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Himalayan Crossings: Explaining the Rise of China and India

Selected Insights on US Foreign Policy and on Political Economy, Security, Finance, and Information Technologies in and between South Asia and Greater China

Dr. Rudolph's Website

Mobile telephony and women-owned microenterprise; two things that go well together

February 27th, 2011 by Matthew Rudolph

A few new links on this topic:

LIRNEasia work on BOP expenditure patterns featured on GSMA mWomen website

Old Think: Wrapping Amercians' Heads Around the Reality of Their Future Employers – Foreigners

February 14th, 2011 by Matthew Rudolph

Kuttner recently argued that American politicians (particularly Democrats) are letting US businesses ignore American workers, and that the USG is coddling the Chinese because American firms make money there.

Its not clear if US firms are not making money selling into China in any real way yet.   They make money from the Chinese assembly platform in a supply chain that delivers final goods to the US consumer. I guess the auto firms, Microsoft and Apple may finally be profiting with sales into China.

Why should Obama go after US business?  If Kuttner wants a German-style model for the US, then he should urge the USG not provide health care to all workers and better education and targeted skills training to make US workers appealing to all business, not just American ones?

Maybe I’m forecasting too firmly on what I alone see as the obvious trend, but is this just not archaic thinking by Kuttner that the major employers of the future for US manufacturing labor will be US firms?  Isn’t the right way to think about this, that the USG should cultivate a workforce that will compete for contracts from TNCs everywhere? Won’t it be Indian, Chinese and Italian and Middle Eastern firms, as well as US ones?

Victor Shih pointed out that “there are still plenty of opportunities for labor repression in China due to weakly enforced labor laws. US companies have come to enjoy that quite a bit.” So Kuttner has a point.  “But”, adds Shih, “with rising wages in China, the equation is starting to chagne.  Of course, the answer is not ‘onshoring’ but moving to India.  Large-scale, national,  job training might be considered too ‘socialist’ in the US, but state-level effort might work.”

India's African Soft-Power Counter to China's African Push

February 14th, 2011 by Matthew Rudolph

This is the kind of thing that HC has long been suggesting would be an opportunity for India.

India Steps Forward as Africa Seeks Academic Aid –

India's Response to China's role in global economic governance

February 14th, 2011 by Matthew Rudolph

China and global economic governance: History matters | East Asia Forum.

Wendy Dobson over at East Asia Forum has written about China’s positive participation in global and multilateral institutions.  This is something that Ian Johnston has written about with greater rigor elsewhere.

Global climate change will be the key issue area in which to observe and evaluate deep patterns of Chinese policy behaviour and thinking on global multilateral institutions.

Dobson and Drysdale in their anlyses of Chinese participation in mulitlateral institutions have not yet pointed this out.

What has this got to do with India?

As HC has written elsewhere, climate change policy and carbon-control institutions and processes present India with the opportunity to make a positive and lasting impact on global institutions.

It will be interesting to see if Jairam Ramesh who is spearheading India’s efforts in this direction will keep his job in the coming months.

For-Profit Micro-Finance on the Hot Seat

February 14th, 2011 by Matthew Rudolph

Further to HC’s recent post on mobile telephony and what it would take to make micro-finance really be effective against poverty in the long run, the BBC broadcast one of the few interviews Vikram Akula has done since investigations and new legislation have been in the works in India’s state of Andhra Pradesh.
(Full disclosure, Akula was a student of Lloyd Rudolph — my father — in the University of Chicago Political Science Department, and he has graciously offered his time in the past to give advice to Ubuntu at Work, a non-profit micro-finance coaching and assistance organization that I advised).
A few things stand out in this broadcast. First, Y. V. Reddy, former Governor of the Reserve Bank of India (whom I’ve interviewed, and who is a reasonably mainstream and market-friendly thinker on political economy) compares “for-profit micro-finance” to “sub-prime lending”. Listen for yourself. Akula is hoping that the current RBI Governor will succeed in centralizing regulation of the microfinance sector.
Second, Vikram Akula, ends up with a mixed performance in this broadcast. He is founder of SKS micro-finance, which is now a for-profit micro-finance provider. Last year SKS had a widely-covered IPO listing on the Bombay Stock Exchange. According to the BBC, Akula took home 13 million US $ from that offering.
SKS Microfinance, an Indian firm that makes small loans to the poor, had raised about $358 million in an IPO after pricing the sale at the top end of the indicated price band.

