TI publishes two things: a “score” which, on a scale of 1-10, measures corruption, and a rank out of however many countries were evaluated – 183 countries in 2011. A score of ten would be excellent, but no country gets that; New Zealand tops with a 9.5 (and the US gets only a 7.5). On that scale, India gets 3.1, which gives it a rank of 95 out of 183 countries, in company with Albania, Kiribati, Swaziland and Tonga.

Two years ago, when I wrote about the same study, India’s score was 3.4 and its rank was 84 out of 180 countries. At the time, I wrote: “Indian corruption seems to be improving gradually – but perhaps not as fast as in other places.”

I was wrong.

What is now noticeable, with the extra two year’s data, is that there’s actually a trend that started in 2008. In the wrong direction.

What I’ve done in the graph is show a normalized rank to adjust for changes in the number of countries TI has evaluated.  That’s the red line, and lower is better. Here, India’s position initially improved. I’m guessing that the newly-added countries each year tended to score low, thus pushing India’s normalized rank up. The number of countries grew from 90 in the year 2000 to 183 in 2011.  But by 2008, the number of countries in the study had stabilized around 180… and India was drifting down in the rankings.

The green line is the score for India. There, higher is better. There did appear to be a very gradual upward trend there too – which ended in 2007. Since then, it flattened and then started to slide.

China hasn’t got much better than it was in 2009 – it had a score of 3.6 and a rank of 79. It’s kept the same score in 2011, but that’s yielded a rank of 75.

The article started with a list of names: Jose Alberto; Murilo; Geraldo; Angela; Paulo; Edwiges; Vicente; Rita; Lucia; Marcellino; Teresinha. These were the 11 children of the interviewee, the mother of Professor Jose Alberto Carvalho, one of Brazil’s most eminent demographers. But as for Professor Carvalho himself — well, he and his siblings had a total of 26 children, slightly over 2 each.

With different names, that could have been my story. My father was one of 8 children, two of whom didn’t make it into adulthood. But none of his siblings had more than 2 kids, and some had only one.

It could have been the story of most of my friends in urban India.

Of course, the countries aren’t precisely comparable. Brazil’s GDP at $1.6 trillion in 2009, is similar to India’s $1.4 trillion. (World Bank numbers.)  But Brazil’s population, estimated at 190.8 million in its 2010 census, is one-sixth of India’s.

And yet. It was pretty remarkable. I dug around for the numbers, and here they are:

Brazil is a Catholic country, and large families were the norm. As this graph shows, its population growth through the early 1980s exceeded India’s. And then something happened.

ELECTRICITY, TV, AND FEMALE EMPOWERMENT

The article focused on three factors: female education; electricity; and TV, specifically “novelas” — lengthy and gripping serials about families.  In a nifty graphic, it related the decline in fertility to these three things.

• In 1960, women averaged 2 years of schooling and 6.3 children. Only 19% of households had electricity; and very few had TV.
• In 1980, women were up to 3.5 years of school, and down to 4.4 children. More than half of households, 54%, had electricity. Around a third, 36% had TV access.
• In 2000, women got 8.5 years of education (more than the 7.3 years men averaged), and had only 2.4 children. Nearly all households — 95% — had power, and 90% had TV.

Again, how come?

CITIES ARE WHERE IT’S AT

One underlying factor — people moved into cities, fast.  In 1960, more than half Brazil’s population lived in the countryside. By 1980, only a third did. Now it’s nearly 90% urban.

In India, more than 2/3 of the population is still rural. It’s a lot harder to bring electricity, television, and education to hundreds of thousands of villages than to a few big cities. The graph below shows the percentage of people living in cities in the two countries.

I wondered if this could be replicated in India, and the answer is, probably not. The article touched on the military dictatorship that forced the pace of urban growth, pushing the population into the cities. It had its social costs in cramped housing and dangerous streets and women commuting long distances to work.

