Free Markets: China, India and Globalization 3.0

Free market is a concept which moots the idea "Business gets done where it gets done the best". It means businesses will always tend to minimise costs and maximise benefits. Profit is the name of the game.

China, the apple of the eye of the developing world and India's great nightmare is able to churn out manufactured products at jaw-dropping costs. and consistently enough now - its been about seven years now since they joined the WTO and opened up their markets in the truest sense of the word. "To get rich is glorious" declared the Chinese leader Deng Xiaoping back in 1977, when he put China on the road to capitalism.

China can amass so many low-wage workers to cater to their industrial needs because it has such a voracious appetite for factory equipment and knowledge jobs. This is precisely where the government has to step-in. Create the ecosystem and let the flowers bloom. Because as as long as there are needs and wants, and they will be forever, there will be these industrial flowers eager to bloom. Immediately within a year of joining the WTO China saw a boom in their infrastructure - the government was under pressure from the private companies to provide them the ecosystem for the millions of dollars that they were willing to pool in. Privatization has done China a world of good and i am a little worried that China has found the key to the treasure.

Cutting across to India, the poster boy of our economic reforms and growth - the telecom sector is a shining example what private companies can do with optimum government support. In just one hour, India Inc. sells about 12,000 phones!! It marks a landmark growth-rate of 42 pc in teledensity this year. The government alone could never have done that.

This leads us to a very interesting phenomenon called Globalization 3.0. The term is coined by Thomas Friedman in his book - 'The world is Flat'. Globalisation 3.0 is when you empower an individual with tools to excel - tools like education, electricity, infrastructure, broadband connectivity - tools that'll enable him go into the wild and hunt for himself. You are putting the ball in the court of the individual citizens. You are enabling "Business to get done where it gets done the best".

In the long run, the answer lies in a conscious effort by the government to generate ecosystems, letting private companies model the market, let the market itself decide the course of the development. And as it has shown in the past - be it the the-world's-favorite-son Obama's USA or Japan, they have done it. I am sure we can too.

Three key phrases:

Business gets done where it gets done the best
Government should create ecosystems
Globalization 3.0

PS: The above is a modified reader-friendly version of my entry in the IITM's inter-hostel debate.
PS 2: The skeleton of the discussion is based on 'The World is Flat' by Thomas Friedman