Impact of Industrial Revolution on World's Economy and History

The Industrial Revolution marked the beginning of a major shift in economic, military and
political power from East to West.

A research letter written by Michael Cembalest, chairman of market and investment strategy at
JP Morgan, and published in the Atlantic Magazine shows how dramatic this economic power
shift has been. The size of a nation's GDP depended on the size of its population and labor force
in agrarian economies prior to the Industrial era. With the advent of the Industrial revolution,
the use of machines relying on energy from fossil fuels dramatically enhanced labor productivity
in the West and shifted the balance of power from Asia to America and Europe.

The shift in power was not just in economic terms. Enabled by machines such as steamboats and
weapons like the repeating gun, the West engaged in long distance trade and warfare that led to
the colonization and exploitation of Asia and Africa. The new colonies were used as a source of
cheap raw materials for European factories and the colonized people served as captive customers
for their manufactured products.

History of Per Capita GDP of Selected Countries. Source: Angus Maddison

While development of Asian and African nations stagnated and their share of world GDP
dropped precipitously, their colonial rulers in the West prospered. Social indicators like literacy
and life expectancy showed little improvement in the colonies, according to data compiled by
Professor Hans Rosling. For example, his Gapminder.org animations show that life expectancy
in India and Pakistan was just 32 years in 1947. In Pakistan, it has jumped to 67 years in 2011,
and per Capita inflation-adjusted PPP income has risen from $766 in 1948 to about $3000 in
2011. Similarly, literacy rate in undivided India was just 12% in 1947. It has increased to about
67% in India and 62% in Pakistan for people 15 years and above.

Indicators such as per capita energy consumption and Internet usage confirm the rise of Asia,
particularly Asian giant China's. China's per capita energy consumption now stands at 68 million
BTUs, about a fifth of US per capita energy consumption, but it's rising rapidly. Pakistan is at 15
million BTUs per capita, Bangladesh at 6 million BTUs and Sri Lanka at 10 million BTUs.In
terms of Internet access, China now tops the world with over 500 million users, more than twice
the number of Internet users in the United States. Among the world's top 20 are South Asian
nations of India with 120 million Internet users and Pakistan with 30 million users, according to
Internet World Stats.

While there has been progress on economic and social fronts in South Asia, the combined GDP
of SAARC nation is still accounts for less than 4% of the world GDP. China has significantly
increased its share and now accounts for more than 10% of the world GDP marking the biggest
economic shift since the Industrial Revolution. China's growing economic clout will ultimately
translate into political and military power in the international arena.
All indications are that the pendulum of power has just begun its swing eastward in the last
decade. It could be a century or more before the effects of this swing are truly felt in terms of the
exercise of economic, military and political power on the world stage. Meanwhile, the 21st
century is shaping up to be another American century in which United States' extraordinary
power will not go entirely unchallenged by multiple potential adversaries, including China.
Here's a video discussion on the subject:
http://vimeo.com/117657383

Vision 2047: Political Revolutions and South Asia from WBT TV on Vimeo.
Here's a video of a BBC documentary about Al Andalusia or Muslim Spain:

Related Links:
Haq's Musings

Pakistan Military Industrial Revolution

China's Checkbook Diplomacy
Education Attainment in South Asia
Pakistan Needs Comprehensive Energy Policy
Social Media Growth in Pakistan
Is America Young and Barbaric?
Godfather Metaphor for Uncle Sam
Posted by Riaz Haq at 5:26 PM
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Labels: Economic History, Industrial Revolution
16 comments:

Riaz Haq said...

Here's a WSJ story on growth challenges for China and India:
India and China are grappling with different issues. China doesn't want to repeat the
mistakessuch as triggering a property bubblethat it made in its all-out response to
the global financial crisis of 2009. India, meanwhile, is struggling to carry out structural
economic reforms it failed to enact during its recent boom years.
China's gross domestic product has grown at an average annualized rate of 10% since
2000, but government officials know they can't sustain that torrid pace. Growth fell to
8.1% year-over-year in the first quarter, the slowest pace since 2009, and is widely
expected to fall to about 7.5% in the second quarter. If the euro-zone crisis persistsor
China's stimulus is poorly carried outChina's growth may weaken further.
But China is better positioned to handle a shock than it was in 2008. It relies less on
trade for growth: In 2008, China's net exports amounted to 7.7% of GDP; in 2011 the
share had dropped to 2.6%. Beijing reported on Monday that inflation declined to 2.2%
in June, compared with a year ago. With government debt at an estimated 22% of GDP,
China has plenty of levers to pull to stimulate its economy in the face of declining
demand.
--------"China is in a very comfortable position compared to the rest of the world," said Luis
Kuijs, project director at the Fung Global Institute, a Hong Kong think tank. "It's more a

