himachal Pradesh and Rajasthan states.

Power Minister Sushil Kumar Shinde said most of the supply had been restored and the rest would be reinstated soon.

It is unclear why the supply collapsed but reports say some states may have been using more power than authorised.

Mr Shinde said he had appointed a committee to inquire into the causes of the blackout, one of the worst to hit the country in more than a decade. The committee will submit its report within 15 days, he said.

The power cut happened at 02:30 local time on Monday (2100 GMT Sunday) after India's Northern Grid network collapsed.
Monday morning saw travel chaos engulf the region, with thousands of passengers stranded when train services were disrupted in Punjab, Haryana and Chandigarh.

The Rajdhani train from Jammu to Delhi was more than five hours late.

"The train stopped near Panipat station [in Haryana] at about 02:30. For a long time we had no idea what was holding us up," passenger DK Rajdan said.

"Rajdhani is air-conditioned so it was not uncomfortable. But for six or seven hours we couldn't get anything to eat or drink and people were beginning to get worried," he said.

Delhi Metro railway services were stalled for three hours, although the network later resumed when it received back-up power from Bhutan, one official said.

Traffic lights on the streets of the capital were not functioning as early morning commuters made their way into work, leading to gridlock.

Water treatment plants in the city also had to be shut for a few hours.

Officials said restoring services to hospitals and transport systems were a priority.

Power cuts are a common occurrence in Indian cities because of a fundamental shortage of power and an ageing grid. The chaos caused by such cuts has led to protests and unrest on the streets.

Earlier in July, crowds in the Delhi suburb of Gurgaon blocked traffic and clashed with police after blackouts there.

Correspondents say that India urgently needs a huge increase in power production, as hundreds of millions of its people are not even connected to the national grid.

Prime Minister Manmohan Singh has long said that India must look to nuclear energy to supply power to the people.

Estimates say that nuclear energy contributes only 3% to the country's current power supply. But the construction of some proposed nuclear power stations have been stalled by intense local opposition.

Riaz Haq said...

Here's BBC's Soutik Biswas on India's power situation:

As India copes with a massive power breakdown for a second successive day, some interesting facts about the country's power situation to chew on:

India has an installed capacity of more than 170,000 megawatts, up from a mere 1,362 megawatts at the time of Independence in 1947

The majority (around 60%) is generated from coal and lignite, while just under a quarter (about 22%) is hydro-electric

Despite its soaring energy needs, India has one of the lowest per capita rates of consumption of power in the world - 734 units as compared to a world average of 2,429 units. This is nothing compared with say, Canada, (18,347 units) and the US (13,647 units). China's per capita consumption (2,456 units) is more than three times that of India.

The low per capita consumption is despite the fact that the power sector has been growing at more than 7% every year.
Homes and farms are consuming more power today than industries and businesses. Industrial consumption has actually dropped from 61.6% in 1970-71 to 38% in 2008-2009.

India has suffered consistent power shortages since Independence in 1947. Peak demand shortage is more than 10%, whereas the overall energy shortage is more than 7%.

Sixty-five years after Independence, only nine states - Andhra Pradesh, Gujarat, Karnataka, Goa, Delhi, Haryana, Kerala, Punjab and Tamil Nadu - of 28 have been officially declared totally electrified.

India remains perennially energy starved despite 15% or more of federal funds being allocated to the power sector. Bankrupt state-run electricity boards, an acute shortage of coal, skewed subsidises which end up benefiting rich farmers, power theft, and under-performing private distribution agencies are to blame, say experts. There is no shortage of money, and the problem, as the Planning Commission admits, is more "in the delivery process [than] in the system".

Transmission and distribution losses have leapt from 22% in 1995-96 to about 25.6% in 2009-2010. The states with the worst losses are Indian-administered Kashmir, Bihar, Chhattisgarh, Jharkhand and Madhya Pradesh. The best performers: Punjab, Himachal Pradesh, Andhra Pradesh and Tamil Nadu.

India's first power generation company was the private Calcutta Electric Supply Corporation (CESC) started in 1899. The first diesel power plant was set up in Delhi in 1905. The first hydro-electric power station was set up in Mysore in 1902. At the time of Independence, about 60% of India's power sector was privately owned. Today, about 80% of the installed capacity is in the hands of the government. Private companies own 12% of the capacity.

Riaz Haq said...

