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Lester Thurow’s Wake-up Call to India

November 5th, 2003 · No Comments

Technology Review feature an interview with the MIT economist by Venkatest Hariharan. A few excerpts:

In the knowledge economy, Thurow says, countries that wish to stay ahead must pay great attention to education. “Ask yourselves this question30 or 50 years from now what job will an illiterate do? By that time you will have robots to do what an illiterate does now. Today, I can get a robot that can mow my lawn and does not cost more than an ordinary lawn mower. Very soon they will be cleaning the house and doing other household chores.”

Thurow emphasizes that the knowledge economy means more than just information technology and programming. “Every job will have a big knowledge component,” he says. A worker in a steel mill, he says, “is more likely to sit behind a computer screen than lift anything physically. When we are talking about knowledge workers, we are talking about any job that has a knowledge component.” And fewer and fewer jobs fall outside of that description, he says.

According to Thurow, the lack of widespread, basic education in India handicaps the country as it competes with China. “More people are in Chinese grade schools than are in Indian grade schools,” he contends. Thurow praises China’s approach of getting everybody educated up to the third grade, then to the sixth grade, tenth grade, twelfth grade, and so on. “The worst educated province in China is better than the best educated province in India,” he says. While conceding that Indian universities are superior to those in China, he says that India’s “top down” strategy for developing its high-tech workforce is not as good as China’s “bottom-up” approach. India “cannot allow this to continue in the long run,” he warns, adding that the country “better have a strategy that gets everybody educated.”

When it comes to globalization, Thurow says that India is ambivalent. “One of the big factors in attracting foreign direct investment, or FDI, is the speed of making decisionsand China pulls in 30 times the FDI that India does,” Thurow says. “The Chinese understand that you have to sell yourself to the foreign corporations as a good place to do business. The truth of the matter is that India has not yet come to that conclusion.”

Thurow notes that there were two ways for a country to acquire technology. One is to copy it, as Japan did in the past. But this strategy is becoming increasingly difficult because people are locking up their technology. The other approach is to attract foreign investment, which brings technology with it. “FDI is not just money,” he explains. “It’s about technology, markets, and hiring scarce managerial and engineering talent.”

Striking a cautionary note, Thurow says that India was quasi-left out of the global economy. Even the country’s much vaunted success in the IT industry needs to be put in perspective, he says. Indias software exports last year totaled around $10 billion while Microsoft alone was around $50 billion. If India does not carry its masses along with it, he says, it will not be able to succeed in the knowledge economy.

Tags: Emerging Markets

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