SO WHAT ABOUT TV?

I remember when people used to half-joke that the best way to reduce India’s population would be to introduce TV to the villages, so people would be too busy watching to make babies. In Brazil, it’s nearly true.

But not, according the the National Geographic, in quite that way. It’s the role models provided by the novelas. These soap operas present glamorous women (because women like to watch stories about glamorous women, and men don’t exactly mind either), with small families.

Why small families? Well, presumably because it’s difficult to be glamorous when you’re caring for 6.3 children. But also for a much simpler reason: It’s easier to manage a storyline with a reasonable-sized cast of characters. Not to mention a lot easier to film.

The women viewing these programs took the point. Asked why they wanted smaller families than their mothers or grandmothers, they said: Too much work; too much expense.

What’s India watching?

I’ve been watching these numbers from around 1971 with the intense interest of  a dieter stepping on the scales. India had under half the number of people it has now. Back then, population growth was considered a problem verging on a disaster tending to a catastrophe. Books like Paul Ehrlich’s “The Population Bomb” dominated the discussion. Population growth is still a problem, further stretching already over-stretched resources and building in grounds for conflict. But at least in some areas, people have started talking of the Demographic Dividend, and acknowledging the energy, enthusiasm, and potential of a youthful demographic structure.

So what’s the news this year?

First: India’s population growth rate is declining significantly. From a high of 2.24% per year in the decade ended 1971, it’s down to 1.64% per year in the first decade of the Twenty-first century. Back in 1971, it seemed it would never go down, no matter how much the government pushed the Family Planning message: Do ya teen bachhe bas (2-3 kids, enough).

Of course, it’s a small percentage of a very large number. In ten years, between 2001-2011, India added 181 million people: One Brazil. Five Californias. Still, back then, we talked of India adding one Australia each year. That would have meant an addition of 220 million people over a decade, not 181 million.

By 2025, India expects its population to overtake China’s — which had, after all, implemented its one-child policy about a generation ago.

( The  US, with 310 million people, has the world’s third-largest population. But it’s only a fourth the size of  China, which has 1.34 billion or India, with 1.21 billion.)

When my grandfather was born, India had only one-fifth the population it has now.  Here’s what the population graph looks like:

FEWER KIDS AND MISSING GIRLS

There are actually fewer children under 6 years old in this census (159 million kids) than in the previous, 2001, census (164 million kids). The under-sixes are now 13% of the population, compared with 16% ten years earlier. In a not-so-encouraging development,  the numbers have fallen more sharply for little girls than for little boys: it’s 2.1 million fewer boys, but nearly 3 million fewer girls.

That’s nearly a million missing girls, and it suggests selective abortion (and possibly infanticide or neglect), owing probably to a huge cultural son-preference. Every decade since 1961 there’s been a growing disparity between the girls and boys under six. On the positive side, the sex ratio (number of women per thousand men) has improved slightly from 933 to 940, suggesting that older girls and women are surviving better.

LITERACY IMPROVING

I’d give two cheers for the improvement in literacy. When I was a kid, most people, especially women, couldn’t read. It’s not true any more, and there’s a growing market for print media in India’s many languages. Some 82% of males and 65% of females can read, up from 75% and 54% ten years ago. In another ten or twenty years, perhaps, nearly everyone will be literate.  This isn’t a brilliant achievement, considering that Sri Lanka did it a long time ago, as did the Indian state of Kerala. But it is an achievement.

WHAT’S THE FUTURE?

This graph of India’s population, based on UN projections, shows three different futures out to the turn of the century.

• In the highest case (red), population crosses 2 billion soon after 2050, and keeps going.
• In the middle case (pink), population peaks at around 1.7 billion, and then gradually declines to 1.5 billion.
• In the best case (blue), the peak’s here in 2040, and by the end of the century, population is back to 880 million, back where it was around 1995.

