The fundamental things apply

From the World Economic Forum’s annual Gender Gap report (via the rather conservative blog Cominganarchy), there are two interesting charts. They both provide evidence for my earlier comparison of the fundamental issues regarding the economic potential of India and China.

GDP/cap vs Gender Gap


Competitiveness vs Gender Gap


China is placed a bit lower than I had expected on this chart. I think it has to do with the scoring system. e.g., women literacy vs male were ranked and scored. Even though Chinese women's relative literacy is 0.91, it is only ranked #81. This means in certain measure a small difference (in terms of economic and social impact) has been magnified in this scoring.

But the more seirous problem with the China data here (and in general for all statistics) is that the urban-rural difference has been averaged. If we are to look at the urban data alone, I am sure the relative literacy (and most other measures) will greatly improve. I would not be surprise if urban China is ranked in top 25, or even 15. However, much of what the report reflects about China, esp the rural area, is true. When you listen to a restaurant waitress that she quitted school at 13 and now sending money back to pay for her younger brother's school fee, you know how much we still have to do in this country. When you are picking up your shirts and dresses from Banana Republic or A&F, with a "Made in China" sign, you would appreciate who really created the economic miracle in China. It is the hundreds of millions of country girls who work 70 hours a day in these sweat shops.

The fundamental things are that in China, 2 people works to support 3 people; in India only one person works to support 3, they do apply, as time goes by... this is what contributed to China's successful economic transformation, and what India needs to consider very seriously.

"Take Advantage Of Employment Discrimination"

China Law Blog has a very interesting post: Take Advantage Of "China's Rampant Employment Discrimination"

Well, I would say, "Take Advantage Of Employment Discrimination", anywhere in this world that there is discrimination. Though I also agree with CLB that it is indeed rampant in China -- just look at the unisex restaurants and unisex factory floors (even though one could argue that there is cost reduction due to easy management for unisex factory, i doubt if the benefit outweighs the cost).

There are, however, a couple points to add

• CLB said, 'Another discrimination in China is against "villagers" without a degree from one of China's top two or three universities. Another opportunity.' -- I do not quite agree. First, we see the same brand premium in US (Ivy Leage and Stanford) and UK (Oxbridge) and the average quality from the premium brands are indeed higher. Second, it is true that there are 'arbitrage' opportunity from the "villager" graduates, but this is not without costs, i.e., more time to select the right candidate due to lower average success rate. But I do agree with CLB, if you spot one, grab him! (Digression: the beauty of the Chinese language is that there was no gender in the 3rd person - "彼or 他", until the turn of last century during May-4 movement when "它/她" were created, plus the ridiculous 牛也 (the god belongs to the gender of cow!). Anyway, we used to enjoy the absence of stupid political correctness in terms of "him/her" or "s/he" or "chairperson". If you understand 禅(Zen in Japanese) or heard about the story of 3 monks bumped into a nude girl, you would understand what I mean.)
• Yes, there is arbitrage if one does not discriminate, because the cost of recruitment is lower (one finds the right candidate quicker, statistically). However, if one is going to pay the same amount for others, one is not exploiting the arbitrage fully. To exploit the arbitrage fully one would only have to pay a small premium over the market rate, which is usually still lower than what the "true" value of the candidate is. This does solve one major problem, i.e., the case when some are unemployed due to discrimination
• I know what I said above in politically incorrect, but that is the reality of this world. However, without facing the reality one cannot really address the problem. We need to recognize that, even if one would still partially discriminate these candidates, the important thing is that we realize the TRUE value of these people. Once this is realized, one would expect more employers will join the arbitrage competition, and gradually bid up the price. The point of inflexion is when the underpivileged receives more than one job offer. To make this happen we need more employers who are willing to just pay a very small premium (or even no premium) over the current (under-rated) market price. Until, eventually or asymptotically, when there is no more arbitrage opportunity. Then the CLB mission will be accomplished.
• Therefore, even for those employer who are still paying a discount to the discriminated (but just the smallest premium over the market rate), we should encourage them and encourage more employers to follow suit. Because that is the first step toward the ultimate goal, and one must go through such first step in the long process of transition.
• The fundamentalist would criticize those who pay a small (but not enough) premium for not doing enough. I need to warn them, they are effectively hurting the discriminated they claim to protect.

