Message to India: Globalize Or Be Left Behind

Continued from page 1

By Venkatesh Hariharan

October 29, 2003

According to Thurow, the hype about "China's Century" was nonsense. China's Century (or India's century)-if it does happen-will much more likely be the twenty-second, not the twenty-first, he says. That's because it takes at least 100 years for another country to catch up with the most developed country. He points out that it took the United States that long to develop an industrial economy on par with that of Britain, which from 1730 to 1910 had the highest per capita income in the world.

"Take your calculator out," Thurow directs. "Put in China's per-capita income of $870. The United States per-capita income is $38,000. Put in how fast you think the U.S. is going to grow in the next 100 years. Put in how fast you think China is going to grow in the next 100 years. Unless you put some very crazy numbers for China, and line it out till 2100, you will still not get more than two-third the per-capita GDP of the United States. That's because China has five times as many people."

When it comes to globalization, Thurow says that India is ambivalent. "One of the big factors in attracting foreign direct investment, or FDI, is the speed of making decisions-and China pulls in 30 times the FDI that India does," Thurow says. "The Chinese understand that you have to sell yourself to the foreign corporations as a good place to do business. The truth of the matter is that India has not yet come to that conclusion."

Thurow notes that there were two ways for a country to acquire technology. One is to copy it, as Japan did in the past. But this strategy is becoming increasingly difficult because people are locking up their technology. The other approach is to attract foreign investment, which brings technology with it. "FDI is not just money," he explains. "It's about technology, markets, and hiring scarce managerial and engineering talent."

Striking a cautionary note, Thurow says that India was "quasi-left out" of the global economy. Even the country's much vaunted success in the IT industry needs to be put in perspective, he says. India's software exports last year totaled around $10 billion while Microsoft alone was around $50 billion. If India does not carry its masses along with it, he says, it will not be able to succeed in the knowledge economy.