Bhaswati and I are old friends; we  were at school and college together. Back then, there was only one way to think about population in India. It was a problem. Modern medicine and the end of famines meant death rates fell, but everyone still had a lot of babies. Population grew at over 2% per year. We learned the theory of demographic transition: That economic growth would slow population growth, and until that kicked in, the population would just keep expanding. Economic growth was half-swallowed by the needs of a growing population. It was difficult to see how the second part of the transition — where birth rates fell in harmony with falling mortality — was going to happen. India’s government pushed for “family planning” — encouraging people to have only 2 or 3 children rather than the 7-9 or more they might have otherwise.

(The graph above is from UWC- Marathon’s Keith Montgomery.)

During the Emergency, India’s brief fall from democracy, the late Sanjay Gandhi earned himself a terrible reputation — in part because of allegations of forcible sterilization. He set aggressive targets for field workers, who rounded up men and had them vasectomized, apparently in some cases without their consent. After the Emergency, the whole thing became a politically tender sore spot.

Population growth was politicized in other ways. I’ve heard Hindus blame Muslims because Indian Muslims are allowed four wives. “Naturally they have more children if they’re polygamous,” one such person argued. “A man can have 3 or 4 children by each of his wives.” Clearly the speaker was no demographer. The constraint on population growth isn’t the average reproductive capacity of the man. It’s the average number of children borne by each woman that counts. Since the wives must share the attentions and purse of one man, polygamy could actually reduce this average. (The wives are seldom wage-earners in this scenario.)

My kid drew this chart for a school project in 1994. India’s rapid population growth, that tripled the population between 1926 and 1985, was still considered a problem.

THE DEMOGRAPHIC DIVIDEND

But that’s all moot now. India is instead talking of the Demographic Dividend. In a world where the developed countries all have low reproductive rates and aging populations; where India’s big competitor, China, implemented a one-child policy just long ago enough that these only children are today’s adults; in such a world, India is the only major country with a young population. A young population means workers and consumers. Energy. Instead of being a liability, it’s a selling point. From her speech:

“India will be the largest contributor to the world’s workforce — all 136 million people — over the next 10 years (fully a quarter of the entire world’s additional workforce). According to projections, the demographic dividend will spur the rise of middle class population to half a billion people over the next two decades. “

WHAT CHANGED?

It isn’t just India that changed in the 30+ years since I studied about demographic transition. It’s the world. The tidy theory I learned was that after the population bulge, birth rates would fall and then population would stabilize at the new level, and everyone would live long happy lives in a world that was again in balance.

Source: Wikipedia

But what we’ve seen is that it doesn’t stabilize at the new level. People don’t have babies to improve their nation’s demographics. Instead of 7-9 babies or 2-3 babies, people have 0 or 1.The birth rate falls some more, until it goes below the replacement rate. That’s what happened in Japan and across much of Europe. It may be what’s happening in China; will the state-imposed one-child policy prove addictive once it’s lifted? Will people have gotten out of the habit of having larger families? Will the social support structures for child-rearing have attenuated?

Here’s the demographic transition graph, with an addendum, from Wikipedia. It adds a fifth stage: A falling population. What lies beyond? We don’t know, really. Will birth rates pick up again? Will having more babies become fashionable and economically attractive? Will population gradually fall to pre-industrial levels? No telling. It’s the world our grandchildren and their heirs will live in.

But meanwhile, for another two or three decades, there’s the Demographic Dividend for India…

…where its huge young  population, juxtaposed with India’s political and economic structure, its democratically elected pluralistic Governments and its rising economic and entrepreneurship strength demonstrates a new reality – That if India’s economy, with its young population, grows as it is growing now, it will change the world.

BOOK-LOVERS AND E-READERS

At first, I wasn’t sure how I liked my new Kindle, though I routinely read book-length things on my laptop. I registered it to Amazon, and bought my first book for about $9.  It took some getting used to. But I could see it as the wave of the future.