Again, this applies not just to China. It applies to any other country, developed or developing. It is actually the theme of one of my old post -- China vs India. And again, the situation in China, albeit may not be the worst in this world (there are many countries that are worse), is not an excuse. It is for China's own good if this problem gets solved, even if it is partially. The larger the extent this partial solution is, the more competitive China as a nation will become.

ASEAN + 3 or ASEAN + 6? for East Asia Summit

Update (Dec12) :
1. Related, FT article
2. Kuala Lumpur Declaration on the ASEAN Plus Three Summit (Full Text)
3. Francis Fukuyama's essay in WSJ (May 2005) (pdf)
4. an old essay by Waseda University Professor Lim Hua Seng agrees with me
5. Jeffrey Robertson of Australia (pdf) examines the benefit of ASEAN+1/3/5, and why Asia FTA has been resisted by Japan and US, until China joined and support the ASEAN cause.
6. Japan Times essay on the "China-Japan Feud"; my take is that ASEAN+1 will go ahead regardless and Japan could end up as the loser.
Update (Dec12) :
7. Asian Leaders Hold Summit Without U.S. Presence - Washington Post -"The whole process is open," said Cui Tiankai, who heads the Asian affairs department at the Chinese Foreign Ministry. "Now we have 16 countries, but next year we could have 17 or 18. For example, we are aware of the interest expressed by the United States government."..."That's the new way of China's diplomacy these days," Natalegawa said. "They are very flexible."
8. Beijing opposes exclusive East Asia bloc - UPI - " Chinese Premier Wen Jiabao told leaders at the Association of Southeast Asian Nations forum in Kuala Lumpur that China does not seek regional leadership. He also "made it clear that China is opposed to building any self-enclosed or exclusive bloc in the East Asia region," the official Xinhua news agency reported. "
Update (Dec13) :
9. Aso's speech: "Asian Strategy As I See It:Japan as the "Thought Leader" of Asia" Read for youeself. IMO he really needs to hire a speech writer and a P.R. specialist.
10. Andy Mukherji is right that an Asian FTA will be hard to materialize, if taking the ASEAN+6 path. But we have more options, we can start with ASEAN 6 + China 1. Then for Korea, Japan/etc to join one by one.

There has been report that Japan opposes to the ASEAN+3 solution toward an East Asia trade pact. It proposed ASEAN+6 instead, fearing it would be "led by China". This is part of a ploy (can i call it conspiracy?) from the neo-con in US to contain China, when the Bush administration felt bitter about being left out in an Asian conference(*).

There are 10 nations in ASEAN:

• Founding members (August 8, 1967): Indonesia, Malaysia, Philippines, Singapore, Thailand
• States that joined later: Brunei (1984), Vietnam (1995), Laos, Myanmar (1997), Cambodia (1999)

The 10 nations have already achieved significant progress in reaching a free trade pact. But there is no catalyst to push for it. Adding the NE Asia 3 may be the catalyst (or anchor) that is long needed. To include 3 more nations into the pact 3x10+3(among the NEA 3)=33 negotiations are required.

To include 6 more nations 6x10 + 6*5/2!= 75 more negotiation is needed. Significant delay is expected. ASEAN + 6 proposal is dragging the feet of an East Asian trade pact. Nothing gets done if you are too ambitious. This is why APEC fails to achieve anything substantial.

Therefore, ASEAN+3 is a more practical solution to reach a trade pact. The next 3 countries (India, Australia, NZ) can always join later. By prioritizing free trade for ASEAN+3 it does not mean excluding the next 3. On the contrary, it speeds up future inclusion of the next 3. In fact, by proceeding in gradualism, one also allows for other neighboring countries, such as Mongolia, Sri Lanka, Bangaldesh, Maldives, East Timor and PNG, to join once ASEAN+3 is established, similar to how the expansion of EU has been accomplished.

China will perhaps be the anchor of ASEAN+3. But China will not control the whole of East Asia as a result. ASEAN combines has 600M people. By irrationally opposing a practical solution (of ASEAN+3), Japan (and US) is hurting the economic interests of everybody in the region, including Japan itself.

Hopefully the ASEAN nations, with the experiences gathered in past negotiation, realize this. If Japan does not like it, it can opt out. ASEAN+2 will only need 21 new negotiations and it would be a much easier task to accomplish. Not having Japan in the FTA will be a minus for all, but it can always join the Asia family when it decides it wants to. But ASEAN+2 is still better than no trade pact at all.