Here's an NDTV story on foreign investor disenchantment with India:

India's economy is growing at its slowest pace in nearly a decade, with stubborn inflationary pressures and high interest rates.

But what global firms often find hardest is the red tape and the policy paralysis that has stalled major reforms.

"Doing business in India is difficult because the problem is there are too many decision makers," Amit Midha, president of Asia Pacific and Japan for Dell, told Reuters in an interview.

"And decision makers change quite often. New decision makers come and they don't honour the contract previously signed."

Irked by a lack of opportunities, Germany's Fraport - the world's second-biggest airport operator - recently decided to shut its development office in India, becoming the latest in a growing list of companies exiting Asia's third-largest economy.

"When a company is trying to leave India and that company is well respected, then clearly it suggests that there is something, this place is not easy to work," Midha said.


A lack of clarity in recent proposals aimed at targeting tax evasion, including retrospective taxation on foreign corporate deals involving Indian assets, panicked foreign investors. Those rules have now been put on hold.

"Policies like retroactive taxes...are a huge risk for us to make an investment. We just do not know how to assess our results and how to report our results globally," said Shanghai-based Midha during a visit toNew Delhi.

"That sort of a set-up doesn't work for any global company for that matter."

Dell has operations in eight cities in India, where it has had a presence since 1996.

With 27,000 employees, India is Dell's biggest employee base outside the United States.

Chief Executive Officer Michael Dell told Reuters in July that Dell is bullish on India, along with China andBrazil.

Dell's experience in India has helped it deal better with the complications of doing business in a high-growth, but poor-infrastructure market, Midha said.

"From our experience, we tell people, in India, the initial gestation period can be hard, but once it's over, it can be a lot smoother," said Midha, who is also the chairman of Global Emerging Markets for Dell.

"If you don't have the resources, don't get into it. Because you need to make sure you have some staying power to go through the initial gestation period."

Midha said Dell had no plans to leave India and is now familiar with how to "navigate" in the country.

"There is a lot of progress made here in terms of infrastructure, but things like blackouts and other things doesn't give India a good position in the global stage," he said.

Hundreds of millions of Indians were left without power earlier this month in one of the world's worst blackouts when electricity grids collapsed two days in a row.

"I think the government is committed to promote investments in India, I see lots of signs of that," Midha said. "But, that said, proof is in the pudding."

Riaz Haq said...

Here's a Washington Post piece on India's thirst for energy:

Like China two decades ago and the United States in 1950, India stands on the cusp of transformational economic and social change, a jumping-off point at which the demand for electricity is about to explode.

Its economy and population are among the fastest growing in the world, and it has ambitious and energy-intensive plans to develop its infrastructure and industrial base. But business leaders are crying out for uninterrupted power supplies, and a third of India’s population is not even connected to the national grid.
Every modern, industrial society in history has gone through a 20-year period “where there was extremely large investment in the power sector, and electricity made the transition from a privilege of an urban elite to something every family would have,” Varro said. “India is right now just at that jump point.”

Whether it succeeds in meeting that demand could be the single most important determinant of India’s economic prospects over the next two decades, one of the main factors that will decide whether the country can continue to pull hundreds of millions of people out of poverty and realize its ambitions to be a 21st-century economic powerhouse.
But even if India finds the fuel it needs to power its generators, it is not clear how it will pay for the electricity they produce.

State electricity distribution companies across India are mostly bankrupt, forced by their political masters to give power away — free to farmers to run water pumps to irrigate their land, and at below-cost prices to everyone else. Theft and losses of power amount to 28 to 30 percent of output, further bleeding the distributors of resources.

Nationally, separate ministries for coal, gas, power and renewable energy routinely fail to coordinate.

“Policymaking in the energy sector is rather fragmented, and we really don’t have a forward vision,” said Rajendra Pachauri, who won the Nobel Prize in 2007 for his work as head of the Intergovernmental Panel on Climate Change.

Pachauri forecasts that if India continues on its path of “business as usual,” it will have to import unimaginable, and unfeasible, amounts of coal and oil in two decades.

A failure to invest properly in researching and developing renewable energy also threatens environmental ruin. “India can’t possibly continue on the path we are on,” he said.

Charles Ebinger, director of the Energy Security Initiative at the Brookings Institution in Washington, said the difficulties that India faces in meeting its rising energy demand “would pose a serious political challenge for a well-run government — and that certainly isn’t the case here.”

