The world turned upside down


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Very important article !

Great sentence to be remembeed: " This is a region that, to echo Churchill’s phrase, sees opportunities in every difficulty rather than difficulties in every opportunity."


Very important article !



This is a sad reflection of the mindset people from mature western countries, fundamentally one of superiority. No reflection of individual intelligence within countries, most of which gets poached to mature countries, once academic studies or business excellence achieved.


Human capital forms a very deceptive asset base. It can hit back in times of financial contingency, and can push production as it itself consumes. Consider the telecommunications industry in India, for example. Surely the large base has come from optimizing time usage and bandwidth usage, but remember the prices would not have slipped out of a possible cartel’s fingers had the state-owned BSNL not applied the knife time and again to rates. The general perception today is that telephones and internet IS NOT expensive. If they have been kept that way in the West, somebody has to be pulled up. So when the mass decides, with some delicate nudging by the state volumes carry the day, not bottomlines.

These are young days yet, let’s wait and see, fingers crossed.


These trends are also extremely important to apply to energy markets. In terms of energy and resources, it's much more efficient to transfer technology than to transport physical resources such as petroleum or coal. In the past, we could have assumed the technology would come from the U.S. and Europe. Now China is ahead of the U.S. in clean energy technology, and Brazil is not far behind, in terms of biofuels and other areas as well.


The article seems kind and high-spirited for the developing world. It is to be remembered that the combined poulation of US and Europe(which is most of the developed world is not even 1/6th of the international population). Still there are few multinational companies from the rest of the world as compared to the US n Europe. The resourses that people from developed world consume is multiple times than in the developing world. It is true that a worker who is not able to find a job in India may die due to hunger. High competition in the labor market has made it cheap, and unlivable for people. A working labour does not have the resources to see a doctor.

The world is still dominated and controlled by the rich and powerful countries. They take raw materials from poor countries and transform them into valuable products. A few companies that hail from the developing countries are fighting hard to get a share of profits from the money makers. It is still not to be forgotten that there are many sectors where the western countries have a monopoly. Most of the developing countries are still running in trade deficits( it would have been otherwise if their situation were improving).

It is comical that the root cause of other countries catching up with rich ones was developed by western countries. That are, cheap transportation and development in IT. These resources are used to source cheap raw materials from poor countries. Only a part of it is being used by the developing nations to deliver value in the western market, which is making so much fuss.

By the economics developed in west, everything comes to normal profits in the long run, and the world is moving towards that and new technology is supporting this. The indication is that the poor and hungry in some parts of the world are working harded than protected people in the rich countries.


@Trevor Miles

Thanks for your good insights. On identities, which we had taken for granted in the 19th and 20th centuries, sure enough, they have come loose in the last three or four decades. Immigration has altered the scene too.

I now see countries as distinct, not so much in any racial or religious sense, but only in the opportunities and freedoms they offer to make a good living, to augment good cultural and educational goals for the greatest numbers of people. I still remain a Benthamite in this regard.

History turns corners, changes the scenary inexorably. This specific turn, discussed in the main article, is bound to benefit us all in the West, East, South and North!! BRIC countries should continue in the directions they have taken.


I too am glad to join your call for more 'south-south' trade and co-operation. In my posts I invariably call for reducing border / territorial disputes and increasing contacts, especially, through trade, joint enterprises across national and ethnic fences [not 'Ali-Baba' companies but more genuine ones!!].

It will be a pity if resources in the BRIC countries are diverted to 19th century type of jingoistic border wars!!! I am hoping China will give higher priority to trade with INDIA. The two countries should build vast industrial estates in their common border with free movement of goods manufactured in those estates allowed in both directions..

I can confirm that many mainland Chinese people are now migrating to Australia and NewZealand. I have been to property auctions where they bid figures up to One Million plus Australian dollars. Australian property prices are high, mostly because of Chinese buyers!!

Like you, I am also wondering why so many wealthy Chinese invest such large amounts in properties in the Western countries.

But it remains true that there is less corruption and government interference in Western countries than in India or China. Business people like clear and transparent legal and tax systems.

um hmm...

G C London - you wrote"Indeed many Chinese and Indian financial companies only remain profitable in their domestic markets because of lack of competition owing to protectionist laws."

This must be a joke. Are you speaking of the same financial services companies in the West that went bankrupt many times over just two years ago, and are alive only due to the tax-payer bailouts?

Technically, they are wholly owned subsidiaries of their respective governments, except that their governments do not have either the honesty or the spine to call them as such, because the bogus free-market rhetoric gets in the way.

Trevor Miles

I had to add a comment agreeing with Jaysrin. The innovation in the Developed industries - is this definition even valid any more - focusses on "bigger, better, faster", which is not the way to reach the largest populations in the BRIC countries. Of all companies in the West, I think Nokia has got it right. Also the Nirma case study in India is a great exemplar of how a local company beat out the companies from the Developed world by providing packaging and distribution innovation. Have a look at for more discussion.