Note(*): Apparently geography has not been taught well in US schools. USA belongs to the North America continent, not the Asia continent. Contrary to what the diplomats in US want to believe, there has never been any conscious effort in leaving US out in this East Asian Summit. In fact, ASEAN has said USA could join if it signs the Treaty of Amity and Cooperation, like Australia did. Russia has signed, and may get its invitation ticket to the next meeting.

Categories:

• china
• japan
• world
• pol
• econ

Lee Kuan Yew's wisdom

I have promised to stick to economic related issues. But I just can't resist telling everyone Lee Kuan Yew has said something.

No comment needed. Lee Kuan Yew is better than Sun Bin. He is Sun Zi. There has nothing Lee Kuan Yew said in the past that I could find fault in. I need to wait for him to get a lot older, maybe he could make a careless mistake and I can find something to say....but I am happy we have such bright mind in our species. With him here we are not afraid of competing with the aliens, or E.T. :))

Original link in Der Spiegel, excerpt below.

------
August 8, 2005

SPIEGEL INTERVIEW WITH SINGAPORE'S LEE KUAN YEW
"It's Stupid to be Afraid"
Singapore's first-ever prime minister, long-time government head and current political mentor Lee Kuan Yew talks about Asia's rise to economic power, China's ambitions and the West's chances of staying competitive.

The elder statesman Lee: "We run a meritocracy."

SPIEGEL: The political and economic center of gravity is moving from the West towards the East. Is Asia becoming the dominant political and economic force in this century?
Mr. Lee: I wouldn't say it's the dominant force. What is gradually happening is the restoration of the world balance to what it was in the early 19th century or late 18th century when China and India together were responsible for more than 40 percent of world GDP. With those two countries becoming part of the globalized trading world, they are going to go back to approximately the level of world GDP that they previously occupied. But that doesn't make them the superpowers of the world.

SPIEGEL: Their leading politicians have publicly discussed the so-called "Asian Century".
Mr. Lee: Yes, economically, there will be a shift to the Pacific from the Atlantic Ocean and you can already see that in the shipping volumes of Chinese ports. Every shipping line is trying to get into association with a Chinese container port. India is slower because their infrastructure is still to be completed. But I think they will join in the race, build roads, bridges, airports, container ports and they'll become a manufacturing hub. Raw materials go in, finished goods go out.

SPIEGEL: You've been the leader of a very successful state for a long time. Returning from your time in China, are you afraid for Singapore's future?
Mr. Lee: I saw it coming from the late 1980s. Deng Xiaoping started this in 1978. He visited Bangkok, Kuala Lumpur and Singapore in November 1978. I think that visit shocked him because he expected three backward cities. Instead he saw three modern cities and he knew that communism -- the politics of the iron rice bowl -- did not work. So, at the end of December, he announced his open door policy. He started free trade zones and from there, they extended it and extended it. Now they have joined the WTO and the whole country is a free trade zone.

SPIEGEL: But has China's success not become dangerous for Singapore?
Mr. Lee: We have watched this transformation and the speed at which it is happening. As many of my people tell me, it's scary. They learn so fast. Our people set up businesses in Shanghai or Suzhou and they employ Chinese at lower wages than Singapore Chinese. After three years, they say: "Look, I can do that work, I want the same pay." So it is a very serious challenge for us to move aside and not collide with them. We have to move to areas where they cannot move.

SPIEGEL: Such as?
Mr. Lee: Such as where the rule of law, intellectual property and security of production systems are required, because for them to establish that, it will take 20 to 30 years. We are concentrating on bio medicine, pharmaceuticals and all products requiring protection of intellectual property rights. No pharmaceutical company is going to go have its precious patents disclosed. So that is why they are here in Singapore and not in China.

SPIEGEL: But the Chinese are moving too. They bought parts of IBM and are trying to take over the American oil company Unocal.
Mr. Lee: They are learning. They have learnt takeovers and mergers from the Americans. They know that if they try to sell their computers with a Chinese brand it will take them decades in America, but if they buy IBM, they can inject their technology and low cost into IBM's brand name, and they will gain access to the market much faster.

