The Upside Down World

"Developed", "Developing", and "Underdeveloped" countries. I wonder
who coined these terms and how they came up with the classification.

A country which was once very rich and well matured, with some of the
best in education, science, business and trade is plundered by various
foreign invaders and is left limping to fend for itself. This nation
whose limbs have been cut-off and is now struggling to grow again, and
is called a developing nation. The foreign nation that was the
plunderer takes the term developed nation. It is all very confusing to
me, and not convincing.

To this effect Roger Cohen's editorial in the New York Times says,
that the world once again has become upside down. He says, "For a
while the world was flat. Now it's upside down. To understand it,
invert your thinking. See the developed world as depending on the
developing world, rather than the other way round. Understand that
two-thirds of global economic growth last year came from emerging
countries, whose economies will expand about 6.7 percent in 2008,
against 1.3 percent for the United States, Japan and euro zone
states."

Citing Indian examples he emphasizes, "That's also a good position
from which to view India's Tata Motors agreeing to buy Land Rover and
Jaguar from Ford for $2.3 billion, or Tata Steel's acquisition last
year of the Anglo-Dutch Corus Group steel company for $12 billion.
Globalization is now a two-way street; in fact it's an Indian street
with traffic weaving in all directions."

"A shift in economic power is under way to which the developed world
has not yet adjusted. Of course the G-8 and the permanent membership
of the U.N. Security Council need to be expanded to reflect this
change. The 21st century can't be handled with 20th-century
institutions.That's obvious. Less obvious is how the United States,
which underwrites global security at vast expense, begins to share
this burden, so that the new multi-polarity of wealth is reflected in
a multipolarity of security commitments. Headstands are in order for
the next U.S. president," writes Cohen.

Read the whole commentary at --
http://www.nytimes.com/2008/06/02/opinion/l02cohen.html?emc=tnt&tntemail0=y

Outsourcing is a Two-way Street

"So long as America remains one of the world's largest consumer
markets and there are enough economic incentives to move production to
the U.S., the flow of global employment will run both ways," says an
article in Forbes. The author writes, "Some pundits and politicians
love to complain about how Americans lose their jobs because of
cheaper labor overseas. But many foreign companies create jobs for
Americans by investing and operating in the U.S."

Not many think of it this way, unfortunately. Many view outsourcing as
a one way street, when in fact it goes several different ways, truly
making this world a global village.

Another excerpt from this article says, "Even Indian
information-technology outsourcing companies are bringing operations
to the U.S. Despite its far-flung location, Applabs, a large
independent IT quality-assurance provider, has opened offices in
Philadelphia and Lindon, Utah.

How could America's workforce be as appealing to outsourcers as
India's? "Companies are already seeing in Bangalore, India, that there
is such a tight labor market that their wages have gone up
dramatically in the past couple of years," Heijmen says. A more
expensive labor market, compounded by the relative weakness of the
dollar, has made operating within the U.S. an increasingly attractive
option for foreign companies.

To be sure, American companies continue to offshore all manner of
duties to other nations around the world. But experts say its
converse, foreign hiring of American workers, won't cease anytime
soon."

Read the full article at --
http://www.forbes.com/opinions/2008/05/25/foreign-labor-auto-oped-cx_jhb_outsourcing08_0529america.html

Sen on the Global Food Crisis

Amartya Sen, Nobel price winning economist has an op-ed piece titled
"The Rich Get Hungrier" in the New York Times today.

He says, "WILL the food crisis that is menacing the lives of millions
ease up — or grow worse over time? The answer may be both. The recent
rise in food prices has largely been caused by temporary problems like
drought in Australia, Ukraine and elsewhere. Though the need for huge
rescue operations is urgent, the present acute crisis will eventually
end. But underlying it is a basic problem that will only intensify
unless we recognize it and try to remedy it.

It is a tale of two peoples. In one version of the story, a country
with a lot of poor people suddenly experiences fast economic
expansion, but only half of the people share in the new prosperity.
The favored ones spend a lot of their new income on food, and unless
supply expands very quickly, prices shoot up. The rest of the poor now
face higher food prices but no greater income, and begin to starve.
Tragedies like this happen repeatedly in the world.

A stark example is the Bengal famine of 1943, during the last days of
the British rule in India. The poor who lived in cities experienced
rapidly rising incomes, especially in Calcutta, where huge
expenditures for the war against Japan caused a boom that quadrupled
food prices. The rural poor faced these skyrocketing prices with
little increase in income."

Voicing a popular concern that is causing a lot of debate he says,
"There is also a high-tech version of the tale of two peoples.
Agricultural crops like corn and soybeans can be used for making
ethanol for motor fuel. So the stomachs of the hungry must also
compete with fuel tanks."

