January 2, 2016

Learning about India by Starting with the State-Level

As China's economy continues to decelerate, multinational companies may soon be looking at business opportunities in India--the world's fastest growing economy as measured by gross domestic product (GDP), according to the Center for International Development at Harvard University. "India tops the global list for predicted annual growth rate for the coming decade, at 7.0 percent. This far outpaces projections for its northern neighbor and economic rival, China, which the researchers expect to face a continued slowdown to 4.3 percent growth annually to 2024."

In my limited experience of working in India, I learned that the country with a population of 1.3 billion within a federal union of twenty-nine states and seven union territories contains a myriad of complexities best understood at the state-level.

Amit Kapoor, Ph.D, president and CEO of the India Council on Competitiveness and honorary chairman of the Institute for Competitiveness, was interviewed by the Seattle, Wash.-based National Bureau of Asian Research about understanding the competitiveness of India's states including key trends, investment patterns, signs of progress, and suggestions for improvements in state-level competitiveness.

As companies look for opportunities in what is expected to become the world's most populous country by 2022, according to the United Nations, I found particular value in Dr. Kapoor's comment:
For decision-makers in particular, focusing on how to improve the competitiveness of individual states can ultimately make [India] more prosperous. This bottom-up approach provides a more detailed look at the distinctions between high- and low-growth states; identifies areas that have greater firm concentration, network effects, openness, and integration into the world economy; and reveals the characteristics or policy measures that led to each growth pattern. Therefore, it is extremely important to dig deeper than country-level analysis and actually focus on what is happening at the regional and state levels in bigger economies.
In addition, Dr. Kapoor notes that infrastructure and urbanization is a challenge India will need to address:
India's urban density is one of the highest in the world and will continue to increase as more people flock to the cities. China just witnessed a major migration during its period of economic dynamism, and India will see a similar scale of migration over the next fifteen to twenty years. How the government manages this massive shift of people will greatly affect the country's competitiveness and economic reform efforts.
Dr. Kapoor's interview provides good insights on how to accurately learn about India by starting with the state-level of what is now the world's fastest growing economy. Do you agree? What would you add?

Aaron Rose serves as President and CEO of ROI3, Inc., a Seattle, Wash.-based company that empowers people in emerging economies through innovative, technology-based solutions. He is also the editor of Solutions for a Sustainable World.

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