Asian Innovation -- China and India

During a recent trip to Asia I read many reports about relative competitiveness. Even though I want to focus most of my efforts on Southeast Asia, I'm compelled to rant a bit about China and India as well.

I have no answers here, just some initial impressions based on recent travel and having working relationships and friends in both countries.

China and India stand as the twin colossi of innovation-fueled growth, of course. Both have made astonishing progress in the past 30 years, to be sure.

But both are beset by internal challenges that would make American policymakers tremble, cry, and start shouting at everybody they see, not just their head-of-state.

China can fool the first-time visitor with its fantastic new airports, nice roads, and mile after mile of modern office complexes and high-rises.

Shanghai feels to me like the new New York, with the added advantage of my being able to stare directly into the mid-day sun without fear of damaging my eyes.

Beijing feels like a cross between Washington DC and Dallas. Clearly a government capital, and on a scale that might humble JR Ewing.

India is capable of no such sleight of hand. It's a miserable slog from the time you land until the time you depart. The heat in most places is pernicious and merciless. As a splendidly raucous, messy democracy, the country is unable to sweep its problems under the rug (or out into the nether provinces) as the totalitarians in China can.

Yet both countries still have hundreds of millions of poor people, are gobbling increasingly large shares of oil and other natural resources, and if anyone is really sincere about making the connection between carbon-based emissions and global warming they would start to address the situation in these two countries before going after the US or Western Europe.

The population bulk is so obvious as to be unremarkable, but I'll remark anyway: the two countries hold more than a third of the world's people. (Add another 600 million or so in Southeast Asia, 130 million from Japan, and 50 million from South Korea, and you are nearing half of the world's population.)

Many of us remember the Malthusian-based "population bomb" thinking from the 70s. The premise was that hundreds of millions would starve soon because the planet could not provide enough food for them. This was when the globe's population stood at around 4 billion, compared to today's 6.7 billion.

A revolution in crop hybrids, which dramatically increased yields, arrived just in time. (The best-known leader of that movement, Dr. Norman Borlaug, died just recently.) Starvation became more a function of war than food shortages, and the population continued to grow.

Yet the pressures of population are way apparent to me when I visit either of these two countries. I always have to check my American mindset at the exit gate, and try to see what I'm seeing with unbiased eyes (if that is possible).

Just as many visitors to the US, conditioned by American TV shows and movies, think we have numerous gunfights in all of our streets every day--oh wait, sometimes we do--we Americans almost uniformly become uncomfortable when confronted by the masses, say, outside of Mumbai International Airport or rush-hour in Shanghai.

So I try to be the earnest guy. Hey, I'm a regular Rick Steves when I'm in foreign lands.

That said, I can't get away from the numbers in China and India.

Let's shift gears for a second, and look at the counter-example of Ireland.

Visitors to the Emerald Isle in the 70s found a beautiful place that was noticeably poor. Ireland's per-capita income in 1975 was sandwiched among Spain, Greece, and Puerto Rico, and was less than 40% of that of the US.

Today, Ireland's per-capita GDP ranks as high as fifth in the world (according to the World Bank), just behind the US and just ahead of Switzerland.

Why? A series of smart (in retrospect) government initiatives, including a friendly tax policy for investors, kicked off a "Celtic Tiger" renaissance in the 90s that brought Ireland into the world's elite economies. Adopting the Euro as its currency (a move most likely made more to spite hated England than anything) confirmed to the outside world that Ireland was a serious regional and global player.

But it had to help that there are only 3 million people in the republic. Add a couple hundred thousand good jobs in Ireland, and you've transformed a country's economy. But add a couple hundred thousand good jobs in India, and you haven't made much progress in improving any city, let alone the entire country. Boiling the ocean.

This is relevant because we live in an era of nations. The empires of old have (almost) vanished and the kingdoms of today are either democratic or tiny. This would seem like progress and a devolution of power among the peoples of the earth.

But thanks to our terrible weapons of war and a centralization of capital, a few nations today have a global presence that would be the envy of Alexander the Great or Genghis Khan.

The United States, of course, leads this pack, and Americans are taught (or were taught until recently) that this is the way things should be. Yet the nations of China and India are two places that challenge this assertion today.

When India was a collection of hundreds of states under the British Raj, it had no real power. As an enormous, independent country--even shed of modern-day Pakistan and Bangladesh--and the world's largest democracy, it does.

India, to me, is a place of insatiable demand and really crappy roads. This sounds harsh and will no doubt anger my Indian friends. I am trying to ameliorate this opinion by working with a friend of mine there on a book about the complexity of India and its still-new relationship with the US.

China, to me, has a yin and yang aspect to it: terrifying from a distance, but resolutely benign when you're there. The striving folks I know there have no grandiose illusions about leading the world, but just want stable, comfortable lives.

One friend of mine in China is utterly perplexed at US criticism of Chinese imports. "We do all this work for you, we make all of your products at a really cheap price, and then you complain. We do not want to own your country, we want to own ours."