A very thought provoking op-ed, this can be accessed at--
http://www.nytimes.com/2008/05/28/opinion/28sen.html?emc=tnt&tntemail0=y

Indian Saris For The Indigenous Market

"With India's middle class flourishing thanks to the subcontinent's 10
percent annual growth, it is suddenly less urgent to create clothing
for foreign markets — especially when Bangladesh and China can
undercut the prices — and more interesting to adapt subtly and
gracefully, Indian style.
Indian fashion week functioned as though Mumbai were the new
Manhattan. Celebrities? Bollywood stars turned out in droves for the
splashy shows, and if you have never heard of the designer Manish
Malhotra or the superstar couple Kareena Kapoor and Saif Ali Khan,
they probably have a higher recognition factor in India than
Brangelina in the front row at Marc Jacobs," says an article in the
New York Times Magazine.

This is an interesting article that talks about the Indian fashion
industry catering to it's rich indigenous population versus
non-resident Indians, who were the focus segment earlier.

Article at---
http://www.nytimes.com/indexes/2008/05/18/style/t/index.html#pagewanted=0&pageName=18menkes&

India Will Limit Rice Exports...

First it was lentils, and now it is rice...

The International Herald Tribune reports that, "Vietnam and India on
Friday tightened limits on rice exports, joining Egypt and Cambodia in
trying to conserve scarce supplies for domestic consumption at the
risk of triggering further increases in global rice prices, which have
roughly doubled since the start of this year.

Soaring prices for rice, a staple for nearly half the world's
population, are already causing hardship across the developing world,
particularly for urban workers. Together with rising prices for other
foods, from wheat and soybeans to pork and cooking oil, higher rice
prices are also contributing to inflation in many developing
countries."

When my family and friends from India visit the US they always talk
about how Basmati rice, cashews and some other staple products, that
are grown in India are very expensive in India and sometimes not even
available domestically, because most of the best quality produce is
exported to the US. This has been going on for a while, it was just a
matter of time before it became necessary to make a rigid move like
this.

Read the IHT article at--
http://www.iht.com/articles/2008/03/28/business/rice.php

Is a shift in global power not imminent?

"The continued rise of the emerging economies, particularly India and
China, is never far from the headlines. What impact these economies
will have on the twenty-first century is the subject of much debate,
with the possibility of a shift in global political power a recurring
theme. It is often assumed that the emerging economies are following
the same path to development that the established economic powers did
- but this assumption is worth questioning," says Stuart Simpson in a
very interesting essay on Spiked.

Read the full essay at --
http://www.spiked-online.com/index.php?/site/article/4390/

Opportunities in the New World

An interesting column in the Toronto Star about globetrotters circling
the world for new opportunities -

An excerpt-
"The coming year or two is shaping up as a tale of two global
economies. One is characterized by slow and possibly "negative" growth
in mature industrial nations, the other by continued dynamic gross
domestic product growth in emerging-world economies. In 2007, for the
first time in history, China, India and Russia together accounted for
more than half of global economic growth."

Read the full article at --
http://www.thestar.com/columnists/article/304114

Will Wall Street's Flu Make India Sneeze?

From Tehelka --
As the fear of recession grows in the US, VISI TILAK, SHANTANU GUHA RAY and VIVEK SINHA examine the possible impact it will have on our economy

AN EARTHQUAKE with a magnitude of over 8 on the global economy’s equivalent of the Richter scale, a huge ebb in the largest economic ocean of them all — can a tsunami that could engulf most economies, wipe out many minnows and seriously damage others, be far behind?

As uncertainty grips the world, and the US economy flounders between the Scylla of the sub-prime crisis and the Charybdis of a credit crunch, economists and political leaders around the globe have been providing a plenitude of opinions, united only on one thing: everyone agrees a big storm is coming. Where they differ is on the intensity, the toll it will extract and which economies, if any, will be able to provide a safe port.

Already weakened by the dollar in decline, the sub-prime crisis and the credit market downturn hit the US amidships. While it’s too early to tell whether this collision was of the Titanic iceberg variety or whether the battered US economy will limp back to recovery, what is definite is the palpable list.

Consider just one comment from Bloomberg News: “US corporate profits are in a recession and the entire economy may not be far behind.” Hence the rushed repair job carried out by the Federal Reserve (75 basis points cut in interest rates) and the Bush Administration (a $156 billion stimulus package).

The result: Emerging markets, which, by definition, are provided ballast by the consumerist czar of the economic world, are bound to be buffeted about. The question is, by how much? More important, will the internal buoyancy in the Indian economy be enough to offset the global tempest unleashed by the US in crisis?

Read the full article at --
http://www.tehelka.com/story_main37.asp?filename=Bu090208Will_Wall.asp

A new kind of dream home!!!