Apr 21, 2011

Book Review of "India's Global Powerhouses"

In Jules Verne's A Journey to the Center of the Earth Professor Lidenbrock buys a manuscript written in an old and cryptic language. He spends several days trying to decipher its meaning. Sometimes I see myself like Professor Lidenbrock when trying to understand the economies of India and China. The book, India's Global Powerhouses, has helped me put some pieces together. In my economic development class we have read some articles related to India, including a comparison between the economies of China and India, but reading a complete book about the topic makes one's mind think longer and probably deeper about the topic.

India is so vast in almost every sense that one's understanding of the country depends on what sector of the economy one looks at. There is certainly poverty and inequality, and it seems like the high rates of economic growth are not translating themselves into broader improvements in leaving standards.

The recent economic growth of India is due to its cost advantage, but more recently there is also a high degree of sophistication in products and services. Infosys is a case in point. With more than ninety thousand employees around the world the company offers a plethora of highly technical consulting services.

The book looks at corporate India, it has a positive tone, and an optimistic approach. It presents the history and current growth of the Indian companies that are becoming truly global. From Tata, a consortium group that produces steel, vehicles, tea, and consulting services (among other products), to Mahindra & Mahindra, one of the world leaders in tractor production.

I took the book with me to my macroeconomic classes and by telling the story to my students, and by looking for the companies online, we have a better understanding of the of companies and people behind the consistently high rates of growth of India.

My students and I dropped our jaws when we saw an online picture of the building of Infosys, and also when we learned that Jaguar and Land Rover where acquired by Tata group. We looked at the websites of some of the companies described in the book like Mahindra & Mahindra, Suzlon, and Tata itself, and were very impressed. We also found a TED video on innovation in India, more specifically on the development of the Nano, and "ultra low-cost" little car (US$ 2000), and other advancements.

This is a well written and balanced book. The last part of the book reminds us of the huge challenges that still remain in India. Bureaucracy and corruption are ubiquitous.

I could not put the book down. At the end I felt a bit like Professor Lidenbrock in the Jules Verne's novel who after some days of study could decipher the cryptic message. Although there are still several black holes in my understanding of the Indian economy, I have made some progress :)

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