China Research

A discussion forum on emerging markets, mainly China – from a macro, micro, institutional and corporate angle.

India – Modi wants to win the election and act as the voice of the South

March 26, 2024

One month from now – on April 19 – general elections will start in India and include altogether seven stages until June 1. Almost one billion people are invited to vote – 150 million people more than last time.

Opinion polls point at a new victory for current Prime Minister Narendra Mori and his Hindi right wing Bharatiya Janata Party (BJP) together with BJPs coalition partners (see my article from February 22 this year with the title “India isn’t easy to analyze and to deal with”, including comments on the economic development and challenges, https://blogg.lnu.se/china-research/?p=3501). Most observers expect the oppositional alliance called INDIA to weaken the position of the BJP – but not strongly enough to win.

Strengthening India’s voice of the South

There is no doubt that Modi during his assumed third mandate period aims at further strengthening India’s role as voice of the South, certainly in competition with China. Both countries appear to be quite different in their political approach vis-à-vis the southern world.

India seems to see the South in a collective view with visions of necessary common achievements in important areas such as less poverty, better health and environment but also non-violence in Gandhi’s historical spirit.

More exactly, the Indian government made the following comment in this context: ”India hosted a special virtual Summit, called the Voice of Global South Summit under the theme – ‘Unity of voice, Unity of purpose’ from January 12-13, 2023. It was a new and unique initiative that envisaged bringing together countries of the Global South and share their perspectives and priorities on a common platform across a whole range of issues…”.

India obviously strives to integrate the global South more visibly with the Western hemisphere – in line with its philosophy to see the whole world as one family (Vasudhaiva Kutumbakam).

China’s strategies on the other hand tend to base quite openly on commercial objectives, for example by producing and financing new infrastructure projects and by receiving in return access to important commodities or Taiwan issues. However, China also uses, for example, BRICS and the trade agreement RCEP as platforms for meeting the South multilaterally.

It may be interesting to see how India and China will compete in the South in the longer run. It seems to be on the cards that this competition will become fiercer.

Hubert Fromlet Affiliate Professor at the School of Business and Economics, Linnaeus University
Editorial board

Science and female equality – reflections on the International Womens’s Day

March 6, 2024

The International Women’s Day (IWD) on March 8 has become a global phenomenon – widely acknowledged and celebrated. Theoretically, there is a broad understanding in most countries regarding the importance of female equality both politically, institutionally, economically, socially and psychologically. Practically, much more could be done for female equality – and should be done! Both in advanced and emerging countries.

Science has a lot to tell

In my view, science can give different explanations for the benefits of improving female equality. The following five conclusions from scientific research could be mentioned in the first place – most of them having an impact on economic growth and well-being (which is not the same):

¤  The impact of improved institutions on economic growth.
Research has shown for quite a number of years that improved institutions mean a lot to the quality and sustainability of economic growth. Nobel Prize winners such as R. Coase, D. North, E. Ostrom and O. Williamson are particularly famous in this respect. More lately, D. Acemoglu / J.Robinson, D. Rodrik and T. Persson have done extended work on the importance of institutions. Looking more closely on institutional research reveals clearly that better institutional conditions also mean improved conditions for economic growth – but also that extended female participation in these processes logically works as a driver of such desirable economic developments. Examples for progress may be better institutional conditions for female education, health, wages, and child care. 

¤  The impact of female human capital formation on economic growth.
Research has shown for quite some time (R. Lucas, R. Barro, P. Romer, G. Mankiw, etc.) that improvements of human capital formation (education) also outside the pure institutional sphere can contribute substantially to better economic growth. Consequently, when further focus on female capital formation happens, we have a widened source of economic growth.

¤  The impact of enlarged female labor supply. 
A substantial number of countries in the world have already – or will have – increasing demographic problems in the forthcoming decades (China, Japan, Russia, Germany, the Baltic countries, and a number of other European countries, see https://commission.europa.eu/system/files/2023-01/the_impact_of_demographic_change_in_a_changing_environment_2023.PDF).