matter of choice of what policy measures it will take to stimulate the economy, rather
than whether it will be able to."
----------"India's hands are tied, and because of that it's much more exposed to the global
slowdown," said Frederic Neumann, co-head of Asian economic research for HSBC. "It
has no fiscal ammo left to pump-prime the economy, so it has to endure a slowdown and
take it on the chin."
India's main challenge is to stimulate business investment, which is drying up amid
wariness among both domestic and foreign companies about shifting tax policies and
regulations. The country's currency, the rupee, has tumbled against the dollar in the past
year, partly due to growing investor concerns about India's high current-account deficit,
which is roughly 4% of GDP. The rupee's fall has driven up real import costs for Indian
companies and made foreign-currency loans more expensive to service.
The Reserve Bank of India in April cut interest rates for the first time in three years to
fuel business lending. But when industry was looking for more last month, the central
bank said it couldn't cut rates further with inflation uncomfortably high at 7.6%.
"The sad thing is that it makes sense in China for it to be slowing down, because it's
maturing from a low-income to a middle-income economy," said Rob Subbaraman, Asia
economist at Nomura Securities. "In India, growth should be picking up and not slowing
down."
http://online.wsj.com/article/SB10001424052702304058404577496443063859250.html
July 9, 2012 at 10:21 PM
Riaz Haq said...
Here's a Wharton School piece on India's low ranking on innovation index:
Just a few weeks ago, global credit rating agency Standard and Poors (S&P) released a
study titled, Will India be the first BRIC fallen angel? The report suggests that India
may become the first BRIC country (Brazil, Russia, India and China) to lose its
investment grade rating. While it remains to be seen if India can escape this ignominy,
the country has earned another dubious distinction: It ranks the lowest among the BRIC
nations on the Global Innovation Index 2012.
This innovation index was released recently by the international business school INSEAD
and the World Intellectual Property Organization (WIPO) along with the Confederation
of Indian Industries (CII), Alcatel-Lucent and Booz & Co. The index ranks 141 countries
on the basis of their innovation capabilities and results. Brazil, Russia and China were
ranked 58th, 51st and 34th respectively. India stands at the 64th position, two notches
below where the country landed last year.

According to the study, The innovation front in India continues to be penalized by

deficits in human capital and research; infrastructure and business sophistication, where
it comes last among BRICs, and in knowledge and technology outputs, where it comes in
ahead of Brazil only. The report also notes that the BRIC countries need to invest
further in their innovation capabilities to live up to their expected potential.
Vijay Govindarajan, a professor of international business at Dartmouth College and the
first professor-in-residence and chief innovation consultant at General Electric, points
out that innovation is critical to Indias future. He suggests that the government must
provide seed capital to strengthen applications research and create incentives for
universities, research labs and industry to collaborate. Much is at stake if India does
not move up on the Global Innovation Index, Govindarajan says. Without business
model innovations, India cannot solve the problems for 90% of Indians. Such innovations
can then be used to launch global strategies. This is the essence of reverse innovation
[innovations adopted first in the developing world] where India can lead.
As part of the same report, India is ranked second (behind China) in the global
innovation efficiency index. (The innovation efficiency index is the ratio of innovation
input and innovation output.) Chandrajit Banerjee, director-general of CII notes that
innovation efficiency is a ratio and not a direct measure . [This implies that] while
India can produce innovation output best in the world when equal amounts of input are
fed into its innovation ecosystem, it also needs to strengthen certain innovation drivers
that will improve the situation.
Gopichand Katragadda, managing director of General Electrics John F. Welch
Technology Center in Bangalore adds: The results of the study point to the fact that, in
India, the innovation ecosystem (input) is poor while the knowledge/creative output
under the constraints is good. One interpretation of this is that we need better
government measures on regulations, education and infrastructure to tap the
demonstrated potential of talented people.
According to Katragadda, if India does not get its act together on the innovation front,
the country could lose the opportunity to make this a century of Indian innovation,
tapping into the brilliant technical minds of the region.
http://knowledgetoday.wharton.upenn.edu/2012/07/india-ranks-lowest-amongst-brics-ininnovation/
July 11, 2012 at 4:40 PM
Riaz Haq said...
Here's a Wall Street Journal Op Ed by Prof Walter Russell Meade on the impact of
European economic crisis on geopolitics:
The crisis of the euro zone is a geopolitical as well as an economic event. While Europe