SPIEGEL: But how afraid should the West be?
Mr. Lee: It's stupid to be afraid. It's going to happen. I console myself this way. Suppose, China had never gone communist in 1949, suppose the Nationalist government had worked with the Americans -- China would be the great power in Asia -- not Japan, not Korea, not Hong Kong, not Singapore. Because China isolated itself, development took place on the periphery of Asia first.

SPIEGEL: Such a consolation won't be enough for the future.
Mr. Lee: Right. In 50 years I see China, Korea and Japan at the high-tech end of the value chain. Look at the numbers and quality of the engineers and scientists they produce and you know that this is where the R&D will be done. The Chinese have a space programme, they're going to put a man on the Moon and nobody sold them that technology. We have to face that. But you should not be afraid of that. You are leading in many fields which they cannot catch up with for many years, many decades. In pharmaceuticals, I don't see them catching up with the Germans for a long time.

SPIEGEL: That wouldn't feed anybody who works for Opel, would it?
Mr. Lee: A motor car is a commodity -- four wheels, a chassis, a motor. You can have modifications up and down, but it remains a commodity, and the Chinese can do commodities.

SPIEGEL: When you look to Western Europe, do you see a possible collapse of the society because of the overwhelming forces of globalization?
Mr. Lee: No. I see ten bitter years. In the end, the workers, whether they like it or not, will realize, that the cosy European world which they created after the war has come to an end.

SPIEGEL: How so?
Mr. Lee: The social contract that led to workers sitting on the boards of companies and everybody being happy rested on this condition: I work hard, I restore Germany's prosperity, and you, the state, you have to look after me. I'm entitled to go to Baden Baden for spa recuperation one month every year. This old system was gone in the blink of an eye when two to three billion people joined the race -- one billion in China, one billion in India and over half-a-billion in Eastern Europe and the former Soviet Union.

SPIEGEL: The question is: How do you answer that challenge?
Mr. Lee: Chancellor Kohl tried to do it. He did it halfway then he had to pause. Schroeder tried to do it, now he's in a jam and has called an election. Merkel will go in and push, then she will get hammered before she can finish the job, but each time, they will push the restructuring a bit forward.

SPIEGEL: You think it's too slow?
Mr. Lee: It is painful because it is so slow. If your workers were rational they would say, yes, this is going to happen anyway, let's do the necessary things in one go. Instead of one month at the spa, take one week at the spa, work harder and longer for the same pay, compete with the East Europeans, invent in new technology, put more money into your R&D, keep ahead of the Chinese and the Indians.

SPIEGEL: You have seen yourself how hard it is to implement such strategies.
Mr. Lee: I faced this problem myself. Every year, our unions and the Labour Department subsidize trips to China and India. We tell the participants: Don't just look at the Great Wall but go to the factories and ask, "What are you paid?" What hours do you work?" And they come back shell-shocked. The Chinese had perestroika first, then glasnost. That's where the Russians made their mistake.

SPIEGEL: The Chinese Government is promoting the peaceful rise of China. Do you believe them?
Mr. Lee: Yes, I do, with one reservation. I think they have calculated that they need 30 to 40 -- maybe 50 years of peace and quiet to catch up, to build up their system, change it from the communist system to the market system. They must avoid the mistakes made by Germany and Japan. Their competition for power, influence and resources led in the last century to two terrible wars.

SPIEGEL: What should the Chinese do differently?
Mr. Lee: They will trade, they will not demand, "This is my sphere of influence, you keep out". America goes to South America and they also go to South America. Brazil has now put aside an area as big as the state of Massachusetts to grow soya beans for China. They are going to Sudan and Venezuela for oil because the Venezuelan President doesn't like America. They are going to Iran for oil and gas. So, they are not asking for a military contest for power, but for an economic competition.

SPIEGEL: But would anybody take them really seriously without military power?
Mr. Lee: About eight years ago, I met Liu Huaqing, the man who built the Chinese Navy. Mao personally sent him to Leningrad to learn to build ships. I said to him, "The Russians made very rough, crude weapons". He replied, "You are wrong. They made first-class weapons, equal to the Americans." The Russian mistake was that they put so much into military expenditure and so little into civilian technology. So their economy collapsed. I believe the Chinese leadership have learnt: If you compete with America in armaments, you will lose. You will bankrupt yourself. So, avoid it, keep your head down, and smile, for 40 or 50 years.

