Q: if moving from A-I-S is sure thing to happen, how can economies make most of it ? i mean for eg if china...what shd they idealistically be doing ? start concentration in service industry ??
A: Countries should move away from low cost manufacturing, to more quality value added manufacturing which will give them more margin and help them to pay higher wages, those kinds of manufacturing also requires lesser man power. Simultaneously they will move towards a services economy which can absorb high value high skilled employees. Low cost core competency is easily imitable, and wont stay as a competitive advantage for more than 10 years max.
Q: but tht means tht every country through dis transition period will create economic drifts between rich and poor
A: poor gets richer as they get higher wages. my grandfather was an agriculturalist. my father was an engineer of the industrial era and me and my brother are of the services era. our standard of living has grown. we were very poor 2 generations ago and we are all well off today
Q: but now suppose china is shifting to high qulaity value production ...what hppens to the unskilled labour ....as the conomy shifts....the existing unskilled labor will lose jobs and have less pay?
A: no, they will get better paid jobs as companies will increase their skill sets through training. overall wages will go up anyway
Q: then why is there such huge gap of rich and poor in india?
A: many reasons. In India, 60% of the people are dependent on agriculture. they have not migrated to industrial economy and agriculture gives the least returns and wages. Successive governments were more keen on giving them doles but hardly did anything to give them skill sets
Q: if you look at the 60 % then we can't say tht india has moved to the manufacturing stage right
A: give a man a fish, you satiate his hunger for a day. Teach him fishing and you give him a living. India is a rare country
Q: atleast not entirely as most of the population is still farming
A: we moved from Agri to Services and then came back to industrialization. this was a problem , as agri to services is not a logical transformation for most, hence only the elite benefitted or the middle class but the farmers suffered. also some of the figures are skewed. these farmers kids have migrated and are in services sector. they either ignore their parents or parents refuse to move out to live with children. we missed the industrialization bus in 1970 due to license raj and went back to it only by 2000. the clashes we are seeing on grabbing land for industrialization, is a sign of growing I-economy in rural areas also govt. dont spend money on rural development ,they dont create assets, they dont create small industrial clusters, and there is widespread corruption
Q: so basically it means we have been put behind a decade due to license raj
A: only 15 paise out of each rupee spent on rural population benefit the beneficiary. you are correct. we lost not one, but 3 decades or at least a quarter of a century. the green revolution of late 60s should have led to industrialzation based on agro output in 70s. this did not happen. also govt, killed pvt initiative and gave govt jobs left right and centre. this created a generation or two of unproductive people
