He writes:
Posted by DeLong at November 16, 2004 06:43 PM | TrackBackDavos Newbies : Davos Newbies Home: Behind the Financial Times's subscription firewall, Vijay Joshi has a fascinatingly heterodox analysis of the limitations of India's outsourcing boom. His argument is that India desperately needs export-oriented manufacturing to supply the tens of millions of unskilled jobs the country requires. Outsourcing just doesn't cut it in terms of job creation:
Some people think that the information technology sector could be India's saviour. But its quantitative significance in the near term is extremely limited. IT-related output is currently less than 1 per cent of GDP. More significantly the sector employs less than 1m people. This could increase by another million by 2010. While undoubtedly helpful, it pales into insignificance when one considers that India's labour force will rise by 40m by 2010 to an estimated 450m people (and much of the rise will occur in backward states). We must remember also that growth of the IT sector will be constrained by the rate at which the supply of educated labour can be increased. Note that only 5 per cent of India's relevant age-group receives college education.
Gee, you mean we won't all be software engineers and college professors in the Brave New World of Tomorrow? Who woulda thunk it . . .
Posted by: General Glut at November 16, 2004 08:28 PMIt'll be more than enough people to tootaaly destroy the US's IT industry.
One more industry down the tube. I am sure we can all have great futures as Maids and Coachman to the wealthy.
Posted by: Don Quijote at November 16, 2004 08:36 PMWasn't this the lesson of the BJP's defeat in the last national election?
Posted by: BoulderDuck at November 16, 2004 09:31 PM If the Indian guys in my office are typical, the surplus labour will be mopped up by newly-created butler/valet/maid/cook jobs. Welcome to England in the 19th century.
(It's better than England in the 14th century).
What BoulderDuck Said. When the mass of people REALISE that they aren't going to benefit from the "boom," they vote their pocketbook.
Posted by: Ken Houghton at November 17, 2004 05:52 AMI just saw Vijay at lunch... I totally missed his article... thanks for pointing it out.
I sort of get the feeling that he's arguing against a straw man, though I could be wrong. Is anyone saying that IT alone is the future of the Indian economy? I see it as one growing sector in an economy that needs many to be healthy. Furthermore, it probably brings productivity gains and externalities in the form of increased incentives for education leading to a more skilled workforce overall.
I've been to a few of Vijay's lectures. Most of them focus on the dangers of floating exchange rates for developing countries.
Posted by: Marshall at November 17, 2004 06:21 AMWhat's consistently missing in this type of discussion is: what is it that we really want to do? Or alternatively, what is necessary for us to do in order to lead graceful lives?
I doubt it has much to do with building It industries...
Ken is right. This is hardly a contrarian view. Singh has said as much and reoriented policy to reflect this. And no one in the Indian BPO industry has been silly enough to entertain this idea either.
Posted by: Dan at November 17, 2004 08:37 AMI don't know why the fuss over loss of factories capability is over the loss of manufacturing jobs. Why isn't it over the lack of manufactured stuff? I mean, if the factories close where are we going to get good leather buggywhips and fine wood cartwheels and iron locomotive engines and green glass patent medicine bottles and bright brass canning jar lids and all the other "stuff" that makes life now so much more comfortable than in centuries past?
Posted by: pouncer at November 17, 2004 10:52 AMI agree that the article is arguing a strawman - not only that, anti-globalization folks have been arguing this in India for years now.
It should be noted that India is now into outsourcing low-level services jobs - BPO and call centres. And indeed, many remarkable changes in Bangalore's culture can be traced to these new sets of jobs, because the people being hired to these jobs are not highly educated elites.
The more worrying is is this article from Stepehn Roach, pointing out that manufacturing is not creating too many jobs either:
http://www.theglobalist.com/DBWeb/StoryId.aspx?StoryId=4226
I agree that the article is arguing a strawman - not only that, anti-globalization folks have been arguing this in India for years now.
It should be noted that India is now into outsourcing low-level services jobs - BPO and call centres. And indeed, many remarkable changes in Bangalore's culture can be traced to these new sets of jobs, because the people being hired to these jobs are not highly educated elites.
The more worrying is is this article from Stepehn Roach, pointing out that manufacturing is not creating too many jobs either:
http://www.theglobalist.com/DBWeb/StoryId.aspx?StoryId=4226