may yet find a path out of its economic quagmire, it will turn inward for some time as it
reorganizes some of its core institutions. The world will not stand still while this happens.
To begin with, Europe's disorder is a grand opportunity for Russia. It is not all good
news in the KremlinRussia will hurt economically, as the European Union is its most
important trading partner and customer for oil and gas. But geopolitically, Russia will
have a lot of new opportunities. Ukraine, Moldova and Belarus will feel less pull from
the West and more from the East.
----------Elsewhere, the euro crisis has reinforced Turkey's decision to drop its long courtship of
Europe and become an independent actor. Europe looks less and less to the Turks like a
model to imitate and more and more like a fate to avoid. Turkey in any case would like to
replace the EU as a major political and economic force in the Arab world, and it is likely
to use this period of European introspection and preoccupation to advance its agenda.
Between Russia's new geopolitical opportunities and Turkey's detachment from Europe,
the situation in the Balkans is going to become much more confused and perhaps even
dangerous. If Greece ends up leaving the euro or is deeply embittered with Brussels and
the EU over the long term, and if Cyprus is similarly affected (likely, given its close
economic ties to Greece), we could see Greece and Cyprus tilt toward Russia.
-----------This is bad news for Americans. An assumption that Europe is in a period of continuing
decline is to some degree baked into the cake of American foreign policy. The perception
that Europe (and Japan) are no longer the powers they once were has driven the U.S. to
look for new partners as it seeks to build a liberal world system in the 21st century.
But Americans expected a slow and gentle decline, with many years in which to make a
gradual adjustment to the change. We hoped that the euro and the single market could
mitigate or even reverse that decline. We have also taken for granted that the EU would
at least be able to manage its own neighborhood, bringing peace, security and
integration to the Balkans and drawing countries like Belarus, Ukraine and even Russia
toward Western ways. We may now have to adjust to a world in which the EU is
retreating faster and farther than anyone expected.
This euro crisis isn't just a banking or a currency issue. It is a serious political crisis that
could dramatically alter the geopolitical balance in Europe and Asia.
http://online.wsj.com/article/SB10001424052702303640104577440362953611968.html
July 24, 2012 at 10:07 PM
Riaz Haq said...
Here's BBC's Soutik Biswas on massive power failure in India's northern grid:
A massive power cut has caused disruption across northern India, including in the

capital, Delhi.
It hit a swathe of the country affecting more than 300 million people in Punjab, Haryana,
Uttar Pradesh, Himachal Pradesh and Rajasthan states.
Power Minister Sushil Kumar Shinde said most of the supply had been restored and the
rest would be reinstated soon.
It is unclear why the supply collapsed but reports say some states may have been using
more power than authorised.
Mr Shinde said he had appointed a committee to inquire into the causes of the blackout,
one of the worst to hit the country in more than a decade. The committee will submit its
report within 15 days, he said.
The power cut happened at 02:30 local time on Monday (2100 GMT Sunday) after
India's Northern Grid network collapsed.
---------Monday morning saw travel chaos engulf the region, with thousands of passengers
stranded when train services were disrupted in Punjab, Haryana and Chandigarh.
The Rajdhani train from Jammu to Delhi was more than five hours late.
"The train stopped near Panipat station [in Haryana] at about 02:30. For a long time we
had no idea what was holding us up," passenger DK Rajdan said.
"Rajdhani is air-conditioned so it was not uncomfortable. But for six or seven hours we
couldn't get anything to eat or drink and people were beginning to get worried," he said.
Delhi Metro railway services were stalled for three hours, although the network later
resumed when it received back-up power from Bhutan, one official said.
Traffic lights on the streets of the capital were not functioning as early morning
commuters made their way into work, leading to gridlock.
Water treatment plants in the city also had to be shut for a few hours.
Officials said restoring services to hospitals and transport systems were a priority.
Power cuts are a common occurrence in Indian cities because of a fundamental shortage
of power and an ageing grid. The chaos caused by such cuts has led to protests and
unrest on the streets.
Earlier in July, crowds in the Delhi suburb of Gurgaon blocked traffic and clashed with
police after blackouts there.

Correspondents say that India urgently needs a huge increase in power production, as
hundreds of millions of its people are not even connected to the national grid.
Prime Minister Manmohan Singh has long said that India must look to nuclear energy to
supply power to the people.
Estimates say that nuclear energy contributes only 3% to the country's current power
supply. But the construction of some proposed nuclear power stations have been stalled
by intense local opposition.
http://www.bbc.co.uk/news/world-asia-india-19043972
July 30, 2012 at 9:37 AM
Riaz Haq said...
Here's BBC's Soutik Biswas on India's power situation:
As India copes with a massive power breakdown for a second successive day, some
interesting facts about the country's power situation to chew on:
India has an installed capacity of more than 170,000 megawatts, up from a mere 1,362
megawatts at the time of Independence in 1947
The majority (around 60%) is generated from coal and lignite, while just under a quarter
(about 22%) is hydro-electric
Despite its soaring energy needs, India has one of the lowest per capita rates of
consumption of power in the world - 734 units as compared to a world average of 2,429
units. This is nothing compared with say, Canada, (18,347 units) and the US (13,647
units). China's per capita consumption (2,456 units) is more than three times that of
India.
The low per capita consumption is despite the fact that the power sector has been
growing at more than 7% every year.
Homes and farms are consuming more power today than industries and businesses.
Industrial consumption has actually dropped from 61.6% in 1970-71 to 38% in 20082009.
India has suffered consistent power shortages since Independence in 1947. Peak demand
shortage is more than 10%, whereas the overall energy shortage is more than 7%.
Sixty-five years after Independence, only nine states - Andhra Pradesh, Gujarat,
Karnataka, Goa, Delhi, Haryana, Kerala, Punjab and Tamil Nadu - of 28 have been
officially declared totally electrified.

