Wednesday, July 24, 2013

Joe Studwell book on how Asia works

is discussed in the blog The book discusses mainly the economies of Japan, South Korea, Taiwan, Thailand, Phillipines, Malaysia, Indonesia and China. I am still rteading the book and I am posting some of the bits from the blog since it seems to be very interesting and understandable book to me and though India is not discuused, there seem to me lessons for India. From the Economist review posted on July 11 in the blog"Its heart is a historical account of how smallholder farming, export-led manufacturing and financial repression took root in Asia’s miracle economies, "
"But Mr Studwell’s own manifesto for economic success does resemble the Washington consensus in one respect: it holds that poor economies can prosper by following a short recipe of tried and tested policies. This is now an unfashionable approach among economists, who have turned their attention from policies to “institutions”: the social and political constraints that weigh on ministers, whatever policies they avow. Most authors shy away from prescriptions for success, arguing that every development dish is different.
Mr Studwell has no such inhibitions. Asia’s post-war miracle economies emerged, he argues, by following a recipe with just three ingredients: land reform; export-led, state-backed manufacturing; and financial repression."
Though India is not discussed much in the book, it is mentioned a few times in the discussions. In the second part of the interview with Sam Roggerveen:
"Critically, manufacturing is the way to learn because people learn on the job, in factories, generating the capital to pay for their education. It is affordable in the way that more schooling for everybody would not be because school is just a sunk cost until you leave and get a job. (Indians — don’t get me started — only think about learning through investment in formal education and have no real manufacturing strategy, which is why they are relatively so much poorer than the Chinese.)"
In an interview with Asian Review of Books (ARB):
"ARB: India is noticeably missing from this book, except for a mention that they have delved into IT and service-based industry rather than following the agriculture/manufacturing/finance model. Can you talk about why you didn’t include India here and how it differs?
JS: The media suggests sometimes that India has a different model and it’s based around services. I’m not sure that’s fair. I think it’s just that they don’t have a proper strategy. This is just the place they’ve ended up.
They have a very elitist education system left to them by the British. They have the Indian Institutes of Technology, and they graduate very sophisticated engineers, who work in IT and speak English. They work in software businesses, but in software, the capacity to absorb your human capital isn’t great. You can’t even write a single line of code until you’ve learned software code, whereas if you’re absorbing people into a manufacturing economy, you can put people in a factory and they can start to add a tiny bit of value from day one, because they’re working with and through machines.
This helps to explain why every developed country, with the exception of anomalous offshore financial centers (like Hong Kong and Singapore), everybody’s gone through this manufacturing experience. You can look at agricultural super-specialists like Australia and New Zealand, but even they have some manufacturing related to the agricultural sector."
More may follow as I read the book and the blog.

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