He said the country could struggle to hold its own against other emerging economies, including Brazil, Russia, China and South Africa, countries that with India constitute what is known as the BRICS group.

“If I had to bet, I would say there is a greater possibility of India failing to meet the challenge than of meeting it,” Ebinger said. “You will see India slip down, out of the ranks of the fast-growing BRICS emerging markets, and you will see more political disturbances when energy fails.”

Hopewins said...

Power Shift?

You want the Power Shift?

You think you can handle the Power Shift?

Here is the Power Shift:

Riaz Haq said...

Here's a TOI story of dearth of research in India:

NEW DELHI: At a time when India is being looked at as the next big knowledge superpower, this could come as a shocker. Just 3.5% of global research output in 2010 was actually from India. In most disciplines, India's share in global research output was actually much below this overall average count.

Sample this - India's share of world research output in clinical medicine was a meagre 1.9% in 2010, 0.5% in psychiatry, 1.4% in neurosciences, 1.8% in immunology, 2.1% in molecular biology and just 3.5% in environmental research.

In mathematics, India's share of world output stood at around 2% in 2010 while it was 17% for China. In case of materials sciences, India's share of world research stood at 6.4% in 2010 while China's stood at 26% -- a rise from 5% in 1996.

While India's research on physics stood at 4.6% in 2010, China's stood at 19%.

In 2010, India's largest shares of world research output were in chemistry (6.5%), materials science (6.4%), agricultural sciences (6.2%), pharmacology and toxicology (6.1%), microbiology (4.9%), physics (4.6%) and engineering (4.2%).

India is often referred to as the next big place for computer sciences. But the figures on its research is abysmally low. Only 2.4% of global research on computer sciences was from India in 2010 while the world share moved to three emerging research economies - China 15%, Korea 6.3% and Taiwan 5.7%.

India's global share of research in economics stood at 0.7% in 2010 while in social sciences it was worse - 0.6%.

The biggest declines in volume of research between 1981 and 2010 were in plant and animal sciences (-2.2%) and agricultural sciences (-1.6%). The most significant expansions were in pharmacology and toxicology (+4.2%), microbiology (+3.2%) and materials sciences (+3.1%).

These are the findings of the study on India's research output and collaboration conducted by Thomson Reuters and recently submitted to the department of science and technology.

"India has been the sleeping giant of Asia. Research in the university sector, stagnant for at least two decades, is now accelerating but it will be a long haul to restore India as an Asian knowledge hub. Indian higher education is faced with powerful dilemmas and difficult choices - public/private, access/equity, uncertain regulation, different teaching standards and contested research quality," the report said.

According to it, India's share of world output in engineering fell from 4.3% in 1981 to 2.2% by 1995. India later regained its lost share, increasing to 4.25 by 2010. However, even then, India was overtaken by China (16.4%), Korea (5.4%) and Taiwan (4.4%).

India, where agriculture dominates economic standards, had quite a large share in agricultural sciences which averaged 7.45% over the 1981 to 1995 period, well ahead of other emerging research economies. Its share, however, fell to 6.2% in 2010. Even in the field of plant and animal sciences, the global research output fell from 6.1% in 1981 to 3.9% in 2010.

The report said, "India has a long and distinguished history as a country of knowledge, learning and innovation. In the recent past, however, it has failed to realize its undoubted potential as a home for world class research."

It added, "During the 1980s and 90s, the output of India's research was almost static while other countries grew rapidly, particularly in Asia. China expanded with an intensity and drive that led it rapidly to overtake leading European countries in the volume of its research publications. India is just beginning on this gradient."

Riaz Haq said...

Atheist Richard Dawkins has recently disparaged Muslims by pointing out that the entire Muslim world has had fewer Nobels (10) than Cambridge's Trinity College (34). While Dawkins is correct in that assertion, it;s important to recognize that the history of humanity is not just 100 years old. It did not begin with the launch of Nobels in 1901. It stretches much further back. The defining work of Muslims in earlier centuries included development of decimal number system (still called Arabic numerals), Algebra, the idea of algorithms, first camera, fountain pen, etc. In "Lost Discoveries" by Dick Teresi, the author says, "Clearly, the Arabs served as a conduit, but the math laid on the doorstep of Renaissance Europe cannot be attributed solely to ancient Greece. It incorporates the accomplishments of Sumer, Babylonia, Egypt, India, China and the far reaches of the Medieval Islamic world." Teresi by his description of the work done by Copernicus. Nasir al-Din al-Tusi, a Persian Muslim astronomer and mathematician, developed at least one of Copernicus's theorems, now called The Tusi Couple, three hundred years before Copernicus. Copernicus used the theorem without offering any proof or giving credit to al-Tusi. This was pointed out by Kepler, who looked at Copernicus's work before he developed his own elliptical orbits idea.

