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Can India catch up? Can Australia do better? - - Giving freedom a chance By Sanjeev Sabhlok, 15 November 2011
Copyright ,[object Object],[object Object],[object Object],[object Object],[object Object]
Structure of the talk ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
1. An explanatory framework
[object Object],- Adam Smith  anticipating the socialists and Keynesians even in 1776
Freedom  leads to innovation which leads to growth ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Simplified explanatory framework Growth =  f  (freedom, opportunity) 1 2 3 n Two  obstacles to freedom Opportunity (technical  frontier ) Governance must  enable liberty  ( social reform  is not a government’s job) Ideas don’t   come from governments Innovation pushes out  the  frontier   ,[object Object],[object Object],[object Object],[object Object],People innovate better if the   government gets out of their way ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
The rise and fall of freedom in the West ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],1947 1991 High levels  of freedom Keynesian socialism Hayekian  fight back Keynesian socialism ,[object Object],[object Object],Bigger government, “fine tuning”, “Keynesian stimulus”, paternalistic regulation = falling levels of liberty =  inability to compete (e.g. Detroit) ,[object Object],[object Object],[object Object],[object Object],Post-1688
What’s been the trajectory of freedom in India? Colonialism  Keynesian socialism  Some freedom 1947 1991 India’s story: increasing freedom ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
2.  India is now the world’s largest free market laboratory Can India catch up?
India: the world’s largest test case for liberty ,[object Object],[object Object],[object Object],[object Object],[object Object]
India’s output has  responded rapidly  to the limited increase in freedom ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Liberty works – the cases of China and India ,[object Object],Table:  Share of world output measured in terms of PPP China will overtake US, even  at current exchange rates , by 2020
But can India  actually  catch up?  ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Forecast -  assuming unchanged governance ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Third reason:  Young population By 2050, nearly 40 per cent of China’s population will be older than 65
But catch-up is not about GDP. It is about  per capita GDP ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
[object Object]
Those who catch up can do better (than the leader) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Examples where India is  already   one of the leaders ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Tens of examples documented  in many recent books
Bad news : Mammoth competitive pressure on the West ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Good news :  New opportunities ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
4. How should Australia respond? - and, can Australia do better?
Australia remains  inside  the technical frontier ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
How could Australia do better? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Note : Geo-strategic imperatives also support stronger ties with India.
[object Object],[object Object]
EXTRA SLIDES – IN NO PARTICULAR ORDER
More info about the framework used in these slides: ,[object Object],[object Object],[object Object],[object Object]
Quick historical overview ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
The result: Modern economic growth ,[object Object],[object Object],[object Object],[object Object],Source: Madison >> The Western economies started growing: an unprecedented phenomenon!
Key changes since 1400 ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Detailed discussion  in my draft manuscript,  The Discovery of Freedom (available on the internet)
India was the world superpower till 1750 ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Why did India struggle even after the end of colonialism? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Per capita income shot up in the West, then Japan, then…
Visual depiction ,[object Object],[object Object],[object Object],[object Object],China India
Comparative growth of India and China
China will overtake US in real exchange terms by 2020 Source:  The Economist , 25 June 2011
India positives ,[object Object],[object Object],[object Object],[object Object],Source of the graph:  http://mpra.ub.uni-muenchen.de/10316/1/MPRA_paper_10316.pdf
India is  already   Australia’s  third largest export market  ($19.8 billion) in 2009-10 Source :  Composition of Trade, DFAT . Already  fifth largest  two-way trading partner Will become second largest trade partner in the next decade
India key negatives ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

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Can India Catch Up? Can Australia Do Better?

  • 1. Can India catch up? Can Australia do better? - - Giving freedom a chance By Sanjeev Sabhlok, 15 November 2011
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  • 4. 1. An explanatory framework
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  • 10. 2. India is now the world’s largest free market laboratory Can India catch up?
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  • 16. Third reason: Young population By 2050, nearly 40 per cent of China’s population will be older than 65
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  • 23. 4. How should Australia respond? - and, can Australia do better?
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  • 27. EXTRA SLIDES – IN NO PARTICULAR ORDER
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  • 34. Per capita income shot up in the West, then Japan, then…
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  • 36. Comparative growth of India and China
  • 37. China will overtake US in real exchange terms by 2020 Source: The Economist , 25 June 2011
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  • 39. India is already Australia’s third largest export market ($19.8 billion) in 2009-10 Source : Composition of Trade, DFAT . Already fifth largest two-way trading partner Will become second largest trade partner in the next decade
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