sarmavangala on The Indian Institutes of Technology: A Stillborn Promise
On a visit to India during the week of December 1st I noted that the front pages of the national dailies were agog with the princely starting salaries on offer to graduating students from the elite Indian Institutes of Technology. Facebook appeared to be leading the fray with offers North of USD300 000 p.a.
The Indian Institutes of Technology have an entrance examination where more than a thousand young people vie for every seat. Once accepted, the student has to survive 5 years of gruelling coursework, quizzes, examinations and lab work. The reward for all this expenditure of effort and unexploited talent? Facebook.
This is the tragedy that India is becoming. Youngsters and seasoned bureaucrats hope that India’s much bandied-about IT sector will be a viable alternative to manufacturing-led development. There is no doubt that firms such as Tata Consultancy Services (TCS) can stand up to international competition. However, almost a quarter of a century after the launch of India’s reform agenda in 1991, a mere 3 million of India’s estimated 1.4 billion people work in IT. The technicians, managers and entrepreneurs who graduate from the IITs and turn up at the doors of TCS on their first day of work create far fewer jobs for others than had they opted to manage factories. Three decades of policy neglect have created a situation where only 10 per cent of the work force is employed in manufacturing. Contrast this with South Korea where the focus was industry-based development for the past 2 decades and fully 30 per cent of the labour force is drawn into industry.
There is no glossing of the fact: it is impossible that the IT firms of Bangalore, or the financial services elite in Bombay will catapult India to the ranks of Japan, Korea, Taiwan or China. This is not going to occur in the foreseeable future and this is the rub: punditry that likens India’s economic development to that of the more northerly countries is fatuous.
For a full treatment of Asian development and especially how Japan, Korea and Taiwan differ from Indonesia, Thailand and Malaysia, refer to ‘How Asia Works’ by Joe Studwell, (2013) Profile Books.
Bill Gates seems to have the right idea:
http://www.gatesnotes.com/Books/How-Asia-Works