A second theorem found in Copernican system, called Urdi lemma, was developed by another Muslim scientist Mu'ayyad al-Din al-Urdi, in 1250. Again, Copernicus neither offered proof nor gave credit to al-Urdi. Columbia University's George Saliba believes Copernicus didn't credit him because Muslims were not popular in 16th century Europe, not unlike the situation today.

Riaz Haq said...

Combined PPP GDP of poor developing countries exceeds combined GDP of rich industrialized countries, according to a report in Huffington Post:

For the first time ever, the combined gross domestic product of emerging and developing markets, adjusted for purchasing price parity, has eclipsed the combined measure of advanced economies. Purchasing price parity—or PPP for short—adjusts for the relative cost of comparable goods in different economic markets.

According to the International Monetary Fund—the supplier of this data—emerging and developing economies will have a purchasing price parity-adjusted GDP of $42.8 trillion in 2013, while that of emerging economies will be $44.4 trillion. In other words, emerging markets will create $1.6 trillion more value in goods and services than advanced markets this year.

Advanced economies are, according to the IMF, the 34 nations that result from combining the members of the G7, euro area countries, and the 4 “newly industrialized Asian economies”—Taiwan, Hong Kong, Singapore, and South Korea. The world’s 150 other nations are considered emerging or developing.

Excluding the largest advanced economy, the United Sates, and the largest emerging economy, China, which both account from more than 30% of their respective group’s total GDP, the data show that the PPP-adjusted GDP of poorer nations surpassed that of richer ones in 2009.

It’s worth keeping in mind that the emerging economies have strength in numbers. Not only are there more emerging and developing nations; those nations also boast a larger combined population.

As such, emerging and developing economies trail far behind advanced economies in per-capita terms. Their aggregate per-capita PPP-adjusted GDP is $7,415, while the same measure for advanced nations totals $41,369.

Riaz Haq said...

Why is the English laguage so dominant and widely used today? It's because language does not exist or grow in vacuum. As a means of communication, it reflects the state of the people whose language it is. The global ascendance of the English language has coincided with the rise of the Anglo-Saxon people beginning with the Industrial Revolution in 18th century England. It marked a dramatic shift of global power from East to West.

Riaz Haq said...

Here's an excerpt of The Economist magazine story on productivity gap between US and developing nations:

The productivity gap, an indicator of a country’s output capabilities, is the ratio between the productivity of a benchmark country (such as the United States) and that of a less developed economy. The latest Latin America Outlook from the OECD, a think-tank, compared the productivity gaps of selected countries in the region with those of economies in Asia. In general, productivity gaps in Asian countries have narrowed significantly over the past three decades. America’s productivity in 1980 was 125 times that of China; by 2011 the gulf had come down to 17 times. In Latin America and the Caribbean, however, not only was there a much smaller reduction, in many cases the gap had grown.

Riaz Haq said...

One can probably get a good historic overview of India's economic and social indicators data by reading British economist Angus Maddison and Swedish statistician Hans Rosling.

Maddison estimates that in PPP terms in 1990 dollars. In 1 AD, India’s GDP per capita was $450, as was China’s. But Italy under the Roman Empire had a per capita income of $809. In 1000 AD, India’s per capita income was $450 and China’s $466. But the average of the West Asian countries, such as Turkey and Iraq, was much higher at $621. In terms of general prosperity, therefore, it was the Arab world that was doing well a millennium ago. The Caliphate in Baghdad was a centre of power at the time and both science and culture flourished.

Rosling ( has estimated India's life expectancy in 1800 at about 23 years, lower than its peers at the time.

Riaz Haq said...

One of the things that bothers people so much about Russia's slow play to gobble up chunks of Ukraine is that countries, by and large, have stopped annexing each others' territory since World War II. This modern success is all the more remarkable by the fact that, for most of history, countries loved to conquer land and subjugate the people living there.

European colonialism has been far and away the worst offender in this regard in the last 500 years. Take a look at this GIF charting the rise and fall of (mostly) European empires from 1492, when the European discovery of the Americas kicked off their movement west and south, to 2008.