India remains perennially energy starved despite 15% or more of federal funds being
allocated to the power sector. Bankrupt state-run electricity boards, an acute shortage of
coal, skewed subsidises which end up benefiting rich farmers, power theft, and underperforming private distribution agencies are to blame, say experts. There is no shortage
of money, and the problem, as the Planning Commission admits, is more "in the delivery
process [than] in the system".
Transmission and distribution losses have leapt from 22% in 1995-96 to about 25.6% in
2009-2010. The states with the worst losses are Indian-administered Kashmir, Bihar,
Chhattisgarh, Jharkhand and Madhya Pradesh. The best performers: Punjab, Himachal
Pradesh, Andhra Pradesh and Tamil Nadu.
India's first power generation company was the private Calcutta Electric Supply
Corporation (CESC) started in 1899. The first diesel power plant was set up in Delhi in
1905. The first hydro-electric power station was set up in Mysore in 1902. At the time of
Independence, about 60% of India's power sector was privately owned. Today, about
80% of the installed capacity is in the hands of the government. Private companies own
12% of the capacity.
http://www.bbc.co.uk/news/world-asia-india-19063241
August 1, 2012 at 10:21 PM
Riaz Haq said...
Here's a Washington Post piece on India's thirst for energy:
Like China two decades ago and the United States in 1950, India stands on the cusp of
transformational economic and social change, a jumping-off point at which the demand
for electricity is about to explode.
Its economy and population are among the fastest growing in the world, and it has
ambitious and energy-intensive plans to develop its infrastructure and industrial base.
But business leaders are crying out for uninterrupted power supplies, and a third of
Indias population is not even connected to the national grid.
----------Every modern, industrial society in history has gone through a 20-year period where
there was extremely large investment in the power sector, and electricity made the
transition from a privilege of an urban elite to something every family would have,
Varro said. India is right now just at that jump point.
Whether it succeeds in meeting that demand could be the single most important
determinant of Indias economic prospects over the next two decades, one of the main
factors that will decide whether the country can continue to pull hundreds of millions of
people out of poverty and realize its ambitions to be a 21st-century economic
powerhouse.

----------But even if India finds the fuel it needs to power its generators, it is not clear how it will
pay for the electricity they produce.
State electricity distribution companies across India are mostly bankrupt, forced by their
political masters to give power away free to farmers to run water pumps to irrigate
their land, and at below-cost prices to everyone else. Theft and losses of power amount
to 28 to 30 percent of output, further bleeding the distributors of resources.
Nationally, separate ministries for coal, gas, power and renewable energy routinely fail
to coordinate.
Policymaking in the energy sector is rather fragmented, and we really dont have a
forward vision, said Rajendra Pachauri, who won the Nobel Prize in 2007 for his work
as head of the Intergovernmental Panel on Climate Change.
Pachauri forecasts that if India continues on its path of business as usual, it will have
to import unimaginable, and unfeasible, amounts of coal and oil in two decades.
A failure to invest properly in researching and developing renewable energy also
threatens environmental ruin. India cant possibly continue on the path we are on, he
said.
Charles Ebinger, director of the Energy Security Initiative at the Brookings Institution in
Washington, said the difficulties that India faces in meeting its rising energy demand
would pose a serious political challenge for a well-run government and that
certainly isnt the case here.
He said the country could struggle to hold its own against other emerging economies,
including Brazil, Russia, China and South Africa, countries that with India constitute
what is known as the BRICS group.
If I had to bet, I would say there is a greater possibility of India failing to meet the
challenge than of meeting it, Ebinger said. You will see India slip down, out of the
ranks of the fast-growing BRICS emerging markets, and you will see more political
disturbances when energy fails.
http://www.washingtonpost.com/world/asia_pacific/satisfying-indias-thirst-for-powercould-be-nations-biggest-challenge/2012/08/22/65f6c6d2-e21c-11e1-98e789d659f9c106_story_1.html
August 22, 2012 at 10:14 PM
Riaz Haq said...