SPIEGEL: What are your reservations?
Mr. Lee: I don't know whether the next generation will stay on this course. After 15 or 20 years they may feel their muscles are very powerful. We know the mind of the leaders but the mood of the people on the ground is another matter. Because there's no more communist ideology to hold the people together, the ground is now galvanised by Chinese patriotism and nationalism. Look at the anti-Japanese demonstrations.

SPIEGEL: How do you explain that China is spending billions on military modernisation right now?
Mr. Lee: Their modernisation is just a drop in the ocean. Their objective is to raise the level of damage they can deliver to the Americans if they intervene in Taiwan. Their objective is not to defeat the Americans, which they cannot do. They know they will be defeated. They want to weaken the American resolve to intervene. That is their objective, but they do not want to attack Taiwan.

SPIEGEL: Really? They have just passed the aggressive anti-secession law and a general has threatened to use the nuclear bomb.
Mr. Lee: I think they have put themselves into a position internationally that if Taiwan declares independence, they must react and if Beijing's leadership doesn't, they would be finished, they would be a paper tiger and they know that. So, they passed the anti-secession law to tell the Taiwanese and the Americans and the Japanese, "I do not want to fight, but if you allow Taiwan to go for independence, I will have to fight." I think the anti-secession law is a law to preserve the status quo.

SPIEGEL: Another critical point in Asia is the growing rivalry between China and Japan.
Mr. Lee: It's been dormant all this while, right? But I think several things happened that upped the ante. They possibly coincide with the policy of Japanese Prime Minister Junichiro Koizumi. There is this return to "we want to be a normal country." They are sending ships to Afghanistan to support the Americans, they sent a battalion to Iraq, they reclaimed the Senkaku islands, and most recently, they joined the Americans in declaring that Taiwan is a strategic interest of Japan and America. That raises all the historical memories of the Japanese taking away Taiwan in 1895. Then they're applying to be a permanent member of the Security Council. So, I think the Chinese decided that this is too much. So, they have openly said they will object to Japan becoming a member of the Security Council.

SPIEGEL: Well, the United States said the same to Germany.
Mr. Lee: Exactly. So, the whole process is trying to define the position for the next round, maybe in 10 to 15 years, by which time the world will be a different place.SPIEGEL: Can the Chinese convince their North Korean ally Kim Jong-Il to get rid of his nuclear program?Mr. Lee: North Korea is a riddle wrapped up in an enigma. The leaders in North Korea believe that their survival depends upon having a bomb -- at least one nuclear bomb. Otherwise, sooner or later, they will collapse and the leaders will be put on trial like Milosevic for all the crimes that they have committed. And they have no intention of letting that happen.

SPIEGEL: Who can stop them? The Americans?
Mr. Lee: Yes, but at a price, a heavy price.
SPIEGEL: Could the Chinese do it?
Mr. Lee: Possibly. By denying food, denying fuel, so they would implode. But will the Chinese benefit from an imploded North Korea? That brings the South into the North. That brings the Americans to the Yalu River. So, the North Koreans have also done their calculations and know that there are limits.S

PIEGEL: So Kim is in a strong position?
Mr. Lee: If I were Kim I would freeze the programme, tell the Americans you can inspect, but if you attack me, I will use it. That leaves the Americans with the problem of checking and verifying and intercepting ships, aircraft, endless problems.

SPIEGEL: Would that save Kim's regime?
Mr. Lee: In the long run I think they will implode sooner or later because their system cannot survive. They can see China, they can see Russia and Vietnam, all opening up. If they open up, their system of control of the people will break down. So they must go.S

PIEGEL: If the six party talks fail, do you foresee an arms race in Eastern Asia?
Mr. Lee: If the nuclear program is frozen, there won't be an arms race. Eventually, it is not in China's interests to have an erratic Korea nuclear-armed and a Japan nuclear-armed. That reduces China's position.

SPIEGEL: Many Americans fear that China and the US are bound to become strategic rivals. Will this become the great rivalry of the 21st century?
Mr. Lee: Rivals, yes, but not necessarily enemies. The Chinese have spent a lot of energy and time to make sure that their periphery is friendly to them. So, they settled with Russia, they have settled with India. They're going to have a free trade agreement with India -- they're learning from each other. Instead of quarrelling with the Philippines and the Vietnamese over oil in the South China Sea, they have agreed on joint exploration and sharing. They've agreed on a strategic agreement with Indonesia for bilateral trade and technology.