A lot of interesting things pop out in that GIF. Thailand never gets colonized by any power, European or Asian. Denmark had the earliest westward European colonies, in Greenland. The Japanese empire was pretty huge in 1938.

But the biggest, most remarkable thing in the map is the ebb and flow in the territory controlled by the big European powers. That reflects a few things. Wars between great powers themselves (say, World War I), colonial conquest (Britain in Australia), conflict between colonial powers (Britain and France in North America), and colonized people throwing out colonizers (the dramatic decline in African colonialism after World War II).

The rise and fall of colonial empires warrants particular attention. Each of these sometimes-century long occupations that transformed daily life for colonized people. These regimes varied in all sorts of ways: the degree to which they literally enslaved colonized subjects, to take a particularly grim example, or the amount to which they allowed local political autonomy.

Scholars are still arguing over the implications of these massive colonial shifts for modern politics, which are undoubtedly dramatic. Take the big-picture global economy: why some countries are rich, and others are poor. Daron Acemoglu, Simon Johnson, and James A. Robinson have proposed that colonialism created a "reversal of fortunes" in economic terms. Previously rich peoples became poor when colonized, while previously poor peoples ended up comparatively wealthier. And both, by and large, remain so today.

Why? Well, the central purpose of European colonialism was to benefit and enrich Europeans. Acemoglu, Johnson, and Robinson propose that created different incentives for European powers in richer and poorer colonized lands. In richer places, they built governments whose task was to steal wealth and resources and send them to Europe, shattering the foundations of local prosperity. In poorer places, they actually built European settler communities, protecting economically useful institutions like private property rights in order to make these communities do well. In both previously poor and previously rich places, these colonial institutions altered the trajectory of their development down to the present day.

Riaz Haq said...

Journalist Robert D. Kaplan thinks that what is wrong with the Middle East is a lack of imperialism, and he urges that it be brought back. It is how, he says, most of the world has been ruled by “default.” This argument is so ahistorical and wrong-headed that it takes the breath away.

First of all, “imperialism” is an imprecise term. Kaplan is trying to sweep up different kinds of empire under one rubric. Until the early twentieth century, most people in the Middle East admittedly accepted the Ottoman Empire, which was Muslim-ruled and made minimal economic demands on them while offering minimal governance. But it was precisely at that point when the Ottomans began building railroads to deliver garrisons to the provinces and introducing modern, more intrusive bureaucracy that they began facing opposition from local elites like the Hashemite rulers of Mecca in the Hejaz. The rise of nationalism was also fatal to empire, whether Ottoman or any other sort.

Capitalist economic imperialism of the European sort is a new phenomenon in world history, and proved far less welcome in the Middle East than the decentralized Ottoman methods of governance. The European empires in Asia and Africa were not into it for their subjects’ health. Historians estimate that in the early nineteenth century, the colonized territories provided 15 percent of the metropole’s income, a margin that may well have helped technological and economic advances in Europe. In the late nineteenth and early twentieth century, East Indies (Indonesian) rubber and petroleum provided as much as 25 percent of the Netherlands’ gross national product. That is to say, the Dutch stole billions of dollars from the Indonesians. European imperialism was brutal. European overlords worked plantation laborers to death. Since the foreigners were not liked, it was necessary occasionally to massacre the locals. The German army practiced with machine guns on primitively armed Namibian tribes as a prelude to the slaughter of World War I in Europe itself. Imperial archivists usually destroyed the documents that witnessed the viciousness and genocidal character of European economic imperialism.

Anonymous said...

Share of global GDP (PPP)


EU: 30.4%
US: 22%
China: 2.3%

2020 (projected)

EU: 15.3%
US: 15%
China: 18.9%

Riaz Haq said...

Apologists for empire like to claim that the British brought democracy, the rule of law and trains to India. Isn’t it a bit rich to oppress, torture and imprison a people for 200 years, then take credit for benefits that were entirely accidental?

by Shashi Tharoor

Many modern apologists for British colonial rule in India no longer contest the basic facts of imperial exploitation and plunder, rapacity and loot, which are too deeply documented to be challengeable. Instead they offer a counter-argument: granted, the British took what they could for 200 years, but didn’t they also leave behind a great deal of lasting benefit? In particular, political unity and democracy, the rule of law, railways, English education, even tea and cricket?