Here's an ET story on US fund to support private investing in Pakistan:

The United States on Friday announced a multi-year Pakistan Private Investment
Initiative worth $80 million in financial support to promote economic activities in the
country.
Drawing on public-private partnerships, this initiative will spur job growth and
economic development by expanding access to capital for Pakistans small to medium
sized companies, according to a statement by the US embassy.
Pakistan has a wealth of talented entrepreneurs that desperately needs capital to fully
realise their potential, said US Charge daffaires in Pakistan, Richard E Hoagland.
He said that through this initiative, the United Stated can move beyond the traditional
foreign assistance by playing a constructive role to help entrepreneurs expand their
businesses, provide new jobs to Pakistans fast-growing population, and by improving
lives in the country.
He said that market-oriented, commercial solutions which support Pakistans economic
development have been a priority for the United States.
The US Charge daffaires said that the Pakistan Private Investment Initiative will
generate investment funds catalysed by US assistance.
The initiative seeks private or other qualified sources of capital for matching investments
and funding management services. The investment funds will make equity investments in
promising Pakistani companies, under-served by existing sources of capital.
The Pakistan Private Partnership Initiative welcomes proposals from qualified Pakistani,
regional, and international fund managers keen on investments in Pakistan by October
12, 2012, said a statement of from the United States embassy.
http://tribune.com.pk/story/436968/us-announces-80-million-for-pakistan-privateinvestment-initiative/
September 15, 2012 at 7:45 AM
Riaz Haq said...
Here's a TOI story of dearth of research in India:
NEW DELHI: At a time when India is being looked at as the next big knowledge
superpower, this could come as a shocker. Just 3.5% of global research output in 2010
was actually from India. In most disciplines, India's share in global research output was
actually much below this overall average count.

Sample this - India's share of world research output in clinical medicine was a meagre
1.9% in 2010, 0.5% in psychiatry, 1.4% in neurosciences, 1.8% in immunology, 2.1% in
molecular biology and just 3.5% in environmental research.
In mathematics, India's share of world output stood at around 2% in 2010 while it was
17% for China. In case of materials sciences, India's share of world research stood at
6.4% in 2010 while China's stood at 26% -- a rise from 5% in 1996.
While India's research on physics stood at 4.6% in 2010, China's stood at 19%.
In 2010, India's largest shares of world research output were in chemistry (6.5%),
materials science (6.4%), agricultural sciences (6.2%), pharmacology and toxicology
(6.1%), microbiology (4.9%), physics (4.6%) and engineering (4.2%).
India is often referred to as the next big place for computer sciences. But the figures on
its research is abysmally low. Only 2.4% of global research on computer sciences was
from India in 2010 while the world share moved to three emerging research economies China 15%, Korea 6.3% and Taiwan 5.7%.
India's global share of research in economics stood at 0.7% in 2010 while in social
sciences it was worse - 0.6%.
The biggest declines in volume of research between 1981 and 2010 were in plant and
animal sciences (-2.2%) and agricultural sciences (-1.6%). The most significant
expansions were in pharmacology and toxicology (+4.2%), microbiology (+3.2%) and
materials sciences (+3.1%).
These are the findings of the study on India's research output and collaboration
conducted by Thomson Reuters and recently submitted to the department of science and
technology.
"India has been the sleeping giant of Asia. Research in the university sector, stagnant for
at least two decades, is now accelerating but it will be a long haul to restore India as an
Asian knowledge hub. Indian higher education is faced with powerful dilemmas and
difficult choices - public/private, access/equity, uncertain regulation, different teaching
standards and contested research quality," the report said.
According to it, India's share of world output in engineering fell from 4.3% in 1981 to
2.2% by 1995. India later regained its lost share, increasing to 4.25 by 2010. However,
even then, India was overtaken by China (16.4%), Korea (5.4%) and Taiwan (4.4%).
India, where agriculture dominates economic standards, had quite a large share in
agricultural sciences which averaged 7.45% over the 1981 to 1995 period, well ahead of
other emerging research economies. Its share, however, fell to 6.2% in 2010. Even in the
field of plant and animal sciences, the global research output fell from 6.1% in 1981 to
3.9% in 2010.

The report said, "India has a long and distinguished history as a country of knowledge,
learning and innovation. In the recent past, however, it has failed to realize its undoubted
potential as a home for world class research."
It added, "During the 1980s and 90s, the output of India's research was almost static
while other countries grew rapidly, particularly in Asia. China expanded with an
intensity and drive that led it rapidly to overtake leading European countries in the
volume of its research publications. India is just beginning on this gradient."
http://timesofindia.indiatimes.com/india/India-accounts-for-just-3-5-of-global-researchoutput-Study/articleshow/16551045.cms
September 26, 2012 at 9:16 AM
Riaz Haq said...
Here's PakistanToday on primary energy consumption in Pakistan:
KARACHI - Pakistans gas requirements are growing hastily, while the domestic gas
production is not growing at the same pace. Primary energy consumption in Pakistan has
grown by almost 80pc over the past 15 years, from 34 million tons oil equivalent (TOEs)
in 1994/95 to 60 million TOEs in 2010/11 and has supported an average GDP growth
rate in the country of about 4.5pc per annum.
Consumer Rights Commission of Pakistan (CRCP) in collaboration with Citizens Voice
Project hold policy dialogues on Role of Government and Regulators in the Gas Sector
of Pakistan with parliamentarians, policy makers, regulators and civil society
organisations here on Wednesday.
CRCP recommended Effective Governance & Regulation for development of Gas Policy
in dialogue.
The present natural Gas crisis clearly indicates that overall governance of the gas sector
needs improvement. The growing energy shortages have made life difficult for Pakistanis
across the board. The quality of life of citizens has deteriorated.
Dialogue reported that economic growth rates have been stunted, and industry and
agriculture have suffered. The Government of Pakistan has not yet recognising
magnitude of crisis and its effect on the people and the economy. Government has to take
emergency measures to address, manage and reduce the impact of crisis. The reasons for
present crisis in gas sector have both technical and governance aspects.
The dialogues have given comprehensive insight into the current situation of
transparency, public participation and accountability processes in gas sector of Pakistan.
The intervention is likely to result in enhanced understanding of the sect oral issues for