My IIM friends might recall my arrival on campus with a large tin trunk, containing few clothes and many books. Things have only gotten worse since then. Our entire hallway is lined with a long bookshelf, stuffed full of books. We have three bookshelves in the living room, one in each bedroom, and another in the downstairs entry foyer. And then we have furtive stacks of books breeding in several corners. The Kindle is going to take the pressure off these shelves. Like my film camera, stuffed into a drawer with a half-used film-roll still in it, books are already starting to look a little obsolete.

But that’s old news. What I found startling was this: The other day, I was trawling through a discussion forum when I came across a book that sounded promising. A mystery, set in San Francisco, in the late 19th century. Clever and resourceful heroine solves murder. [ETA: M. Louisa Locke's 'Maids of Misfortune.'] It was self-published. And it was downloadable, from the author’s own website. Two minutes and four dollars later, it was mine.

Why was it startling? Mainly, because it was a complete shift in the market. I’d thought of e-books only as a way for regular publishers to deliver the same paper books in an alternative format. This, though, was from the author herself. The book was as professionally produced as any on Kindle. (And it was a thoroughly enjoyable read, if you like period mysteries set in interesting cities.)  Self-publishing and vanity presses have always existed, but the main barriers have always been quality control and distribution. This doesn’t solve the issue of quality control, but cheap pricing lowers the barrier for reader experimentation. E-books are cheap to produce, and the author will likely break even at tens of books, not thousands. And the distribution issue is solved. You don’t have to worry about getting your book into bookstores any more.

THE HANDMADE DOLL’S-CLOTHING MARKET

There’s a brand of dolls called “American Girl” (formerly an independent company, it was later acquired by Mattel). It started as a series of dolls from various periods in American history, and each doll came with a story and a period-appropriate wardrobe. Now, it’s a sort of Barbie-as-a-nine-year-old: A standardized 18-inch doll that comes in many different hair, eye and skin colors. According to an article I found on line, some people sew clothes for these dolls as a hobby.

“Crafters who make 18-inch doll clothes by hand generally don’t sell them, saying they cost too much in materials and time to be marketable,” the article said. The people they interviewed, Sandy Taylor and Judy Banducci, said they never sell their creations.

This makes intuitive sense. I’ve made doll’s clothes, too, and it’s picky work. Even if you’re well-organized and good at it, a dress would take 1-3 hours to make. Then there’s the cost of the materials and the packaging. There’s no way you can sell these things at any reasonable price.

Except it’s not true. There’s a website called Etsy.com, which features only handmade or vintage products. (It’s primarily a US site.) When I searched there, there were some 6,000 items of clothing for the dolls. Outfits — like jeans or dresses or coats or even entire ensembles — were priced at $10-20. I’m guessing that yields a return of $4-5 per hour, well below minimum wage. We ordered jeans and a wool coat. They’re beautifully crafted, individual pieces. The jeans have the design detail on the rear pocket you find on actual jeans. The coat, lined, has hand-sewn press-studs under regular buttons.

What’s going on here? This time, it’s not mass-produced stuff from cheap labor in China and India. It’s competition from Americans who do this as a hobby, and are literally willing to sell below their real cost of production if you cost their time at minimum wage. It’s a labor of love.

WHERE  IS THE WEB-MARKET GOING?

So I guess the question is, where is this electronic market taking us? Some thoughts:

• There’s massive disintermediation going on.
• Economies of scale have evaporated in some businesses.
• Web marketing and the ability to search and compare prices is making the market more perfect.
• It’s driving down prices and wages. Prices are being determined not by a living wage but by pocket-money/ cost recovery levels.
• It’s providing income opportunities to people who didn’t have them before.

More thoughts/ ideas/ observations?
(Comments are welcome, thought they may not show immediately — owing to spam, I screen all comments.)