Indeed, the British like to point out that the very idea of “India” as one entity (now three, but one during the British Raj), instead of multiple warring principalities and statelets, is the incontestable contribution of British imperial rule.

Unfortunately for this argument, throughout the history of the subcontinent, there has existed an impulsion for unity. The idea of India is as old as the Vedas, the earliest Hindu scriptures, which describe “Bharatvarsha” as the land between the Himalayas and the seas. If this “sacred geography” is essentially a Hindu idea, Maulana Azad has written of how Indian Muslims, whether Pathans from the north-west or Tamils from the south, were all seen by Arabs as “Hindis”, hailing from a recognisable civilisational space. Numerous Indian rulers had sought to unite the territory, with the Mauryas (three centuries before Christ) and the Mughals coming the closest by ruling almost 90% of the subcontinent. Had the British not completed the job, there is little doubt that some Indian ruler, emulating his forerunners, would have done so.

Far from crediting Britain for India’s unity and enduring parliamentary democracy, the facts point clearly to policies that undermined it – the dismantling of existing political institutions, the fomenting of communal division and systematic political discrimination with a view to maintaining British domination.

In the years after 1757, the British astutely fomented cleavages among the Indian princes, and steadily consolidated their dominion through a policy of divide and rule. Later, in 1857, the sight of Hindu and Muslim soldiers rebelling together, willing to pledge joint allegiance to the enfeebled Mughal monarch, alarmed the British, who concluded that pitting the two groups against one another was the most effective way to ensure the unchallenged continuance of empire. As early as 1859, the then British governor of Bombay, Lord Elphinstone, advised London that “Divide et impera was the old Roman maxim, and it should be ours”.

Since the British came from a hierarchical society with an entrenched class system, they instinctively looked for a similar one in India. The effort to understand ethnic, religious, sectarian and caste differences among Britain’s subjects inevitably became an exercise in defining, dividing and perpetuating these differences. Thus colonial administrators regularly wrote reports and conducted censuses that classified Indians in ever-more bewilderingly narrow terms, based on their language, religion, sect, caste, sub-caste, ethnicity and skin colour. Not only were ideas of community reified, but also entire new communities were created by people who had not consciously thought of themselves as particularly different from others around them.

Large-scale conflicts between Hindus and Muslims (religiously defined), only began under colonial rule; many other kinds of social strife were labelled as religious due to the colonists’ orientalist assumption that religion was the fundamental division in Indian society.

Riaz Haq said...

#India's #Nobel Laureate Rabindranath #Tagore became the embodiment of how the west wanted to see the east.

The success turned everyone's heads, including Tagore's. He became the most prominent embodiment of how the west wanted to see the east – sagelike, mystical, descending from some less developed but perhaps more innocent civilisation; above all, exotic. He looked the part, with his white robes and flowing beard and hair, and sometimes overplayed it. Of course, the truth was more complicated. The Tagores were among Kolkata's most influential families. They'd prospered in their role as middle men to the East India Company, whose servants named them Tagore because it was more easily pronounced than the Bengali title, Thakur. The west wasn't strange to them. Rabindranath's grandfather, Dwarkanath, owned steam tug companies and coal mines, became a favourite of Queen Victoria's and died in England (his tombstone is in Kensal Green cemetery). As for the poet himself, this was his third visit to London. On his first, he'd heard the music hall songs and folk tunes that he later incorporated into his distinctive musical genre, rabindra sangeet.

More than anything, what Tagore stood for was a synthesis of east and west. He admired the European intellect and felt betrayed when Britain's conduct in India let down the ideal. His western enthusiasts, however, saw what they wanted to see. First, he was an exotic fashion and then he was not. "Damn Tagore," wrote Yeats in 1935, blaming the "sentimental rubbish" of his later books for ruining his reputation. "An Indian has written to ask what I think of Rabindrum [sic] Tagore," wrote Philip Larkin to his friend Robert Conquest in 1956. "Feel like sending him a telegram: 'Fuck all. Larkin.'"

