The shrewd economic policies of two emerging nations have helped give birth to the Elephant of India and the Dragon of China, writes Padraic White.
BOOK REVIEW: The Elephant and the Dragon - The Rise of India and China and What it Means for All of UsBy Robyn Meredith £16.99 (€25)
In the not too distant past, we had the so-called Asian Tiger economies of Singapore, Hong Kong, Taiwan and South Korea, which were focused on by business for their commercial opportunities, and by governments and academics for the secrets of their success.
The really big player and commercial magnet on the Asian landscape was Japan, with its booming consumer economy, electronic products and pioneering manufacturing philosophies.
Alas, Japan was to settle into a long night of economic stagnancy caused by over-exuberant bank lending from which it is only now recovering. The other Asian tigers settled into a more mature phase and lost much of their international appeal and focus. They were outshone in the 1990s by the new tiger economy in the West - the Celtic Tiger.
Now comes a book to unravel the secrets of two genuine heavyweight economies, complete with their animal appellations - the Elephant of India and the Dragon of China.
Robyn Meredith, a journalist with Forbesmagazine, presents a racy, colourful account of the rise of these two economies which is well researched and has scholarly footnotes.
Both countries continue to grow at rates that entitle them to have the status of "tiger economy". China has been growing at 10 per cent a year and is projected by the Economic and Social Research Institute to continue doing so. India has upped the pace of growth to 9 per cent and, even though it is forecast to moderate to 8 per cent next year, it will still be among the fastest growing economies in the world. It is little wonder that, with these growth rates and their massive combined population of more than two billion people, they are "the places to be" for businesses, large and small, from all parts of the world.
Meredith's book traces the different paths by which these two giant neighbours came to ignite their economies.
China has a market economy but a one-party, authoritarian regime. After the horrors of Mao Zedong's Cultural Revolution came the economic revolutionary leader, Deng Xiaoping. The book pinpoints the significance of his visit in November 1978 to Singapore, where he held talks with Singapore's prime minister, Lee Kuan Yew.
As Deng toured Singapore, "he found a modern technologically advanced nation suitable as a model for China's development". Indeed, Lee reflected in later years that the "journey was an eye opener for him [ Deng] - a turning point".
Deng subsequently introduced special economic zones such as that in Guangdong province near Hong Kong, where foreign investment was fast-tracked and bureaucracy eased. He encouraged his countrymen "to jump into the sea of business".
Foreign investment, initially led by the Chinese entrepreneurs in Hong Kong, has piled into these zones, of which there are now thousands throughout China. The extensive manufacturing of goods by US companies is well described in the chapter, "Made by America in China".
The book highlights the strategy of the Chinese in using their authoritarian state power to drive massive investment in infrastructure - roads, ports, airports, railways, power supplies - to support their industrial revolution. In 1989, there were only 270km (168 miles) of modern highways; by 2010, there will be 64,000km (40,000 miles) of them. With some 4,000 skyscrapers, Shanghai is a visible manifestation of the new China.
By contrast, India's path to economic supergrowth was shaped by its colonial past, reflected in the economic nationalism espoused by Mahatma Ghandi and Jawaharlal Nehru and, of course, by its democracy. Its hostility to foreign investment was evidenced in its traditional bar to foreigners owning more than 50 per cent of an Indian-based company.
The book highlights the year 1991 as the crucial one in the transformation of India's fortunes. Rajiv Ghandi was assassinated in May 1991 but by July a new government had been installed and made sweeping reforms: removing restrictions on imports; easing foreign ownership restrictions; partial currency convertibility; and currency devaluation.
India's entrepreneurs got the room to breathe, as exemplified by the extraordinary emergence of the Infosys company headquartered in Bangalore, which employs almost 70,000 Indians to provide information technology services to international companies.
The book paints a picture of India as a global centre of white-collar workers, where international companies either "outsource" or have "offshore" business functions, as captured in the chapter heading, "The internet's spice route".
While India has successfully developed oases of white-collar business services such as Bangalore and Mumbai, its investment in highways, airports and other infrastructure has been neglected compared to China.
The concept of China as the "brawn" and India as the "brain" of international industry is conveyed in a sentiment attributed to Ratan Tata, scion of Indian company Tata: "China is really the factory of the world. India can be the knowledge centre of the world. If we could put those two together, it could be very synergistic."
Somehow, I don't think it will be quite so simple, particularly when India's illiteracy rate of 35 per cent is compared with China's 9 per cent illiteracy rate.
The book ends with a set of US concerns stemming from the rising power of China and the loss of US jobs to both growing giants. The Chinese government has the world's largest US dollar reserves. The US has lost more than a million information technology jobs in the past five years.
It is significant from an Irish perspective that Taoiseach Bertie Ahern has led trade missions involving a number of ministers to both China and India in recent years.
The region secured one-quarter of foreign direct investment projects in the world in the three years to April last. Irish companies are part of this flow. For example, Delta Packaging, based in west Belfast, has opened six factories in China and two in India in the past two years to protect and grow its business.
Padraic White is a former managing director of the Industrial Development Authority (IDA) and co-author ofThe Making of the Celtic Tiger - the inside story of Ireland's boom economy .
