Trade and Prosperity: Where Does India Stand?

Posted by: on Dec 21, 2011 | 4 Comments

Economic Growth and prosperity have always been measured by the values and volumes of international trade. Both exports and imports are critical to economic development and prosperity. Exports bring in the much-needed foreign exchange and earnings into an economy. Imports make a larger variety of goods available to the average consumer, giving them the freedom of choice. Imports also increase competition in the economy and, hence, boost productivity.

It is for this reason that trade has become an important indicator of the wealth of a nation. With this perspective, let us look at how India has performed. India’s share of the world trade was 2.5% at the time of her Independence. By the 1980s, this has plummeted to 0.45%. This performance was no better than pathetic! By 2008, India’s share had risen to 1%. With 16% of the world’s population, the country would need to increase its imports and exports 32 times to reach the world’s average.

Compare this with Singapore, the country has a population of 5.18 million (about one-third the population of Delhi alone), but its imports and exports are double that of India. This translates to each citizen of Singapore trading, on an average, 500 times more than an Indian.

You may argue that India and Singapore is not a fair competition. How about comparing India to China in that case? Both the countries have similar population and some of the issues, like poverty, are similar in both the economies.

In 2010, India’s exports were around $225 billion, while China recorded almost $1.6 trillion in exports. On the imports front, India’s figure stood at $358 billion, while China recorded a little over $1 trillion. India’s performance is almost embarrassing. What do you think India should do to boost her position?

Open The Borders

Posted by: on Oct 10, 2006 | No Comments

We have our freedom to move & settle, according to our choice. Then what is it, that chains our feet?

If you were born to European parents, you could move freely within the European Union (EU). The Schengen Agreement gives even Nepalese free movement within the Union once you get in, but penetrating the EU boundaries is by no means easy for those over here.

If you were a US national you would not have too much problem in entering most countries of the world. However, as a Nepalese to enter the US is difficult. Student visas are impossible to obtain for most and employment permits are not available except for a few high-tech and other selected positions.

Getting a tourist visa for Japan is an ordeal. Likewise, Canada, UK, Australia remain closed for the majority.

It is ironic that as air travel has made it easier and faster to get to a destination of your choice, government barriers keep making it tougher and time consuming. Politicians and bureaucrats meet regularly to discuss ways to remove restrictions on movement of goods. WTO is an example. However, every time government officials get together they conjure up even more restrictions on our right to go where we want to.

This trend to restrict our movements accelerated after 9/11. In the name of fighting terrorism governments around the globe have instituted an array of stringent controls on immigration.

It is doubtful whether these controls catch any terrorists but they do make travel difficult for all of us. Osama is unlikely to be seeking a visa or openly crossing borders. However, in his name, governments have utilized the opportunity to restrict our movements even though we may have nothing to do with Al Qaeda.

Visa paper-work by embassies and routine checks at airports, which everyone is aware of and hence can take evasive measures against, hardly catch anyone. Our purpose would be better served with trained and vigilant policemen in plainclothes, aided with cameras and high-tech devices, carrying out unobtrusive checks at airports.

Countries must regard travelers and immigrants as customers and treat them with deference that is their due. When you go to a five star hotel, you are unlikely to be aware of their security – they do their work unobtrusively and with a minimum of fuss. But create a disturbance and see how soon you are removed. That is what is required of countries around the world.

Governments should take a leaf out of how private businesses manage. Do not ask your customers to adjust to your procedures, adjust your procedures to suit your customers. This may well be too much to ask from control-minded officials. The only solution, therefore, is to privatize airports and airport security and abolish visa restrictions.

There are principally three other objections against immigration. None of them stand basic scrutiny:

The foremost objection by the US and the EU is that we do not have room for everyone. Not true.

The US population could triple without adding any numbers to existing cities. The US has large tracts of land available for development of wonderful new cities especially in the west. The problem is lack of people to inhabit those areas.

Though Europe’s population density is higher than the US, most countries could double their population and still have only a fraction of population density when compared with Singapore, Hong Kong or Europe’s own Monaco.

Secondly, countries worry about immigrants taking up jobs. This argument considers merely one side of the picture. Immigrants do take up jobs, but they also create jobs for others when they buy goods and services. Immigrants need housing, cars, health services and food like everyone else and this leads to a corresponding increase in employment as well.

The third worry is that immigrants may end up on welfare and have to be supported by local taxpayers. True, but then stop handouts and charity for those coming in. Let them earn their own living with the host country providing only opportunity and nothing else.

Nepal cannot change the world but it can open itself to travelers. Abolish visa fees and controls. It would be great boon to Nepal by giving an immediate boost to its tourism, trade and foreign investment. It may well even shame a few countries into following its example.