SKS Microfinance(SKSMICRO.NS) Stock price(INR) since IPO in Aug 2010. Source: Yahoo Finance

When SKS was still a non-profit (missing word) part of its mission statement and its marketing claimed it would help “irradiate poverty”? The BBC journalist unkindly, and rather opportunistically, but not inaccurately puts Akula on the spot for this claim. Alas, he is not as adroit when handling his firms past messianic claims as he is on making the general case promoting for-profit micro-finance.
There are two key issues that the BBC report is, perhaps, a bit irresponsible about:
First, the opportunistic targeting of “for-profit” micro-finance. While the profits made by such firms interacting with the poor “bottom of the pyramid” justify close scrutiny and demanding business ethics, inquiry, research and moral reasoning on the benefits of micro-finance should extend to non-profit micro-finance as well.
This is a theme HC has been covering for some time.
While randomized field experiments have serious problems, they are some of the better evaluations we have of micro-finance, and they do not suggest that non-profit micro-finance is significantly more effective at poverty alleviation than is for-profit micro-finance. The BBC is verging on journalistic demagoguery with this imbalance in the story.
Second, if journalists, policy-makers and other are interested in understanding the dynamics that Y. V. Reddy alludes to in his “sub-prime” analogy, they may want to interview or analyze the venture capitalists and investors who are supporting the for-profit micro-finance boom.
Below is a table made from the shareholder pattern data available on SKS Microfinance Website.
Table Showing Shareholding Pattern
What is their view of the industry? Why do they consider it a good investment? What do they think of what is going on now in India?
In conclusion, let me remind regular readers of HC, that the idea behind micro-finance-oriented business services, coaching, and mentoring, is to help support the success of women entrepreneurs, through business advice, moral support and greater loan-life-cycle audit-trail visibility.
Hopefully, the “business services and coaching” phase of the micro-finance trend will soon reach its adolescence and we will be able to see the results of social science research of all types (not just randomized field experiments) on whether and how such services may effect the welfare of women micro-financed entrepreneurs.

Daring to be different — and right

February 7th, 2011 by Matthew Rudolph

Daring to be different — and right.

Greenstone and Pande slyly show that Jairam has put the Chinese on their back foot with his proposal.

The interesting thing is how Jairam is surviving in this government.  He has no popular electoral base.  He is not making friend is industry.  Its not clear who is patron is?  Sonia? Manmohan.

It Was Specialization that Blinded Professional Economists to the Coming Crisis: Rajan

February 7th, 2011 by Matthew Rudolph

Chicago Booth Blog: Fault Lines by Raghuram Rajan – Fault Lines by Raghuram Rajan.

Strangely, since becoming famous, Rajan has actually become less orthodox and more of a critical thinker.

What he fails to do in this piece is answer the question his article begs:  Even if economists had seen the crisis coming what could they have prescribed to prevent or mitigate it?

His view of political economy — the dynamism-stifling and risk-generating power of status-quo encumbancy in markets — should ultimately call for an aggressive role for government against anti-competitive behavior.  Smaller banks and financial services, tout court. “Small enough to fail”.  This would go beyond Roosevelt -style “Trust busting”?  It would be great, but Rajan shies away from the radicalism his theory would logically prescribe.