the stakeholders.
Most important of all, it is expected to inform the policy makers and especially the public
representatives about the governance situation of the sector and shall persuade them to
take positive actions for sectoral improvement. In Pakistan, industrial and fertilizer
sectors are getting gas on subsidised rates, while the CNG stations were being subjected
to an exorbitantly high tariff regime, neglecting the general publics interest. The gas
consumers woes could not be resolved unless Pakistan had an autonomous regulator
free of political interference. Besides, the problems could not be resolved without
improving peoples access to information, putting in place a system of strict penalties on
consumers involved in gas pilferage and non-payment of gas bills
http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/business/31Jan-2013/primary-energy-consumption-grows-by-almost-80pc-in-15-years
January 31, 2013 at 9:32 PM
Riaz Haq said...
Combined PPP GDP of poor developing countries exceeds combined GDP of rich
industrialized countries, according to a report in Huffington Post:
For the first time ever, the combined gross domestic product of emerging and developing
markets, adjusted for purchasing price parity, has eclipsed the combined measure of
advanced economies. Purchasing price parityor PPP for shortadjusts for the relative
cost of comparable goods in different economic markets.
According to the International Monetary Fundthe supplier of this dataemerging and
developing economies will have a purchasing price parity-adjusted GDP of $42.8 trillion
in 2013, while that of emerging economies will be $44.4 trillion. In other words,
emerging markets will create $1.6 trillion more value in goods and services than
advanced markets this year.
Advanced economies are, according to the IMF, the 34 nations that result from
combining the members of the G7, euro area countries, and the 4 newly industrialized
Asian economiesTaiwan, Hong Kong, Singapore, and South Korea. The worlds 150
other nations are considered emerging or developing.
Excluding the largest advanced economy, the United Sates, and the largest emerging
economy, China, which both account from more than 30% of their respective groups
total GDP, the data show that the PPP-adjusted GDP of poorer nations surpassed that of
richer ones in 2009.
Its worth keeping in mind that the emerging economies have strength in numbers. Not
only are there more emerging and developing nations; those nations also boast a larger
combined population.

As such, emerging and developing economies trail far behind advanced economies in
per-capita terms. Their aggregate per-capita PPP-adjusted GDP is $7,415, while the
same measure for advanced nations totals $41,369.
http://www.huffingtonpost.com/2013/08/28/gdp-poor-countries_n_3830396.html
August 28, 2013 at 10:54 PM
Riaz Haq said...
Here's NY Times Nobel Laureate economist-columnist on Ibn Khaldun's lessons for
Microsoft and other established powers:
The trouble for Microsoft came with the rise of new devices whose importance it
famously failed to grasp. Theres no chance, declared Mr. Ballmer in 2007, that the
iPhone is going to get any significant market share.
How could Microsoft have been so blind? Heres where Ibn Khaldun comes in. He was a
14th-century Islamic philosopher who basically invented what we would now call the
social sciences. And one insight he had, based on the history of his native North Africa,
was that there was a rhythm to the rise and fall of dynasties.
Desert tribesmen, he argued, always have more courage and social cohesion than settled,
civilized folk, so every once in a while they will sweep in and conquer lands whose rulers
have become corrupt and complacent. They create a new dynasty and, over time,
become corrupt and complacent themselves, ready to be overrun by a new set of
barbarians.
I dont think its much of a stretch to apply this story to Microsoft, a company that did so
well with its operating-system monopoly that it lost focus, while Apple still wandering
in the wilderness after all those years was alert to new opportunities. And so the
barbarians swept in from the desert.
Sometimes, by the way, barbarians are invited in by a domestic faction seeking a shakeup. This may be whats happening at Yahoo: Marissa Mayer doesnt look much like a
fierce Bedouin chieftain, but shes arguably filling the same functional role.
Anyway, the funny thing is that Apples position in mobile devices now bears a strong
resemblance to Microsofts former position in operating systems. True, Apple produces
high-quality products. But they are, by most accounts, little if any better than those of
rivals, while selling at premium prices.
So why do people buy them? Network externalities: lots of other people use iWhatevers,
there are more apps for iOS than for other systems, so Apple becomes the safe and easy
choice. Meet the new boss, same as the old boss.