The Boss

>Trade will make us rich

Posted by: on Jul 24, 2006 | No Comments

>

Countries which trade are rich. Countries which don’t are poor.

If I were to pick up one indicator of the wealth of a nation, that would be its exports and imports. Consider India: its share of world trade which was 2.5% at the time of its Independence, had plummeted to 0.45% by the late 80s.

It was a pathetic performance. India, with 16% of the world’s population, would have had to increase its imports and exports by 32 times to just reach the world’s ‘average’. India remained poor – its people had to survive on less than a dollar a day.

Compare this with a ‘dot’ on the globe: Singapore. With a population of just 4.2 million, its imports and exports are double that of India’s. This translates to each Singaporean trading, on average, 500 times more than an Indian. No wonder an average Singaporean lives comfortably, enjoying an annual income of over US$ 25,000.

Some say that the comparison with Singapore is not apt. Let us compare China with India. ‘Anti-capitalist’ China’s trade with the world has burgeoned to a trillion dollars, five times that of India’s while China’s population exceeds India’s by just 28%. Chinese now enjoy an annual income which is more than twice that of the Indians while just three decades ago the Chinese were poorer.

Contrast Nepal with Switzerland. Both countries are landlocked, but, the similarity ends there. Again trade provides an indication of why Nepal lags behind. Nepal’s imports and exports don’t add upto even three billion dollars. Switzerland’s figure is 326 billion dollars.

On a per person basis, the comparison is even more stark. Each person in Switzerland trades 400 times more than a Nepali. Switzerland’s per capita annual income at US$ 35,000 is one of the world’s highest.

Trade is not the only reason for Switzerland’s wealth. Their banking laws which guarantee anonymity to the depositor also have a lot to do with the Swiss being rich. However, trade plays a significant role.

Why are Singaporeans and the Swiss such good traders, achieving a prodigious percentage of the world’s trade, while the Indians and Nepalese are bit players and do not count? High taxes and stifling controls pursued by Nepal and India compared to the free market, low tax policies (average import duty is below one percent) of Singapore and Switzerland is the reason.

India, upto 1990, was ‘protected’ by the world’s highest tariff rates, import bans on all consumer products, and an inefficient and corrupt bureaucracy bent upon controlling trade.

The results of this ‘protection’ were obvious. Indians who would buy from a Scot and sell to Jew and still make a profit had no opportunity to do so in the world markets.

Post 1990, India began to see sense, but only after its policies had brought the economy to a shuddering halt. It had no foreign currency left and had to pawn its gold reserves. India liberalized and very soon its trade took off and dollar reserves started accumulating.


Within 15 years India achieved what it could not do in the earlier five decades. Its share of world trade has increased to 0.8% and foreign exchange reserves have crossed the 140 billion dollar mark starting from almost nothing.

If this was achieved with only a modest reduction of controls and import duties, consider what can be attained by the abolition of all controls and taxes on trade.

The good news for Nepal is that it can rewrite its laws tomorrow. There is nothing stopping this country from emulating Singapore and eliminating its trade barriers.

The government has to do just this and then watch the people of this country take to trade as a child takes to candy. Nepal will have shopping malls no less full of merchandise than Singapore. Goods will be cheaper too as both labour and real estate are priced lower.

Further Nepal will get as many tourists as it can handle. Why should people from India, Bangladesh and Pakistan go to Singapore, Hong Kong or Dubai when they can come to Nepal with its warm, hospitable people, majestic mountains, and, yes, cheaper perfumes too.

The Himalyan Times

>Trade will make us rich

Posted by: on Jul 24, 2006 | No Comments

>

Countries which trade are rich. Countries which don’t are poor.

If I were to pick up one indicator of the wealth of a nation, that would be its exports and imports. Consider India: its share of world trade which was 2.5% at the time of its Independence, had plummeted to 0.45% by the late 80s.

It was a pathetic performance. India, with 16% of the world’s population, would have had to increase its imports and exports by 32 times to just reach the world’s ‘average’. India remained poor – its people had to survive on less than a dollar a day.

Compare this with a ‘dot’ on the globe: Singapore. With a population of just 4.2 million, its imports and exports are double that of India’s. This translates to each Singaporean trading, on average, 500 times more than an Indian. No wonder an average Singaporean lives comfortably, enjoying an annual income of over US$ 25,000.

Some say that the comparison with Singapore is not apt. Let us compare China with India. ‘Anti-capitalist’ China’s trade with the world has burgeoned to a trillion dollars, five times that of India’s while China’s population exceeds India’s by just 28%. Chinese now enjoy an annual income which is more than twice that of the Indians while just three decades ago the Chinese were poorer.

