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From: Matthew Yglesias

Mythical India

By Matthew Yglesias - July 6, 2006, 9:17AM

Pankaj Mishra notes that despite the hype India is, in fact, an extremely poor country.

5 Comments

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I think India's troubles are understated in the article. There is very little incentive for those who make it to reinvest in the economy of India, and there is little leverage the government can bring to bear on them. India's wealth is in the skills of its highly trained citizens who make up a small percentage of its population. Tax them heavily and they will hop on a jet and be gone forever. Oil fields and factories don't do that.

Njorl

Posted by Njorl
July 7, 2006 12:51 PM | Reply | Permalink

Why can't the government create incentives to invest locally? Tax deferals on profits and so on?

It isn't like there are tons of places in the world to get a great return on capital, it shouldn't take much to make investing in India attractive.

Posted by Eric K
July 7, 2006 1:07 PM | Reply | Permalink

Yes its extremely poor.

Essentially all countries outside of the US and Europe are very poor. Its shocking, the first, second and every time you see those shacks.

Think of all those smart people, living like that.

Posted by mickslam23
July 7, 2006 1:19 PM | Reply | Permalink

I don't think this recognizes the fact that this country has made a complete sea change in its embrace of capitalism over the last 15 years. Its changing rapidly, and at the pace its growing, going to double gdp/capita every 7-8 years or so.

I was just at a conference today about this, and found that the response to the question "Do you want to stay in the US?" is now "Well, I'll be here for a few years and then go back to India" where it use to be "Hell yeah!"

Posted by mickslam23
July 7, 2006 1:25 PM | Reply | Permalink

"its embrace of capitalism over the last 15 years. Its changing rapidly, and at the pace its growing, going to double gdp/capita every 7-8 years or so."

I believe one of the more interesting questions in economics right now is that we could have said "at the pace its growing, going to double gdp/capita every 7-8 years or so" for the ten years before they embraced capitalism. The economic boom preceded the reforms.

Posted by theCoach
July 7, 2006 6:49 PM | Reply | Permalink

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