 A major contribution to a future solution of the enormous burden of labor force shortage can most certainly emerge from an increasing female labor participation, both in volume and in quality terms. Such a development can also contribute to better international competitiveness.

¤  The impact of psychological satisfaction on productivity. 
Psychology often plays a neglected role in economic analysis, even, for example, in productivity studies for scientific work (J. Astegiano). Particularly important is the potential role of improved female labor productivity and what it means to economic growth (OECD, see https://www.oecd.org/chile/economic-empowerment-women-productive-inclusive-societies.htm).

¤  The impact of better economic conditions on the society. 
Since an extended and broadened female labor market participation leads to better medium- and long-term GDP growth, chances of a stable society with good ethics should increase as well (B. Friedman). 

Conclusion – science shows the importance of women in the economy
Putting together the brief reflections above should demonstrate that there is sufficient scientific analysis that underlines the positive impact on economic developments by increasing  and improving gender well-being and improved female participation on labor markets. These processes should be considered as win-win developments – on both macroeconomic and microeconomic levels. This conclusion can be applied to both more advanced and emerging countries.

Hubert Fromlet Affiliate Professor at the School of Business and Economics, Linnaeus University
Editorial board

Avoid too much import of skilled human capital from poor countries!

February 6, 2024

Labor markets in less developed countries are frequently analyzed from  different angles. Researchers put their emphasis often on institutional and physical working conditions, gender issues, child labor, (minimum) wages and wage disparities, social protection of workers, income distribution,  energy and environment, workers’ health, ethics, labor market laws and rules (plus their enforcement and application), labor productivity, etc.

There exists also quite some literature about immigrant workers coming from the emerging world to Western countries. One special aspect, however, seems to be neglected by most analysts with nexus to migration issues: the increasing efforts by foreign (Western) politicians to attract skilled workers to their home countries.

The complicated issue of skilled worker immigration

We all know that the world has become tougher in recent years with extensive movements on global labor markets for various reasons – due to poverty, covid, dictatorship, persecution, and wars. All these developments are certainly disliked in advanced democratic countries – but many times politicians and voters want to see a visible downsizing of the unskilled labor force inflow from poor countries. Instead, they prefer a growing inflow of skilled workers from particularly Asia and Africa.

Whatever one may think about this less humanitarian positioning, there is at least some logic in it. First, Western institutions cannot cope with necessary immigration administration anymore. Second, politicians are often no longer capable to handle the protests from the extreme right. Third, the strong demographic changes with shrinking population in mostly mature countries – but also, for example, in China and Russia – has already led to serious shortages of skilled experts within the EU, particularly in Germany (“Fachkräftemangel”).

Regarding Europe, we can at least base a lot of labor knowledge on relatively reliable statistics. This is, however, mostly not the case when it comes to statistical developments on labor markets in emerging or really poor countries.

Not even China and India provide global analysts with sufficient labor market information. Sure, both countries have an enormous size which by definition makes the production of statistics very difficult. China, for example, measures therefore only urban unemployment. It has recently even stopped to announce the embarrassingly high youth unemployment. On the other hand one can read, for example, in newspapers and journals about the high unemployment of young Indian academics (https://www.linkedin.com/pulse/study-finds-42-gradsu-25-unemployed-upgradcampus-1c/).

Ethical shortcomings

Looking at labor market conditions in many economically lagging countries, I cannot find it very ethical that heads of governments and ministers from EU-countries  and other advanced countries increasingly travel around in Africa, Asia and Latin America just to attract specialized labor force to their own advanced countries (or to find more suppliers of commodities).

This active way of marketing should be considered as in-acceptable. Unnecessary “brain drain” from emerging countries would be the consequence, hindering progress there both in the society and the economy.

As regards countries and companies in our part of the world, sales to emerging countries could or would develop less favorably because of the negative “brain drain”-effects on GDP than in a world without such a kind of human capital loss.

For this reason, Western governments should rather give skills to emerging countries than take too much of their precious human capital accumulation.

Hubert Fromlet Affiliate Professor at the School of Business and Economics, Linnaeus University
Editorial board