Contrast Nepal with Switzerland. Both countries are landlocked, but, the similarity ends there. Again trade provides an indication of why Nepal lags behind. Nepal’s imports and exports don’t add upto even three billion dollars. Switzerland’s figure is 326 billion dollars.

On a per person basis, the comparison is even more stark. Each person in Switzerland trades 400 times more than a Nepali. Switzerland’s per capita annual income at US$ 35,000 is one of the world’s highest.

Trade is not the only reason for Switzerland’s wealth. Their banking laws which guarantee anonymity to the depositor also have a lot to do with the Swiss being rich. However, trade plays a significant role.

Why are Singaporeans and the Swiss such good traders, achieving a prodigious percentage of the world’s trade, while the Indians and Nepalese are bit players and do not count? High taxes and stifling controls pursued by Nepal and India compared to the free market, low tax policies (average import duty is below one percent) of Singapore and Switzerland is the reason.

India, upto 1990, was ‘protected’ by the world’s highest tariff rates, import bans on all consumer products, and an inefficient and corrupt bureaucracy bent upon controlling trade.

The results of this ‘protection’ were obvious. Indians who would buy from a Scot and sell to Jew and still make a profit had no opportunity to do so in the world markets.

Post 1990, India began to see sense, but only after its policies had brought the economy to a shuddering halt. It had no foreign currency left and had to pawn its gold reserves. India liberalized and very soon its trade took off and dollar reserves started accumulating.


Within 15 years India achieved what it could not do in the earlier five decades. Its share of world trade has increased to 0.8% and foreign exchange reserves have crossed the 140 billion dollar mark starting from almost nothing.

If this was achieved with only a modest reduction of controls and import duties, consider what can be attained by the abolition of all controls and taxes on trade.

The good news for Nepal is that it can rewrite its laws tomorrow. There is nothing stopping this country from emulating Singapore and eliminating its trade barriers.

The government has to do just this and then watch the people of this country take to trade as a child takes to candy. Nepal will have shopping malls no less full of merchandise than Singapore. Goods will be cheaper too as both labour and real estate are priced lower.

Further Nepal will get as many tourists as it can handle. Why should people from India, Bangladesh and Pakistan go to Singapore, Hong Kong or Dubai when they can come to Nepal with its warm, hospitable people, majestic mountains, and, yes, cheaper perfumes too.

The Himalyan Times

Trade will make us rich

Posted by: on Jul 24, 2006 | No Comments

Countries which trade are rich. Countries which don’t are poor.

If I were to pick up one indicator of the wealth of a nation, that would be its exports and imports. Consider India: its share of world trade which was 2.5% at the time of its Independence, had plummeted to 0.45% by the late 80s.

It was a pathetic performance. India, with 16% of the world’s population, would have had to increase its imports and exports by 32 times to just reach the world’s ‘average’. India remained poor – its people had to survive on less than a dollar a day.

Compare this with a ‘dot’ on the globe: Singapore. With a population of just 4.2 million, its imports and exports are double that of India’s. This translates to each Singaporean trading, on average, 500 times more than an Indian. No wonder an average Singaporean lives comfortably, enjoying an annual income of over US$ 25,000.

Some say that the comparison with Singapore is not apt. Let us compare China with India. ‘Anti-capitalist’ China’s trade with the world has burgeoned to a trillion dollars, five times that of India’s while China’s population exceeds India’s by just 28%. Chinese now enjoy an annual income which is more than twice that of the Indians while just three decades ago the Chinese were poorer.

Contrast Nepal with Switzerland. Both countries are landlocked, but, the similarity ends there. Again trade provides an indication of why Nepal lags behind. Nepal’s imports and exports don’t add upto even three billion dollars. Switzerland’s figure is 326 billion dollars.

On a per person basis, the comparison is even more stark. Each person in Switzerland trades 400 times more than a Nepali. Switzerland’s per capita annual income at US$ 35,000 is one of the world’s highest.

Trade is not the only reason for Switzerland’s wealth. Their banking laws which guarantee anonymity to the depositor also have a lot to do with the Swiss being rich. However, trade plays a significant role.

Why are Singaporeans and the Swiss such good traders, achieving a prodigious percentage of the world’s trade, while the Indians and Nepalese are bit players and do not count? High taxes and stifling controls pursued by Nepal and India compared to the free market, low tax policies (average import duty is below one percent) of Singapore and Switzerland is the reason.

India, upto 1990, was ‘protected’ by the world’s highest tariff rates, import bans on all consumer products, and an inefficient and corrupt bureaucracy bent upon controlling trade.

