“India has something that China doesn’t. “Companies that compete with the best that Europe and China has to offer”, such as software company Infosys Technologies Ltd. and pharmaceutical maker Dr. Reddy’s Laboratories Ltd. India lacks the physical hardware of a modern economy, but it has more of the software of a modern economy – courts, financial system and the like – than China. Their bottom line: India’s homegrown entrepreneurs may give it a long term advantage over a China hamstrung by inefficient banks and capital markets.”

“China was sold to multinationals to allow it to sidestep entrepreneurs…you could be hardpressed to find a single homegrown Chinese firm that operates on a global scale and markets its own products abroad”

The argument, not surprisingly, is making them very popular in India. Their article has been widely described or reprinted in the Indian press, not always with permission. (Note to India: Intellectual-property rights matter). The Chinese, Mr. khanna hears, are translating it and distributing it discreetly.
..Joydeep Mukherji, who tracks India and China for Standard and Poor in New York, thinks the professors are on to something….He finds that Chinese miracle is less impressive than its press clippings. Shave a bit off the official statistics for exeggeration, China has grown probably 7% a year for the past decade of so. India has grown at 6%. But China as a nation saves about 40% of income and invests that plus what the foreigners invest. India saves about 24% domestically, and draws relatively little foreign investment.
So China to make it simple, is like a business that invests $40 and earns $7 a year. India invests $24 and earns $6 a year ( Ed: This back-of-a-paper-napkin kind of calculation is, to my mind, way too simplistic. But who am I to argue with Standard and Poor?)….
“India gets more bang for its buck”. Mr. Mukherjee says. Its banks have less than half as many bad loans as China’s. “The bottom line for me: If India can raise its savings and investment rate modestly, then it can raise its growth rate quickly”. That “if” ..is an important qualifier. Mr. Huang and Mr. Khanna may yet prove to be lousy forecasters.”

“Paul Krugman has asked the interesting question: “why hasn’t indentured servitude made a comeback in the modern era”. I’ve a sneaky feeling that his interest in this topic may not be unrelated to the projected ‘relative personpower shortage’ there will be in the developed world in the coming decades, and thus the potential for shifting relative factor values. My own instincts are that Paul is barking up the wrong tree here if you want to think about the world as we know it ….
The best way to start looking for it might be by going back to the problem of “indentured servitude”, and asking why is this not being re-inevted. You see, my response would be to say that it already has. It already has due to the the existence of what is called ‘undocumented labour’. This is a strange anomally since it is precisely the absence of documentation which creates the servitude, and the servitude is based on an oral rather than a written contract, enforced either by some fairly nasty looking people, or by the permanent threat of recourse to official judicial procedures. It is a really strange irony this which leads our democratic ‘rule of law’ to become the infrastructural underpinning for the most extensive abuse of ‘wage labour’ since the time of feudalism.
I first started thinking about things in this way after a chat with Margy, Bonobo’s Sofia-based anthropologist. Regular readers will know we’ve been having some difficulties with the Bulgarian e-mail filters, and that the problem may relate to our use of the term ‘locutorio’ or call-centre (this is the place where the illegals send the money home). Now Margy asked me what I knew about Bularia’s Tsar (you see how I went straight to Krugman in my head) Simeone. Well the interesting detail is that he spent a good part of his exile in Madrid, his wife is Spanish, as are his four children. Now I don’t think I’ll make explicit what should be clear implicity, I value my health too much. The second little pearl that I got from Margy was her question: do you have a market in your village? Well I was slow, and didn’t understand, I think I was thinking about all those nice Proven?al village markets my wife so loves. No, she came back, a slave market. And my mind was suddenly down in Andalusia, in Almeria and El Ejido, with the images of all those migrants waiting on street corners for the ‘jefe’ to arrive and select the meat he needs for the day. I was born in Liverpool, and can still remember the humiliating rituals associated with casual labour (from Ireland, of course) on the docks. And then I thought of slave-slav, and a very interesting piece by the much under-valued Ronnie Findlay. The point here is that Findlay stresses the importance for the evolution of the European economy of the ‘white’ slave trade, of Slavs via the Netherlands down to Andalucia and North Africa. And then two little neurones suddenly fired-off together. History in a certain sense is repeating itself, only it’s tragedy both times, no comedy here. The indenturing system is in fact the nation state with limited legal right to movement. In parallel with this is an enormous modern ‘slaving’ system, which officially speaking does not exist (nor is its existence treated in any neo-classical model that I’ve ever seen).
So whole countries are literally converted into ‘people farms’. Remember some countries only have one known source of export earnings: their children. Pakistan and Ecuador immediately come to mind, but there are of course others. In the Philipines the topic is taken so seriously that the ministry of labour has a special department to handle ‘migrant labour’. Then there are the new countries from the East, the slav/slaves, or the undocumented Kurds in Syria (they have no legal status at all!). Well you can see where all this goes. Indentured labour has just been re-invented (if it ever died out) and on a massive and unprecedented scale. The consequence: a reduction in the relative price of unskilled labour (and incidentally one more reason why deflation is coming). This labour needs to move freely and legally. It is strange how all our ideologues are strangely quiet on one topic where market mechanisms really could work against vested interests. Wage levels would regulate the movement of free people, and equilibrate an unbalanced world. But as Paul says, oh never mind.”