Reporting from Workstation 9

India has 36 billionaires! And three in the top twenty(including Mittal(He's an NRI, isn't he?). Just like we add Naipaul to our list of Nobel winners). And India holds the number one position in Asia, above Japan's 24.
Good going Indians.

Ofcourse it's a further reflection of the growing wealth of our country while millions are left behind in poverty. But I truly believe, redistribution can only get you so far. Gotta raise the economic pie=> economic growth(with constant stress on education).

My professor and I were discussing the way forward for developing countries like India. He still believes all the resources must be diverted towards education. I say target education the other way. Either make the sector competitive or get the corporate sector involved.
Since India has a comparative advantage(absolute too) in it's highly computer skilled, lowe-r wage population, invest fully in it. Let the sector with the maximum returns grow unbridled. The Government must then promise to give them cuts etc. if they complete their quota of social responsibility. Each company adopting a village like HP did, can be a good way out of poverty.
That way, you are not coming in the way of the efficiency and also accomplishing you social goals.

Yesterday I studied the Dornbusch-Fischer-Samuelson trade model for a continuum of goods. For the first time(1977) they introduced trade in infinite goods. With and without a tradable sector and with and without tariffs and with and without transfers.
We studied the implications of the rise of China and India on the relative wage, Jobs and economic size of America. Assuming the labour force of the ROW (China +India) rises, the effect on wages was unambiguously positive, Jobs(with no structural unemployment) was also okay as long as people were immediately redeployed..but as regards economic size, we found that America's size would decrease with time.

With all the offshoring controversy dealing with jobs and wages(short term concerns), and American economists claiming it brings in all the welfare benefits of International trade, I was left wondering, why aren't they worried about the economic size((WL)/(WL+W*L*)).
Maybe there are more intricate models that give an opposite result, but I hardly see discussion of economic size in the offshoring literature. Again it's a long run phenomena and economists may still be living strictly by keynes's long run belief. I think it's cause to worry. Guess it requires some more thought. I'll get back as I learn more.

Yesterday I attented Takatoshi Ito's talk of Asian economic integration. The morale somehow seems very low. Two major hurdles to cross are, a stable exchage rate regime(everybody floating) and more importantly, put politics behind. Can Japan and China ever cooperate? Singapore must be praying everyday for something to work out. I cannot believe how it's managed to survive this long. Only 4 million people!! I almost feel like pulling it's cheeks(face one)

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