The results of this ‘protection’ were obvious. Indians who would buy from a Scot and sell to Jew and still make a profit had no opportunity to do so in the world markets.

Post 1990, India began to see sense, but only after its policies had brought the economy to a shuddering halt. It had no foreign currency left and had to pawn its gold reserves. India liberalized and very soon its trade took off and dollar reserves started accumulating.

Within 15 years India achieved what it could not do in the earlier five decades. Its share of world trade has increased to 0.8% and foreign exchange reserves have crossed the 140 billion dollar mark starting from almost nothing.

If this was achieved with only a modest reduction of controls and import duties, consider what can be attained by the abolition of all controls and taxes on trade.

The good news for Nepal is that it can rewrite its laws tomorrow. There is nothing stopping this country from emulating Singapore and eliminating its trade barriers.

The government has to do just this and then watch the people of this country take to trade as a child takes to candy. Nepal will have shopping malls no less full of merchandise than Singapore. Goods will be cheaper too as both labour and real estate are priced lower.

Further Nepal will get as many tourists as it can handle. Why should people from India, Bangladesh and Pakistan go to Singapore, Hong Kong or Dubai when they can come to Nepal with its warm, hospitable people, majestic mountains, and, yes, cheaper perfumes too.

The Himalyan Times

Trade, Tourism and Gambling

Posted by: on Nov 27, 2004 | No Comments

After a gap of a few years I again visited Las Vegas in the US to attend a gambling conference and exhibition. Hotel rooms continue to be added at a break-neck pace to the already existing stock of over 1,25,000 rooms in the city. The latest two billion-dollar casino cum hotel almost ready is the ‘Wynn’.

Even more than being a gambler’s Mecca, Las Vegas has become a destination of choice for the world’s biggest conferences. And why not? Las Vegas has the accommodation – dozens of hotels with 5,000 rooms each – mega shopping malls, entertainment, and the world’s biggest conference infrastructure.

How did this happen? What made Las Vegas in the middle of the desert state of Nevada, the fastest growing city in whole of the US? Las Vegas shows the power of enlightened laws. It shows what can be achieved by lawmakers when they act in accordance with our basic instincts to be free to do what we want to with our money including gambling it away.

Las Vegas is in a perpetual boom because it has legitimate gambling, is liberal in issuing casino licenses, and has no state income tax. Realizing that gambling cannot be eliminated by merely declaring it illegal, the lawmakers of Nevada did away with hypocrisy which characterizes politicians, faced upto the truth, and said, ‘lets make Nevada the world’s gambling capital’. I cannot think of any other advantageous factor that sets Nevada apart from other states in the US.

In fact, whatever other facts come to mind about Las Vegas and Nevada are negative. Nevada is landlocked having no access to the seas like California has. And yet it is Las Vegas which is thriving while California has been in an economic decline for more than a decade. People of California finally rebelled against their governor, threw him out of office, and brought in Arnold Schwarzenegger who promptly reduced taxes on cars by 66% – one of his most popular actions so far.

Nevada has an arid landscape and an inhospitable climate. California’s coastline makes its cities like San Francisco have perhaps the best weather in the whole of US – whatever may be the time of the year, it is neither too hot nor too cold. However, all this is scant comfort to businessmen who prefer lower taxes in Nevada. Many move out of California and migrate to Nevada to take advantage of its liberal business environment.

This shows yet again the importance which businessmen attach to low taxes and low regulation. A desert blossoms while an oasis shrivels – all depending on what the policies instituted by the state are.

At the conference, I noticed that there were exhibitors showing their wares from all over the world. There were roulette wheels from England, horse-racing simulators from South Korea, computerized gaming devices from Slovakia, and slot machines from Australia. There was hardly a continent which was not represented.

What amazed me was the number of products they had moved from their countries to the Las Vegas exhibition center; the exhibition covered over 200,000 sq. fts. I asked some of the exhibitors whether they faced any regulatory problems in bringing their goods for showcasing in the US? They said, ‘No’.

Contrast this with what would happen in Nepal; a company from Bangladesh wanting to bring its goods to exhibit in Kathmandu, would have to obtain multiple government approvals. Customs here would presume that the foreign exhibitor is going to sell his goods in Nepal, and would, therefore require it to make a deposit equivalent to the duty payable on importing that particular good. In the US, no such deposits have to be made. The conference organizers have special approvals which make showcased products duty exempt.

It is enlightened practices like this which result in a massive influx of conference tourists to the US. Everything is linked. Lower regulation helps tourism which in turn gives a boost to trade as well.

Nepal can do better than the US, why not convert this nation into a duty free one? Watch it boom as people come for shopping, gambling, and yes for conferences too.

The Himalyan Times