So the document that landed in my email box from IMA Asia [an international business climate assessment company for which I edit Asia Strategy papers] was bittersweet: A note from economist Glenn Levine about Asia’s wage outlook. It started with the following paras:

“Wage growth is picking up across Asia, attracting the
attention of policymakers and companies. Two factors are
driving this trend.

“The first is that Asia’s labour markets are surprisingly tight just 12 months after a global recession. The other key
factor is China, where tight labour conditions on the eastern
seaboard and a few high-profile labour disputes over pay
have attracted attention at the highest levels of the
Communist Party.”

It’s a different world out there. For China, it’s an interesting mix of high economic growth and the effects of its one-child policy on population growth. According to IMA Asia’s figures, its unemployment rate is 4.2% at present, and wages in the last ten years have grown about 10% points faster than inflation. They’re looking for upto 30% wage increases in some places, though wage pressure is much less away from the Eastern seaboard.

Nowhere in Asia is unemployment in the double digits.  Indonesia has 7.4%, the highest. In Thailand, it’s under 1%. In Singapore, it’s 2.3%. In Korea, 3.1% and in Malaysia, 3.4%.

WHAT ABOUT INDIA?

India doesn’t publish unemployment data. (I think it stopped collecting them some decades ago when the government realized that unemployment was undefinable in the context of a predominantly rural subsistence economy.)

It seems, though, that wages in India are not quite keeping pace with inflation, which sounds as though there’s some slack in the economy. Still, according to IMA Asia, hiring intentions seem to be up and they’re prediction wage growth in the 15-20% per year range.

I always look forward to IMA Asia’s notes. They’re usually based on meetings with their client companies in Asia, and so they’re based not just on governmental statistics, but on what is actually happening on the ground. Right now, the story in Asia is very encouraging.

Edited to Add: Just after I posted this, my friend Sri shared this Youtube video:

Top American Graduates Heading to India for Employment

It’s about young Americans heading for Bangalore and its opportunities, especially in Information Technology.

They forecast 2010-2012 will be another 2-3 years of adjustment in Europe and North America.  “We see no reason to lift our US forecast from 2.2% for 2010 and 2.8% in 2011.”

But Asia’s already growing to the point of inflation pressures. Says IMA Asia:  “the outlook in Asia [is] improving with the prospect of strong demand growth by mid-2010 and rising inflation due to shortages of materials, skilled staff and shipping capacity.”

• China’s GDP growth forecast is 9.7% for 2010 and 9.4 % for 2011. Its inflation (measured as CPI growth rate) is only 4-4.5%.
• India, though, is looking at inflation as high as 15% in 2010 and 9% in 2011, off of a GDP growth rate of 7.5-7.8%.

With such a mismatch in the prospects of two major regions, the uncertainly is “reflected in wildly diverse outlooks for commodity markets.” Forecasts for growth in global oil consumption this year range from 120,000 – 1,400,000 barrels per day, with the price by early 2011 either close to  US$71 or $100 .

Fasten your seat-belts.

In October 2009, the Genetic Engineering Approval Committee (GEAC) recommended approval for transgenic eggplants that would resist the shoot borer, a major pest. (It doesn’t protect against bacterial wilt, a different major pest.) The main US player, naturally, is Monsanto, through the Indian company Maharashtra Hybrid Seeds  Co (Mahyco).

[Edited to Add: On Feb 10, 2010, the government put Bt Brinjal on indefinite hold. There were some reports of planned 180-day rat studies instead of the usual 90-day ones.]

There’s been a storm of protest. Activists, farmers, and political leaders are upset. Some have actually called it poison.

Minister for the Environment Jairam Ramesh  has asked for further investigation and public input, while Minister for Food and Agriculture Sharad Pawar is pushing for its introduction.

Meanwhile, the Chief Ministers of the three largest eggplant-producing states have said they do not intend to grow Bt Brinjal. (West Bengal, Orissa and Bihar together account for over 60% of India’s eggplant production.)

Why the controversy?