Is there a policy moral here? Let me make at least a negative case: Even though
Microsoft did not, in fact, end up taking over the world, those antitrust concerns werent
misplaced. Microsoft was a monopolist, it did extract a lot of monopoly rents, and it did
inhibit innovation. Creative destruction means that monopolies arent forever, but it
doesnt mean that theyre harmless while they last. This was true for Microsoft yesterday;
it may be true for Apple, or Google, or someone not yet on our radar, tomorrow.
http://www.nytimes.com/2013/08/26/opinion/krugman-the-decline-of-e-empires.html
September 8, 2013 at 10:00 AM
Riaz Haq said...
Why is the English laguage so dominant and widely used today? It's because language
does not exist or grow in vacuum. As a means of communication, it reflects the state of
the people whose language it is. The global ascendance of the English language has
coincided with the rise of the Anglo-Saxon people beginning with the Industrial
Revolution in 18th century England. It marked a dramatic shift of global power from East
to West.
http://www.riazhaq.com/2012/07/global-power-shift-since-industrial.html
October 19, 2013 at 5:03 PM
Riaz Haq said...
Here's an excerpt of The Economist magazine story on productivity gap between US and
developing nations:
The productivity gap, an indicator of a countrys output capabilities, is the ratio between
the productivity of a benchmark country (such as the United States) and that of a less
developed economy. The latest Latin America Outlook from the OECD, a think-tank,
compared the productivity gaps of selected countries in the region with those of
economies in Asia. In general, productivity gaps in Asian countries have narrowed
significantly over the past three decades. Americas productivity in 1980 was 125 times
that of China; by 2011 the gulf had come down to 17 times. In Latin America and the
Caribbean, however, not only was there a much smaller reduction, in many cases the gap
had grown.
http://www.economist.com/news/economic-and-financial-indicators/21588391productivity-gaps?fsrc=scn/tw/te/pe/productivitygap
October 30, 2013 at 9:36 PM

Riaz Haq said...

Here's a Huffington Post review of a book about second Industrial Revolution:
Andrew McAfee and Erik Brynjolfsson, from MIT's Center for Digital Business, have a
new book out this week called, The Second Machine Age: Work, Progress, and Prosperity
in a Time of Brilliant Technologies.
-------That's why we invited McAfee to join EMC's leadership team in Boston a couple of weeks
ago to talk with us about how every business model in every industry is going to be
redefined in some form by software. If the first machine age was about the automation of
manual labor and horsepower, the second machine age is about the automation of
knowledge work, thanks to the proliferation of real time, predictive data analytics,
machine learning and the Internet of Things -- an estimated 200 billion devices
connected to the Internet by 2020, all of them generating unimaginable quantities of
data.
McAfee and Brynjolfsson's favorite example of automated work is Google's self-driving
car, a marvel of ingenuity enabled by technology's ability to capture the data of so many
moving variables and act on them instantly, free of human error. If a self-driving car
seems far-fetched, how about software that grades students' essays more objectively,
consistently and quickly than humans? Or news articles on Forbes.com about corporate
earnings previews -- "all generated by algorithms without human involvement."
We used to speak about how organizations had access to databases. Now, leading
organizations are building "data lakes" -- giant reservoirs of information in
heterogeneous formats, to aid decision-making and to offer new services to customers.
Mobile apps collect intelligence from vast networks of drivers on highways to direct us to
the least congested routes between points A and B. "Massive online open courses" offer
thousands of college level students access to the best lecturers halfway around the world
-- at a fraction of the cost.
But progress always has a flip side -- and its critics. Sweeping technology-driven
transformations are as much about disruption and dislocation as opportunity. To explore
this trade-off, we at EMC are hosting a breakfast conversation in Davos on Thursday
with McAfee, Brynjolfsson and New York Times columnist Tom Friedman, who has
written about these topics in previous books and columns. No conversation about the
future can ignore the human costs of progress or the discomforting question of whether
everyone is adequately prepared.
On this question, McAfee and Brynjolfsson are generally optimistic about the future of
technology and the opportunities for humanity. The good news is, living standards
increase with gains in productivity. But why are so many innovative large companies
awash in cash while unemployment rates have hardly budged?

