The Custom-House

India and China compared

India is behind China in the race to the future, and its propects for catching up don't look good, says Shankar Acharya, a former Chief Economic Adviser to the Government of India. 

He takes a hard look at the numbers: India is China's economic equal? Bah!  (Rediff.com, Sept 27):

Offshoring services

Improving communications technologies make it easier to import services from abroad.

Eric Bellman and Nathan Koppel report that "More U.S. Legal Work Moves to India's Low-Cost Lawyers" in today's Wall Street Journal.

Salaries and perks are both lower there.  "That's partly because being a lawyer isn't a high-prestige, big-income profession in India.  'The pecking order is engineering, medicine, M.B.A., CPA and then law...'"

India has an advantage in this business compared to other developing countries because so many Indians speak English, of course, but also because, "the legal systems in India, the U.S. and the U.K. are all rooted in British common law..."

The scale of potential cost savings: Roamware Inc of San Jose, California hired an Indian firm to "create an electronic data base highlighting the key terms in about 200 contracts in order to monitor contract compliance..."  A project that would have cost $60,000 in the U.S. cost about $5,000 in India.

Moderate prestige, maybe, but there are plenty of Indian lawyers. Indian law schools graduate 200,000 Indians a year.  That's five times as many as graduate from U.S. law schools each year.

J. Bradford Jensen and Lori G. Kletzer have written Tradable Services: Understanding the Scope and Impact of Services Offshoring for the Institute of International Economics.  They find:

Allocating scarce trade resources among competing ends

Trade agreements: once you negotiate one, you've got to monitor and enforce it.

The General Accountability Office (GAO) reviewed U.S. monitoring and enforcement last June: Further Improvements Needed to Handle Growing Workload for Monitoring and Enforcing Trade Agreements.

From here to Hong Kong

Pascal Lamy took over as Director-General (DG)of the WTO on September 1

The Hong Kong meeting of WTO member nation trade ministers starts on December 13.  This is a key meeting for the ongoing "Doha Round" of trade negotiations.  There won't be much chance to recover from a weak performance there.

Lamy's laid out his ideas about what needs to happen between now and Hong Kong in three recent speeches:

How to lead a great nation

Theodore Roosevelt to Maria Longworth Storer, December 8, 1902:

Well, I have been President for a year and a quarter, and whatever the future may hold I think I may say that during that year and a quarter I have been as successful as I had any right to hope or expect.  Of course political life in a position such as this is one long strain on the temper, one long acceptance of the second best, one long experiment of checking one's impulses with an iron hand and learning to subordinate one's own desires to what some hundreds of associates can be forced or cajoled or led into desiring. Every day, almost every hour, I have to decide very big as well as very little questions, and in almost each of them I must determine just how far it is safe to go in forcing others to accept my views and standards and just how far I must subordinate what I deem expedient, and indeed occasionally what I deem morally desirable, to what it is possible under the given conditions to achieve...

The work had its satisfactions:

...It has been very wearing, but I have thoroughly enjoyed it, for it is fine to feel one's hand guiding great machinery, with at least the purpose, and I hope the effect, of guiding it for the best interests of the nation as a whole.

From the Library of America's Theodore Roosevelt.  Letters and Speeches, page 263.

Pascal Lamy is on the job

Pascal Lamy took over as Director-General of the WTO yesterday.  His team of four Deputy Directors-General comes to work at the start of October.

Everyone thinks he's capable.  Some have high hopes for what he might be capable of, others (Waldo Bello - see preceeding post) fear that.  It's important to remember that the WTO Director-General is a weak institutional position.  The member states are jealous of their decision-making responsibilities.  Lamy will be dependent on moral suasion.

Here's his short statement on taking office:

They think alike, and yet they don't

Neither Peter Gallagher nor Walden Bello think the Doha Round talks are doomed.  Both share the same political analysis.  But while one looks forward to the outcome, for the other, it's a nightmare.  Gallagher: Optimists on WTO: now there are two of us.

New issue of "Finance & Development"

The September issue of the IMF's quarterly magazine,  Finance & Development, is out.

The focus of this issue is aid and development:

Can more aid really make poverty history as aid campaigners have argued? This issue examines aid effectiveness and how to build momentum toward the Millennium Development Goals after the G8 vowed to double aid to Africa. Includes assessments of use of aid in Ethiopia, Ghana, Mozambique, Tanzania, and Uganda, as well as viewpoints from Burkina Faso, Tanzania, and the UK. Other articles look at next steps for reform in China, and how trading partners can help each other's growth. Profile of Jagdish Bhagwati and IMF Economic Counsellor Raghuram Rajan examines global financial risk. Also a look at governance and measures to combat corruption.