SPIEGEL: But the Americans are trying to encircle China. They have won new bases in Central Asia.
Mr. Lee: The Chinese are very conscious of being encircled by allies of America. But they are very good in countering those moves. South Korea today has the largest number of foreign students in China. They see their future in China. So, the only country that's openly on America's side is Japan. All the others are either neutral or friendly to China.

SPIEGEL: During your career, you have kept your distance from Western style democracy. Are you still convinced that an authoritarian system is the future for Asia?
Mr. Lee: Why should I be against democracy? The British came here, never gave me democracy, except when they were about to leave. But I cannot run my system based on their rules. I have to amend it to fit my people's position. In multiracial societies, you don't vote in accordance with your economic interests and social interests, you vote in accordance with race and religion. Supposing I'd run their system here, Malays would vote for Muslims, Indians would vote for Indians, Chinese would vote for Chinese. I would have a constant clash in my Parliament which cannot be resolved because the Chinese majority would always overrule them. So I found a formula that changes that...

SPIEGEL: ... and that turned Singapore de facto into a one party state. Critics say that Singapore resembles a Lee Family Enterprise. Your son is the Prime Minister, your daughter-in-law heads the powerful Development Agency...
Mr. Lee: ... and my other son is CEO of Singapore Telecoms, my daughter is head of the National Institute for Neurology. This is a very small community of 4 million people. We run a meritocracy. If the Lee Family set an example of nepotism, that system would collapse. If I were not the prime minister, my son could have become Prime Minister several years earlier. It is against my interest to allow any family member who's incompetent to hold an important job because that would be a disaster for Singapore and my legacy. That cannot be allowed.

The interview was conducted by editors Hans Hoyng and Andreas Lorenz.

Translated from the German by Christoper Sultan

China vs India (and the Muslim world): equality and meritocracy, Productivity Lost Index

There have been some discussions comparing China and India, e.g., Jayapraka Narayan of India and Businessweek. India has just as many (or more) western educated engineers and scientist. Indian has the advantages of better command of the international language of science and business, English. There are far more successful Indian business managers and executives in US, while Chinese seldom rise to the top management in corporate America. One wonders why China is so much ahead of the game.

Narayan said, "Why such a difference in outcomes between China and India, despite both countries embarking upon market policies? There are three substantial factors slowing IndiaÂ’s growth. First, we have never given adequate importance to education and healthcare...Second, the severe infrastructure bottlenecks...Third, India never acted with consistency even in pursuing economic reform..."

I think Narayan was right on about education and consistency (a clear strategy and adhering to it, despite major political crisis in 1989). However, I think infrastructure is a only secondary reason, as it is part of the consistent policy driven by economic affordability as well. While consistent policy and education are certainly important, I tend to think there are something behind education. They are equality and meritocracy. We might as well apply such comparison to the muslim world as well.

• Despite the income disparity and inequality between rural and urban residents, China offers relatively reasonable equal opportunities to everyone.
• Although rural students may quit school after 8th grade (and some girls quit earlier), they do receivee the basic education essential for medium/low skilled jobs.
• Although discrimination to rural migrant workers and women are common, the situation is much less serious than the caste discrimination in India, or sex discrimination in many developing countries, and the muslim world.
• If you work hard enough and are lucky enough, even rural resident or women could succeed and win respect in China
• Another important heritage from the communist/Mao era for China is that women hold up half the sky, the rights of women in urban China are probably better than those in many developed world, esp Korea and Japan.

The underprivileged in India or women in the muslim world do not have the same level of opportunity. Estimate of 160-240M of Dalit in India represents 15-25% of the entire population. The productive population is effectively halved at the muslim world and even lower in India, while the population burden remains high. Let's try to quantify the lost of productivity in a population as below.

