Wednesday, September 27, 2006

Africa: India's next great source of labor?

Jen Brea at Africabeat recently blogged about a new World Bank book that says China and India are part of Africa's "Silk Road." The idea is that Africa is poised for great economic growth through increasing trade with India and China. According to the book's promotional site, it is the first attempt to offer "systematic empirical evidence on how the two emerging economic giants of Asia— China and India—now stand at the crossroads of the explosion of African-Asian trade and investment."

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.

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5 comments:

Jennifer Brea said...

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.

This is an interesting point. It scares me beyond belief that in China, the U.S. is the goal a billion people are rushing toward. I really don't think we should be the model for anyone's development.

gaddeswarup said...

Just a quick note. Kuffir seems to think that Senegal is doing well:
http://kufr.blogspot.com/

kuffir said...

'Americans must seriously consider lifestyle downsizing.'

would they? i hope there are others who've come around to the same view.

'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.'

i agree india needs to work on education more than anything else...but how great is the difference between india and china - in terms of educated workforce required to work in factories.

gaddeswarup,

i think senegal is trying out realistic solutions..without compromising on democracy. in my view, that's the achievement.

gaddeswarup said...

A very interesting article in Open democracy on cotton and globalization:
http://www.opendemocracy.net/arts-Literature/ulysses5_3938.jsp

gaddeswarup said...

I added a few more links in my blog including this one:
http://www.geocities.com/wgfs2004/Iowa_is_not_far_from_Telengana.pdf
The problem with these discissions is that issues are complex and on a global scale and many like me are not specialists in these problems. We just see one thread and feel that we have discovered the truth. But there seem to be many inter-related issues. But I feel that the facts and issues are becoming clearer and whether any solution or solutions can be found remains to be seen.