According to Brea, in her post titled "Africa as China and India's 'New Economic Frontier,"
There has long been chatter about labor shortages creating upward pressure on Chinese wages and the fact that Chinese products may become less competitive, if not in first world markets, then in China's own domestic market. This is where the potential for Africa to use its comparative advantage - a low-cost labor force - comes in. If that labor force were mobilized, it could produce products for Indian and Chinese consumers at lower prices than many Indian and Chinese producers.My question is "Where does it all end?" When India begins depending on cheap labor in Africa, then where will Africans turn to find their cheap labor? And in the meantime, what will happen to the 600,000,000 Indians living in poverty whose own government bypassed them for even cheaper labor in Africa?
India has solved one problem, it has found a sound engine of economic growth. And from what I have read lately, it sounds like some of the IT sector growth is stimulating the manufacturing sector. There was a New York Times article earlier in September titled "A Younger India is Flexing its Industrial Brawn," about which Kamla Bhatt and chacko, among a few others, blogged. The main argument is that India has a younger population, no one-child policy, and hence a more robust workforce that is situated to step into the gap left if and when China falters.
Aside from the infrastructure and other obvious differences between India and China, India has another major hurdle to overcome: many manufacturing jobs require basic level of education, some even demand English language skills; at the very least, most manufacturing jobs require literacy, if not in Engligh then in Hindi. But the vast majority of the 600,000,000 Indians living in poverty, those who most need whatever new manufacturing jobs India creates, do not speak functional English, nor do many of them read or write in their mother tongues. So educating them, even just to the level to function in a factory job, is quite a challenge, and one that government after government has been unable/unwilling to take on.
But even before getting to that point, I want to return to my original question. Where does it all end? Does Africa have a labor pool that exceeds India's when it comes to the basic skills required for manufacturing jobs? If so, then maybe we'll see India shift its attention to Africa to get more cheaply the consumer goods its middle class increasingly demands.
But I don't think Africa is any better off than India (I realize I am comparing a country and a continent, crude as it is). The real race will be to see who will be the first to provide the basic social infrastructure needed to raise the labor pool to certain basic standards. Even then, in the greater scheme of things, I'm quite skeptical. The production-consumption cycle of global capitalism--a cycle in which prodcution processes are moved around the world to find the cheapest resources and cheapest labor, and completed goods are then moved back to the wealthiest parts of the world where they are consumed--is utterly unsustainable.
And, yes, I'll be the first to admit (since even environmentalists seem wary to bring it up), Americans must seriously consider lifestyle downsizing. We need to find ways to live richly without plundering the world's resources, and without setting a goal for the rest of the world that we simply cannot afford to have everyone achieve.
Technorati tags: India economy, Africa, China