Is his poetry any good? The answer for anyone who can't read Bengali must be: don't know. No translation (according to Bengalis) lives up to the job, and at their worst, they can read like In Memoriam notices: "Faith is the bird that feels the light when the dawn is still dark" is among the better lines. Translator William Radice thinks that Tagore's willingness to tackle the big questions, heart on sleeve, has made him vulnerable to "philistinism or contempt". That may be so – see Larkin – but perhaps the time has come for us to forget Tagore was ever a poet, and think of his more intelligible achievements. These are many. He was a fine essayist; an educationist who founded a university; an opponent of the terrorism that then plagued Bengal; a secularist amid religious divisions; an agricultural improver and ecologist; a critical nationalist. In his fiction, he showed an understanding of women – their discontents and dilemmas in a patriarchal society – that was ahead of its time. On his 150th anniversary, we shouldn't resist two cheers, at least.

Riaz Haq said...

Height, lifespan, GDP: Humanity has stagnated for most of its history

Over the past millennium, income per capita in the selected countries has increased 32-fold, from 717 US dollars per person per year around the year 1000 to 23,086 dollars in 2010. This contrasts sharply with the previous millennia, when there was almost no advance in income per capita. The figure shows that it started rising and accelerating around the year 1820 and it has sustained a steady rate of increase over the last two centuries. One of the main challenges for growth theory is to understand this transition from stagnation to growth and in particular to identify the main factor(s) that triggered the take-off.

Is the finding that there was stagnation in the standard of living until 1820 truly robust? This claim is particularly important given that mankind experienced significant technological improvements that would have been expected to increase productivity and income per person, from the Neolithic revolution to the invention of the printing press.

Two facts corroborate the idea that there was indeed stagnation over the most part of human history: first, estimates of longevity computed on specific groups across time and space do not display any trend before 1700 CE. For example, De la Croix and Licandro (2015) show using a long-running database of 300,000 famous people that there was no trend in mortality during most of human history, confirming the existence of a Malthusian stagnation epoch.

Second, body height computed from skeletal remains does not display any trend either, while height is known to depend very much on nutrition when young (Koepke and Baten, 2005). This indicates that there was no systematic improvement in nutrition over time. One has to wait until the 19th century to observe a trend in height, as witnessed by the data of the Swedish army.

The three measures of standard of living proposed here – GDP per capita, height and lifespan – are therefore in the same direction: that of stagnation for most of human history. The economic growth that we now enjoy, with its positive effects on the standard of living but also its negative effects on the environment, is therefore an unprecedented and recent phenomenon on a historical scale.

Riaz Haq said...

How India's Economy Will Overtake the U.S.'s

As for population size, India likely surpassed China this year to become the world’s most populous country, and the gap will only widen in the near future. That confers additional benefits through economies of scale in the provision of public goods. Take, for example, India’s digital payments infrastructure built on the biometric identity system known as Aadhaar and the United Payments Interface (UPI) platform, which serves as host to hundreds of banks. Using Aadhaar to verify identity, UPI clears transactions between bank-account holders in real-time. The larger the number of users, the lower the per-capita cost of building the infrastructure for it.

This same argument also applies to other sectors. Once an expressway has been built, for example, the larger the population in the communities residing around it, the lower the per-capita cost of connecting them to it. The same goes for railway and air connectivity, electricity, and piped water. Once these amenities have been brought to one village, the extra cost of extending them to other nearby villages is small.

Size also brings benefits when it comes to creating supply chains. A larger population means greater scope for agglomeration and cost efficiencies. Today, with the risks of investing and operating in China multiplying, multinationals are switching to the so-called "China+1" strategy, looking for an additional, less risky but cost-effective location for their investments. India has a distinct advantage in becoming that "+1" country because it constitutes the largest single market among potential competitors. Components produced in different locations can move freely without having to face a customs border. A large internal labor market also makes for better prospects for a closer match between the skills needed and those available.

But first, India needs to reduce its trade protectionism, which remains relatively high. No country has sustained growth rates of at least 8%, as India needs to do to overtake the U.S. economy, without embracing globalization. The country should roll back tariffs, strike more free trade deals with major economies and trade blocs, and cut back on the use of anti-dumping.

There are additional areas where India cannot afford to be complacent. The country must swiftly privatize a number of public sector enterprises, particularly banks, that have a long history of low or negative returns. Tax reform should also be high on the government's agenda; a constant complaint of businesses, especially small- and medium-sized ones, has been overzealous tax authorities and a convoluted and opaque system.

In essence, India needs to remember the spirit of its economic reforms in 1991—which centered around liberalization, privatization, and globalization—that have gone some distance toward accelerating growth. If the country wants to return to being one of the world's top two economies in the next 50 years, it must deepen and widen the reforms it began three decades ago.