Harvard Business School's Clayton Christensen, who has devoted a career to studying
disruptive innovation, spoke with us about this recently. The challenge, he notes, is that
so much of the innovation we see in the world today is efficiency-based in nature: it's
about doing familiar things in cheaper, more efficient ways.
In The Second Machine Age, the great software-defined businesses of tomorrow will be
the ones that usher in breakthrough innovations that do new things entirely -- the kind of
innovation that generates new value by opening up unforeseen market opportunities: new
products, new services, new ways of servicing customers, and new jobs. That's what the
first machine age was all about. Ready or not, the second machine age is already
underway. And the value and disruption it will generate will stagger us all.
http://www.huffingtonpost.com/bill-teuber/the-coming-of-the-second-machineage_b_4648207.html
January 26, 2014 at 1:56 PM
Riaz Haq said...
Here's a Mint story on British economist Angus Maddison estimates of India's historic per
cap GDP:
Was India a wealthy country before the British came? The numbers that have garnered
the most attention have been his GDP estimates, because they fit in with the narrative of
a strong India and China getting back their clout in the world economy. But what is that
to the average Indian or Chinese citizen? What if the only reason these countries had
such a high GDP in earlier times was because they had a larger population?
That is what is brought out by Maddisons estimates of GDP per capita, again in PPP
terms in 1990 dollars. In 1 AD, Indias GDP per capita was $450, as was Chinas. But
Italy under the Roman Empire had a per capita income of $809. In 1000 AD, Indias per
capita income was $450 and Chinas $466. But the average of the West Asian countries,
such as Turkey and Iraq, was much higher at $621. In terms of general prosperity,
therefore, it was the Arab world that was doing well a millennium ago. The Caliphate in
Baghdad was a centre of power at the time and both science and culture flourished.
By 1500, though, new centres of prosperity had emerged. Indias per capita income was
$550 and Chinas $600 in 1500. The Arab world had declined. But standards of living in
Western Europe at that time had already gone far ahead. Italy topped the table, with a
per capita income of $1,100, the Netherlands following with a per capita income of $761.
This was the Italy of the Renaissance, the Italy of Michelangelo and Leonardo da Vinci,
of Raphael and Titian. The UK was not far behind, with a per capita income of $714.
By 1600, the centre of Europe had shifted northwards and the golden age of Holland had
begun. Dutch per capita income was $1,381 in 1600, while Britain in Shakespeares time
had a per capita income of $974.
Recall that 1600 was the year the East India Company was founded. In contrast, Indias
per capita income continued to be $550, while Chinas was $600. Note that even Ireland,
one of the poorest of Western Europes countries, had a per capita income of $615,

higher than Indias and Chinas. In short, the per capita GDP numbers mirror the
changes in power, prosperity and cultural and scientific achievement.
It wasnt till 1981 that India had a per capita income of $977, beating that of Britain in
1600. And it wasnt until 1993 that Indias per capita income of $1,399 surpassed what
the Dutch had achieved in 1600. Maddisons calculations show that in 2008, Indias per
capita GDP ( in 1990 dollars, PPP terms) was $2,975, slightly more than one-third of the
world average of $7,614. We have a long way to go.
http://www.livemint.com/Opinion/Nb7KkZ3yOVSNW3vHf9K1oM/World-history-byper-capita-GDP.html
February 25, 2014 at 7:53 PM
Riaz Haq said...
Journalist Robert D. Kaplan thinks that what is wrong with the Middle East is a lack of
imperialism, and he urges that it be brought back. It is how, he says, most of the world
has been ruled by default. This argument is so ahistorical and wrong-headed that it
takes the breath away.
First of all, imperialism is an imprecise term. Kaplan is trying to sweep up different
kinds of empire under one rubric. Until the early twentieth century, most people in the
Middle East admittedly accepted the Ottoman Empire, which was Muslim-ruled and
made minimal economic demands on them while offering minimal governance. But it
was precisely at that point when the Ottomans began building railroads to deliver
garrisons to the provinces and introducing modern, more intrusive bureaucracy that they
began facing opposition from local elites like the Hashemite rulers of Mecca in the Hejaz.
The rise of nationalism was also fatal to empire, whether Ottoman or any other sort.
Capitalist economic imperialism of the European sort is a new phenomenon in world
history, and proved far less welcome in the Middle East than the decentralized Ottoman
methods of governance. The European empires in Asia and Africa were not into it for
their subjects health. Historians estimate that in the early nineteenth century, the
colonized territories provided 15 percent of the metropoles income, a margin that may
well have helped technological and economic advances in Europe. In the late nineteenth
and early twentieth century, East Indies (Indonesian) rubber and petroleum provided as
much as 25 percent of the Netherlands gross national product. That is to say, the Dutch
stole billions of dollars from the Indonesians. European imperialism was brutal. European
overlords worked plantation laborers to death. Since the foreigners were not liked, it was
necessary occasionally to massacre the locals. The German army practiced with machine
guns on primitively armed Namibian tribes as a prelude to the slaughter of World War I in
Europe itself. Imperial archivists usually destroyed the documents that witnessed the
viciousness and genocidal character of European economic imperialism.
http://www.thenation.com/blog/208161/whats-wrong-robert-kaplans-nostalgia-empire

http://southasiainvestor.blogspot.com/2012/07/impact-of-industrial-revolutionon.html