Manufacturing and development

A live debate begins in the Economist..'The house believes that an economy cannot succeed without a large manufacturing base' Ha-Joon Chang, University of Cambridge is for the motion while Jagdish Bhagwati, Columbia University is opposing it.
As Moderator Patrick Lane writes in his opening remarks:
This promises to be a lively debate. There are conceptual arguments to be played out. How, for example, is manufacturing defined? What constitutes a "base": having factories on home soil, or keeping hold of intellectual property? What difference does it make if supply chains are spread around the world? And in a debate with such a long history, there are surely plenty of data to be brought to bear too. These are not just questions for Mr Chang or Mr Bhagwati, or for the guest commentators who will contribute later. They are questions for you, too, the readers on the "floor" of our virtual debating chamber. I do hope that you will join in—and that you enjoy the debate.


Your views?

Food prices up again...

Food prices are once again posing problems for monetary policy, across the globe. A recent article by Luis AV Catão and  Roberto Chang 'Global food prices and inflation targeting' gives an overview of the issues at hand, arguing that 'food tends to have stronger predictive power on global inflation cycles than oil. The problem is more severe in emerging markets where consumption basket weights for food are two or three times larger than in rich nations. Central banks should pay close attention.'
The Reserve Bank of India had flagged this issue sometime back, looking at the structural reasons and a speech by Deputy Governor Subir Gokarn had focused on the changing consumption patterns that had raised the price of proteins, 'Persistent price increases in commodities for which there are no effective substitutes will, other things remaining equal, raise the potential rate of inflation over a period of time. This means that either actual inflation or interest rates will be higher than they would be in the absence of such increases.' Further, 'Rapid economic growth is contributing to the emergence of persistent demand-supply imbalances which, in turn, are making proteins more expensive. In the absence of a significant positive supply shock, this might result in the weakening of the economy's most productive resource - its people.'
Going ahead, the FAO Food Price Index can provide valuable cues to the prices, meanwhile as the FAO points out in the case of food, and Catao and Chang point out in the case of monetary policy response, short term policy actions can disrupt long term stability and coordination across the key players will be crucial to avoid aggravation of the problem world-wide.

Impunity to Accountability

Was it just a coincidence that after hearing so much about accountability, or rather the lack of it, when it comes to the CWG in Delhi, I get a mail announcing a conference on a very similar theme for Africa - FROM IMPUNITY TO ACCOUNTABILITY: AFRICA’S DEVELOPMENT IN THE 21ST CENTURY - organised by  Dr. Arien Mack in collaboration with Dr. Befekadu Degefe, an eminent Ethiopian economist. The impulse for the conference?
"While the region’s problems and constraints are varied, we believe the relationship between the people and their government to be one of the most critical. In many of these countries, governments remain unresponsive to the needs of their people, and are accountable to their own interests rather than their people. In the special issue of Social Research on which this proposed conference is based, we will bring the relationship between the governors and the governed into the spotlight once again. By bringing some of our authors together for frank discussion with each other and the public, we hope to generate a productive debate among social scientists and other experts that might serve to prod policy makers and the international community to take more appropriate actions than those they may be currently engaged in."
In the case of India, could we be going the other way - from accountability to impunity? If you read the interview with former Central Vigilance Commissioner, Pratyush Shah, in the Mint, this appears to be the case- a worrying trend indeed.
"Two things bother me greatly. One is the social attitude towards corruption. In India, the most unfortunate part is that the society is no longer seriously concerned about corruption and there is social acceptance. When we were growing up I remember if somebody was corrupt, they were generally looked down upon. There was at least some social stigma attached to it. That is gone. So there is greater social acceptance. This is a kind of paradox. On one side, civil society has become more active in exposing corruption; people are filing PILs (public interest litigations) and various other ways of highlighting corruption, trying to do something about it. On the other hand, in society, there is a general acceptance of corruption. If somebody has a lot of money, he is respectable. Nobody questions by what means he has got the money. Second, the final punishment is becoming increasingly difficult. I am not saying that everything is right with CBI, but there are times they are blamed for things for which they are not responsible.
Look at an average case in the special judge’s court, which is the first court where a chargesheet of CBI is filed—(it) is taking 10 years. We got a survey done for a small pocket of CBI in one of their zones; only 4% people out of all those who were finally convicted actually went to jail. On some ground or the other they went in appeal. One appeal after another, on one ground after another. Same is happening with the departmental proceedings… they take years and hardly any punishment is given. Let me make it more mathematical for you. There would be 20% people in India even today who would be honest, regardless of the temptations, because this is how they are. They have a conscience, they would not be corrupt. There would be around 30% who would be utterly corrupt. But the rest are the people who are on the borderline."
We have to wait to see what action is taken post-Games, whether the CVC report expected by the end of this year will be acted upon or not. Meanwhile developments and debate in Africa should be followed, they remain relevant to India as well.

Expanding rural health care

My article in the Financial Express today takes up the point that we need a multi-pronged strategy to address the shortage of doctors, especially in rural areas. The new BRHC course is a positive move, because it brings with it government and Medical Council accreditation. The Chhattisgarh course ran into deep trouble just because this backing was not available, but those who graduated and placed in the primary health centres have proved to be a boon for rural health care in the state where the socio-economy and geography have been limiting factors in expanding health services. Tamil Nadu has cracked the model with sufficient medical colleges, good infrastructure in rural areas etc. but other states have not got that far yet.
The BRHC course cannot be a one-point solution to healthcare. The point is that there is no need for a new course, if, and this is the big if, there is sufficient supply of doctors coupled with good infrastructure and incentives in the rural areas. Meanwhile, the course needs to be integrated with the general medical degrees to allow BRHC graduates to move into the mainstream over time. Hopefully the proposed National Commission for human resources in health will do a complete overview of the system and create a complete solution to meet the challenge of providing healthcare services to our large and diverse population.