Trevor Miles

As a WASP of South African descent living in Canada - yes, I am confused about my identity - I have to agree with Global Mind. There are many factors that have lead to the rise of the BRIC countries, but there can be no greater example of the value of investing in quality education. In the 1990's I worked for a company based in Dallas started by 2 people of Indian origin which employed tons of people from India (about 5000 out of 7500 at its peak). I could not have worked with better educated, smarter, hard working people. It was a revelation on all 3 levels, but it was the education that really stood out.

I don't see my kids - the eldest just finished his first year at university - getting the same quality of education and this worries me.


I am glad GC London thinks he is "not yet concerned about competition from those countries in my industry anyway, which is financial services". Sure, why not give him the comfort of his complacence? After all, it is these financial "innovations" that have brought western financial services giants to their knees and requiring government bailout. In the meantime, while the American and European companies have been forced to retreat from emerging markets - eg, AIG, Barclay's, Bank of America - owing to rapidly disappearing coffers, domestic emerging market financial companies have expanded aggressively.

GC does not see how the domestic firms have expanded...perhaps he should. The typical rural Indian now transacts through no-frills domestically innovated ATMs that cost $2,000 (where a Diebold would cost $100,000) while the urban Indian goes increasingly mobile for banking and payment services. GC London can have his innovations - swaps, CDOs, and ABS - but the emerging market resident is quite happy with her brand of innovations, thank you.


@ Chris_Malaysian wrote: Apr 20th 2010 1:50 GMT

Agreed with you that we should respect people choices and their constructive contribution to the country they chose to live. Just that the motherland really need them.
To be honest, I find this late financial crisis brought the developing world especially emerging country the opportunity in attracting back their talented people as developed world facing the difficulty in funding and lack of opportunity.
Hope we don't miss this opportunity.”

I agree with what you said there completely. And there are now a steady stream of them coming back to contribute and to prosper, either immediately after their studies or upon making good to some extent. Either way, they command my deep respect and best wishes.

I also have nothing but utmost respect and admiration of those overseas Chinese (or any other nationality really) working hard for a better living and dedicated themselves as a worthy citizen in their adopted country.

For example, there are many Chinese- (and Indian-) Americans working in the US, from dishwashers to higher offices of responsibilities. And then you have the second or third generations in all walks of life from laborers, shopkeepers to two incumbent US cabinet members in the Secretary of Energy and the Secretary of Commerce.

But still there are those few who left China (or the citizenship of it) selling soul for a living at the expense of China, like that character Stern Hu of Rio Tinto case.

And you see a few of the likes here on this forum shamelessly posting comments attacking China who nursed and milked him, clad in dubious ground or out of personal vendetta, they even had the audacity to display their knowledge of Chinese language as if to prove his soiled worth of quisling and butchery job.

Not just on this forum, I have seen their kind in real live here domestically and overseas*. They are the ones I despise with contempt and I’d like to chide publicly on these forums whenever I have an opportunity to, sparing no choice words of my awkwardly limited ability and within the all encompassing Economist code of commenting.

A recent example is a comment made on this forum a couple of days ago on a post from the pen name called “An American originated from HK” on another article. I can’t help feeling so sorry for the U.S. and HK SAR to have a product like that as shown in his post.

* (I do travel frequently and a lot on my menial job, and yes, it’s of a private firm. But don’t be disappointed you bashers out there, I am additionally holding that assistantship to the deputy commander of 50 cent something I appointed myself into).


Much of what is being debated in this commentary is done by people who have not traveled the world and have not personally experienced the innovation and energy of the 'rest of the world'. Their views are founded by their own biases and insular readings. This is particularly true of those who get 2 weeks vacation a year and spend it in a beach resort. Once you experience the ROW, you will understand that the conclusions of the report are obvious, even to the casual observer. The big question is what you do with the observations in your business, investments and life.



The US Georgia Institute of Technology "High Tech Indicators" shows

that China has surpassed the US in key measures of High-Tech Competitiveness

(1) the study/survey finds China scoring 82.6 against the US at 76.1

(2) Also that China has improved 9 points over 2005-2007, while the US & Japan declined 6.8 & 7.1 respective;ly

(3) The US peaked at 95.4 in 1999, while China increased from 22.5 n 1994 to 82.6 in 2007

(4) In certain fields like nanotechnolgy, China leads the US in published articles

(5) what is impressive is China's getting better at marrying those research together with their low-cost roduction process

In Conclusion; Put all these together with the buzzword of innovation, China is big, tough, & cheap



American and global companies should try to learn from the emerging world. To be successful a company must work to be innovative but to do so means a company has to question its own structure and work to improve it. Often corporations fall into tried and true practices which means they are powerful and bloated.





Hope we don't miss this opportunity.



I am pleased to hear that reverse brain drain is happening and glad to know that innovation is rapidly growing in India and China. However i do note that most key innovations are still come from Top University from the West. And you can find many of the PHD and Dr. are from developing world.

The west innovation cover very wide scope from science to business model to marketing to social. For example IPhone - not just product innovative but also marketing, branding innovation. Developing world like India and China no doubt able to generate innovative product/idea but we lack of innovation in business, marketing.

Got to admit that still a lot we must learn from the west in innovation (although i dislike so much of the west foreign policy)....



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