So far, India’s main GMO crop is cotton, modified with Baccillus Thuringiensis genes that are meant to protect it from bollworm. Like many issues in India, this has been controversial ever since it was introduced 5 years ago – and maybe even before that. Some allegations:

• It doesn’t work. Bt Cotton, according to some sources, is more vulnerable to drought and to other pests, so yields quickly fall.
• It’s tough to control and study. Indian agriculture, made up of large numbers of independent farmers, is not suitable for controlled usage.  Bt genes can spread through cross-pollination, and no controlled studies are possible as to whether Bt Cotton performs better or worse than normal cotton.
• Farmers must repurchase the seeds each year, since the plants are not designed to breed true. This is a considerable expenditure; when the cotton does not perform, farmers go deeper into debt, sometimes hopelessly. Anti Bt activists have suggested that the spate of farmer suicides have been linked to the introduction of agribusiness inputs like these.
• Some sources have said that sheep and cattle grazing on the post-harvest stubble – as they traditionally do – were poisoned when they grazed on Bt Cotton fields.
• There have been allegations of allergic reactions among cotton-pickers.

Though cotton is the single largest transgenic crop in India, investigations have been underway on several others. In 2006, India’s Supreme Court stopped trials on Bt Brinjal so it could examine the issues raised in a public interest petition, but eventually they were re-started.

————-

Meanwhile, pro-GMO sources have suggested that with genetic modification, yields have risen, pesticide use fallen, and it’s all been worthwhile.

India’s Prime Minister, in his speech at the 97th Indian Science Congress said:

“Developments in biotechnology present us the prospect of greatly improving yields in our major crops by increasing resistance to pests and also to moisture stress. BT Cotton has been well accepted in the country and has made a great difference to the production of cotton. The technology of genetic modification is also being extended to food crops though this raises legitimate questions of safety…“

Yesterday, at Narita airport in Japan, I encountered an interesting new product: The Naan Dog.

I was intrigued. It spoke of innovation, globalization, and adaptive palates all at the same time. The Naan Dog product was clearly fusion, though I wasn’t sure what had fused with which.

The Naan has clearly become a common enough product that people understand the word – even in Japan. And “dog” implies that all English-speakers would understand the word to mean a sausage, derived from the American “hot dog,” rather than as something canine.

Naturally, I ordered one. It was a sausage on a mini-naan – exactly as pictured – garnished with Japanese curry sauce (derived from the British version of Indian curries) instead of the traditional ketchup and mustard. So I’d say its roots are Germanic-American/North Indian/ Japanese-British. [ETA: Or maybe Pakistani, as much as Indian. The "naandog" in decorative script border at the top of the poster may have been designed to resemble Urdu.]

It tasted pretty much as you’d expect. Not bad, for an innovative fast food eaten standing at a counter at an international airport.

Edited to Add: My friend Srilata wanted to know if it bore any relation to Slum Dog.

Naan Dog Millionaire? Could happen. Even if only a yen-millionaire.

Versace, which opened a store in Mumbai in 2006, is looking to expand in India. It opened a second store in Delhi, reportedly one of their largest outlets worldwide. And it’s trying for an airport terminal store in Delhi. All this when the company globally made a loss because of the economic downturn.

Meanwhile, Sony launched its first Indian video-game earlier this year: Hanuman, Boy Warrior. (Predictably, there was an objection to having a deity as a video-game character. Unpredictably, the objection came from a US-based person.) Sony plans another half-dozen titles. The company’s India country manager said that India had the world’s largest untapped potential for videogames.

————–

India’s unsaturated markets are clearly a draw, recession or not. Its luxury market may be thin, but there’s still enough to attract some brands – and keep them.

And while a Price Waterhouse survey shows that companies in India are cutting costs to deal with the recession, this doesn’t seem to have stopped the expansion. For example, Accenture is planning to hire 8,000 people in 2010, bringing its total Indian staffing to 50,000.