Wanted: Credible Considerations on Karmapa News

February 7th, 2011 by Matthew Rudolph

Recent news suggests that the Indian media still see Rupees in coverage that characterizes Chinese motives and actions in a sinister light. There is enough ambiguity and assertiveness in what is known reliably about Chinese policy toward India; there is little need to use innuendo to amplify things.

Dibyesh Anand helps put the story in perspective.

It is true that the Chinese authorities are well disposed toward the Karmapa Lama.

Below is a picture taken in 2004 by HimalayanCrossings while, well, crossing the Himalaya.

17th Karmapa Lama at Dira Phug Gompa, June, 2004.

Dira Phug Gompa, June, 2004.

The image of the young Karmapa and the alter to him depicted here were inside the austere Dira Phug monastery that stands above the plains immediately below the Southwest face of Mt. Kailash

(the majestic view from the terrace of the monastery across the campsite to the holy mountain is seen here).

Dira Phug Gompa, June, 2004.

Kailash & Campsite for Dira Phug Gompa. June, 2004. (All photos by HC)

A middle-aged Mandarin-speaking Tibetan monk with whom I spoke, was pleased to know that I had come from India and wanted to know if I had seen the Karmapa. I was pleased that despite his reasonably biaojun Mandarin he also knew the Sanskrit word “darshan” (seeing a revered figure).

The notion that the Karmapa is dangerous spy or a Chinese Fifth Column is highly unlikely.  Dominic Ziegler  (a.k.a “Banyan”), over at the Economist Magazine seems to agree.   The cash and, in particular, the Chinese currency, in the possession of the Karmapa could just as easily, and perhaps more credibly, be interpreted as a form of resistance against the Chinese state, by Chinese followers of Karmapa. On this interpretation, the Chinese currency in Dharamsala could be an indicator not of the power of the Chinese government, but its weakness.

Missed in the gleeful coverage (and, as always, the “Times of India” has the least responsible or balanced coverage) is the idea that the presence of the Karmapa in India is anything but good for India’s soft power, credibility, and influence vis a vis China

Tempering the Hype: On-the-ground view of Chinese Higher Education

February 7th, 2011 by Matthew Rudolph

I received this message from a bright and intrepid former political economy student of mine.  His views of a year studying at one of China’s most well-regarded universities is certainly worth considering in light of the hype that has been causing anxiety in american businesses and policy opinion.  

How this student understands the situation and his ability to reflect on his own position in it says as much about the US system as his reporting about the conditions at his Chinese university does about China’s system.

(I have rendered the quote anonymous to protect the student who continues to study in China.)

As you know, I have been studying in direct matriculation at (one of China’s most prestigious universities) for the past semester. I took three classes including Chinese Economic History and Chinese Public Policies, which were quite interesting….  

What I learned this semester probably had more to do with seeing how things are done than learning anything particularly academic. In all honesty, the Chinese university system is extremely lacking. Even at (XXX) University with the smartest students and best professors, standards are so low. What has struck me the most is how absolutely and completely rampant plagiarism is, which of course reflects the much talked about lack of “critical thinking” in China. And the bureaucratic complications make (YYY University in America) look like the most red-tape free place on earth. Regardless, I think it has been really good for me to be here, and I have met a lot of really interesting and friendly people. I know the exposure I am gaining will prove vital in future academic/professional pursuits. 

Vibha Pingle and Ubuntu at Work: Foresight on the Problems of Microfinance

February 1st, 2011 by Matthew Rudolph

Back in 2008 when Dr. Vibha Pingle set up Ubuntu at Work , reviewers at key foundations were unable to grasp the idea that coaching delivered to women microfiance recipients via wireless communications would be a valuable and viable way to take the next step in the development of micro-finance.

Three years later two things are abundantly clear.

First, services and coaching are now proving to be the next wave of MF work.

 Second, telephony and wireless devices seem to be affordable, viable and increasingly ubiquitous.

This recent briefing  from The Economist magazine makes elaborates the picture.