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Gravity Shift: How Asia's New Economic Powerhouses Will Shape the 21st Century Paperback – Jul 31 2010
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'A well-written analysis ... a refreshing read as to where the world is headed without the usual ideological, paranoiac or pessimistic filters that many western analysts rely on when looking at Asia's development.' (Diane Francis, National Post)
'Gravity Shift is a fascinating account of the emergence of India and China as Asia's giant economies .... essential reading for comprehending the similarities and contrasts ... and how these countries promise to transform the global economy in the forthcoming decades.' (Arvind Panagariya, Columbia University School of International and Public Affairs; author of India: The Emerging Giant)See all Product Description
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But first, a clarification is in order. This book is really not about how Asia's powerhouses will shape the 21st century. That topic is covered in only 1-2 chapters. Instead, much of the book analyzes the key criteria for a country's success, and outlines where China and India stand. Obviously, we conclude, India has to go a long way.
The book shatters several myths that are bandied about the India story. The oft-quoted opinions such as "India has the world's youngest population", "Its large talent pool can drive growth" and "Its world-class IT services industry can lift the country into the global league." are not so simplistic, argues Dobson. She exposes the scale of India's challenges by presenting several facts throughout the book. Sample a few:
- 90% of India's labor force is still casually employed.
- 60% of labor force is still in agriculture, but provides only 18% of the country's output.
- At the turn of the century, India had 75% of China's labor force, but total employment was only 55% of China. The key reason: not as many women in India work as do the Chinese. Mao's 'women hold up half the sky' seems to have propelled China far ahead.
- India's literacy rate is 61% while it is 91% in China.
Dobson's conclusion: India has chosen equity over growth but has achieved neither very successfully.
What then according are the factors that can drive India's growth? The author argues that the key is in making the Second India (the not so well educated and casually employed labor force) employable. This means a renewed focus on Manufacturing. A holistic land reform and farmer protection policy that increases land productivity and frees up labor is another. India must no longer tout its advanced college education when its primary education structure is in shambles. Corruption must be taken head-on while law reform that reduces legal delays is critical. A better financial system that finances the small and medium enterprises is required. R&D spending as a percentage of the GDP (referred to as R&D intensity) must rise (it is 1% for India while Japan is 3.2%). Large investments are needed in energy & water infrastructure (did you know that India has harnessed only 20% of its hydro power while this figure is close to 80% in developed countries?). Affordable health care must be meaningful (the poorest 20% in India receive only 10% of health subsidies; the richest 20% receive 30% ). Lastly, states must address their fiscal deficits and reduce the growing income inequality.
If all this sounds like a lot - well - it is. Nobody said getting to be an economic superpower was easy. India most definitely cannot assume that its IT sector and growing population alone will guarantee success. Those are just the basic raw materials. How these are harnessed is what will help us get there.
A great book for its extensive analysis and deep insight.
Between 1995-2005, India's literacy rate averaged 61%, vs. 91% for China. An investigation in 1998 found teaching taking place in only 53% of Indian village schools, and large numbers of teachers absent. About one-fourth of students attend private secondary schools in India.
Corporate customers comprise about 70-80% of Chinese bank business; those with political connections are most represented. Non-performing loans have fallen from 29% of loans for its original big four banks in 2000 to 6.7% for all major commercial banks at the end of 2007.
India's governments habitually run large deficits. About 80% of India's R&D goes to defense, space, and nuclear research. India's number of PC and broadband connections is about 3% the rate of China's.
China faces a rising average population age and growing pension costs. Just 22% of urban waste-water in China is treated - the target is to increase this to 36 by 2010. Candidates for village chief in local elections must be drawn from local CCP branches. Judges are still appointed by local officials, and beholden to them for their pay.
India's growth is impeded by restrictive laws on labor, small-scale industry requirements, lack of accessible and accurate land ownership records, unreliable electricity supply, and inefficient tax collection. Public-sector health care suffers from 40% absenteeism, crumbling facilities, and inadequate drugs and equipment; the poorest 20% receive only 10% of public health subsidies, vs. 305 for the richest 20%. Electricity theft is common, and its production is subsidized.
Some estimate that private and foreign firms in China have a return on capital 50% greater than that of its SOEs. China's SOEs contributed 15% of GDP in 2005.
In 2030 Asia will have three of the world's largest economies - China, India, and Japan.