Updated: (Thanks to WK Lee for the links) There are two excellent discussions about India education and the caste system. Stratification in social caste not only denied talents from lower caste the opportunity to contribute to the society, it also deprived any motivation to work hard and create wealth for oneself and society. High degree of work specialization based sub-castes may help in improving productivity in ancient time when trade is rather localized. Such "planned economy" is a hindrance to development in modern economy, because the Kurumaas and Golaas population may outgrow that of the sheep population they are supposed to raise, and the best shepard may be born in the Kaapy sub-caste family (there is no evidence that such skills are genetic in nature)

Let's try to quatify this. Let's define Productivity Lost Index as the % of the working population who are deprived the right to work as skilled labor (and the right to "proper" education). Discrimination on better job opportunity among skilled labor is not considered as it is hard to quantify. The disparity might be larger if one include such Universal Discrimination Factot (UDF)

Here are the rough estimates - note here we only focus on the opportunity to work, while there is probably an universal discrimination factor (UDF) over what kind of work is given to the under-privileged across all countries in the world. Singapore and some European countries probably perform best in the UDF measure, US good overall but might be slightly impacted negatively by hidden racial inequality

• Japan/Korea 15% : 30% women(x50%)
• China 15%: assume 50% of the rural(x67%) women(x50%), exclude migrant workers who have left the villages (x67% stayed rural), + 20% of urban (x33%) women (x50%)
• Muslim world 30%: 60% of the women(x50%)
• India 36%: 20% Dalit(x80%) + 50% non-dalit (x80%) women (x50%)
• (appreciate if anyone can provide data to improve my estimate)

(One may want to argue that most women stay at home in Japan. But in reality many Japanese women work and they all receive very good education, not different from that for men. Same for Korea, or the European before women are allowed to vote. One can see as far as economic development is concerned, the opportunity to receive education and work is more important than that of voting. In my estimate above the lower job opportunity for women in Japan and Korea compared with urban China is sort of compensated by similar effect in rural China)

(We can also compare literacy rate: India=59.5%, of which male 70.2%, female 48.3%; China=90.9%; male: 95.1% female: 86.5% notice the male/female literacy disparity ratio is 1.4 (India) vs 1.1 (China) )

Therefore, China is an economy of 1.3bn x 85%=1.1bn, India 1.1bn x 65% =0.7bn! (neglecting the negative effect of the super-poor class which contribute to destructive factors in society such as crime and diseases)

China's formula for success is, not co-incidentally, that of Singapore's. And Singapore's formula of meritocracy is, to a large extent, what American value is. Despite not being a democracy, China embraced much of the values adopted by democratic countries and ruled with a rational decision making processes. That is the reason for China's success. If India will follow China's path, the first thing is bring true equality and meritocracy to all its people. If the muslim world is to restore the glory from the 8th to 19th century, the productivity of 50% of its population need to be liberated.

Businessweek interviewed a number of experts. But some of the opinions are, in my view, only tangential on the fundamental issues. e.g.,

• "Indian democracy is viewed as a hindrance vis-a-vis the stability of China's authoritarian regime on its liberalizing market and docile unions." - Japan did not have an authoritarian regime, nor did America, or Singapore in 1965 (or Slovenia, Czech, Estonia). I tend to think democracy is only marginally relevant to economic growth. Liberty is, which India also has, sort of. India's democracy did not enhance or hinder its economic development
• "India also lacks a Hong Kong and a Taiwan, next-door technology, and capital hubs". - There are just as many smart and educated Indian in Europe and USA as there are Chinese (or Taiwanese who went back to Taiwan to build the computer industry)
• "If India were to grow faster than China, it must increase its attractiveness to investing companies in terms of its market size and potential for luxury products...This is evidenced by ubiquitous presence of luxury brands from Starbucks to Louis Vuitton in China vs. India" - FDI is important, but it is only one part of consistent policy and meritocracy (Give equal opportunity to competent foreign companies). To make "luxury products" a strategy is, I am sorry, quite misleading and naive. Perhaps she meant to say value-added and technology content like Boeing, Microsoft and Google, or marketing/brand building expertise like P&G.

The fundamental question is still: How to bring the best out of the resources you have? Ans: give everyone a fair opportunity, and set up a level field for them to play. FDI, anti-corruptions, democracy, policy consistency and coherence...They all point to one sign post, fair play and fair reward. Fair play is the fundamental of capitalism. China is still far from perfect, it is hardly the model for fair play. Singapore is. There are so much more that China needs to do. But China learns about fair play very fast and practices it better than other developing countries. The unfairness in India and those other countries is so enormous that it makes China looks like a saint. Such unfairness is sociological and cultural, rather than political or policy driven.

Update: I am grateful that Asiapundit has quoted this post, but I would like to clarify that the inequality for women is only one of the unfairness in India, the caste discrimination is responsible for lost of productivity among many men as well.