I’m not sure exactly why I’m on a foreign markets/economies kick, but I think I’m pretty close to the end of it.
India and me
I’ve been fascinated/horrified by India economically for over twenty years. On the one hand, the country has lots of potential, based on a huge internal market and a large, well-educated workforce. On the other, economic success for India continues to rely on how favorable the monsoon season is. The country’s leaders are clearly aware of, and dismayed by, the fact that nations they may regard at any given time as peers soon leave India behind in the dust. But not that much has changed over the time I’ve been observing.
“Make in India’
“Make in India” is the marketing slogan the Narendra Modi administration has chosen to promote foreign direct investment, a time-honored tool for simulating economic progress through technology transfer. Think: Japan, Korea, Thailand, Malaysia, China… The road map is clear. The only question is whether a country has the political will to make the journey.
rules for success
I thought I’d try to list in this post, loosely in order of importance, what’s needed to attract foreign firms to create a business in a developing country. They are:
–a large pool of trained, or trainable, workers
–roads and ports, to get output from the manufacturing site to market
–sources of electric power, clean water and telecommunications
–a stable legal system, so the rules of the game are clear at the outset and the goalposts don’t get moved after a firm has committed capital
–protection for intellectual property. A generation ago, multinationals dealt with this crucial issue by sending to the Third World only the tools to make machines that were already obsolete in the First. By and large, that’s no longer a viable option. Because in today’s world technology transfer means not only how to organize and run a business but also current trade secrets, protection of intellectual property is more crucial than ever.
–it’s always nice to have a large internal market, so that the success of a factory doesn’t depend solely on export orders
–it’s also nice to have an eco-system of available suppliers and support industries grouped nearby.
How does India stack up?
It has a large internal market and a big pool of potentially available workers.
The physical infrastructure has never been great, in my experience …and India has never seemed to me to have effectively in made infrastructure development a high government priority.
India has always struck me as distinctly unwelcoming to newcomers, and to foreign enterprises in particular.
Mr. Modi says he wants to change that. Whether he will be able to is another question. So, too, is whether he really means what he says.