Great piece. But you forgot to mention Indian corruption and nepotism that continues to keep it from going stratospheric. India has an investment opportunity has been talked about since God was a boy.
Well, corruption is very common in poor countries, so I guess my first question would be whether it's substantially worse in India now than it was in China in the 90s or early 00s.
Not sure if you have read this, but a good book to Alex's point - looking at generic drugs. The timeframe is early 2000's to 2010's to your point. Since then, IDK. I'd have to look deeper. I read this 4-5 years ago.
Probably. I spent about a year in Gujarat, Rajasthan, Himachal Pradesh over a three year period '86-'89, and people then complained that you needed to even pay off letter carriers to deliver your mail, and that the goondas (organized crime) were the bane of businesses without deep connections. I personally remember a bribery incident on a train trip from Varanasi to Delhi.
The Indian government passing their version of the Freedom of Information Act actually improved the corruption situation a great deal - before, a bureaucrat could simply sit on your application for something and never approve it until you paid a bribe, but now you can force that bureaucrat to tell you what's actually going on - if they're crooked, they either give you enough dirt to get them into trouble, or they get in trouble for breaking the law that says they have to tell you everything.
Be that as it may, instructing companies and workers to prevent knowledge transfer to a neighbouring developing country while pontificating about the importance of the Global South is rich. Corruption and nepotism existed in China too. The difference is higher labor participation rate of women and, crucially, a focus on primary school education while India bizarrely focused on tertiary education for decades.
Not to mention India's own current flirtation with right-wing populism. It seems like maybe Modi is not quite as bad as Trump -- at the very least he is smarter and more capable of seeing his long-term self-interest, rather than saying at every moment whatever makes him feel dominant over whoever happens to be nearby -- but that's a very low bar. :-/
Modi is building a lot of infrastructure and streamlining regulations a little bit. He's also encouraging platform FDI in the electronics sector with production incentives. So he's very far from Trump in terms of economics, even though he does have protectionist instincts.
In some ways, a smart and effective nationalist who condones murdering a sizable minority is _worse_ than a crazy and incompetent one.
I find Modi's regime in India deeply distressing because on the one hand I totally agree with you about wanting to see India integrate as part of the "coalition of democracies". I welcome trade with India and think it's great to see migration of workers back and forth between the US and India. (We probably should have MORE Americans traveling to India to work and learn -- akin to the Slate "Go East, Young Man" series, by Henry Blodget, that was published in Slate some years back, about the opportunities for Americans to do business in China.)
It's hard to know whether, if some large slice of the public turns against him, Modi may respond by subverting India's democratic norms, the way various other would-be authoritarians have done around the world. (e.g. Orbán in Hungary, Kaczyński in Poland, Bolsonaro in Brazil, and of course Trump in the US.)
Upper caste (Hindu) Gujaratis are--or at least were, when I knew quite a few back in the '80's-'90's--pretty vocal in their at times extreme dislike of Muslims. To them, the anti-Hindu atrocities of Mahmoud of Ghazni and the Emperor Aurangzeb had apparently happened only yesterday. Instead of centuries ago. Much of their aversion curiously seemed to be diet-centric, as they're fiercely vegetarian.
By contrast, towards low-caste Hindus and Adivasis (Tribals), they seemed merely condescending and dismissive.
I don't think US companies have much of a choice. European and Chinese researches will head back in droves. Shutting out an immigration pathway will majorly hurt the research industries. Indian STEM workers and tech folks, however, will jump at the chance to work in the US even if they won't ever get a chance to become US citizens.
Modi is problematic and has vitriolic speeches but citing violence against Muslims as problematic while doing business with China over two decades with the widest and most comprehensive levels of persecution in modern recorded history strikes me as odd.
Not just that, economic development will lift people from all boats and really transform attitudes within the country as people will begin to have aspirations for a life that even people in other developing countries take for granted. I think denying 1.5 billion people an opportunity for a better life the way a majority of East Asian countries (which had their own episodes of minority persecution and outright dictators in the past) achieved is not fair.
He's not "assassinating Canadian and US citizens who have connections to a separatist movement". An overzealous intelligence apparatus with some rogue officers willing to pay bounty hunters did that. I am pretty sure they've clamped down on it given the blowback internationally. They've had talks behind the scenes to resolve it. Admitting fault or handing over personnel for justice in a foreign court would be disastrous from a domestic politics standpoint. Not excusing it... just pointing out the nuance.
I certainly hope you're correct that he didn't sanction it, but this was exactly my point. _Of course_ it would be his _public_ position that he didn't. I imagine the CIA has a better idea whether that's true, than what we can know from public reporting, but even with them, if he did sanction it, the order would have been agreed on purely in conversation in a secure meeting, and they would've tried very hard to avoid leaving any kind of permanent / traceable record.
I know that wasn’t the gist of this article, but I was happy to read the linked article about Chinese investment in Morocco on several points. I didn’t know much about Morocco. First, that’s pretty cool that the median income in Morocco is $2150 a month. That has to be one of the highest national median incomes of any African country, if not the highest. Second, that Morocco has an auto manufacturing industry, and third, that there are 8 Chinese EV battery factories there. I get that it probably goes against the aims of our industrial policy, and I do want a thriving American EV and battery industry. I knew Morocco was no failed state like so many in Africa. But to learn of a prosperous Morocco is a pleasant surprise.
I don’t even agree with a lot of “neoliberalism,” but chalk one in the W column for neoliberalism and globalization.
It didn’t really smell right to me, too, but I didn’t have the time to really research that article’s claim. I did look up Morocco a bit and find out it has high speed rail though, to our shame.
India represents a huge opportunity for the non-china aligned world but it has been such an opportunity for decades. It is hampered by corruption, classism, abysmal treatment of women, etc. But the opportunity is real and India and the world would be better off it it makes the moves to realize it. Modi is a cult of personality autocrat which does not help
I really like this piece as it also points to how countries, including, India strive to create economic and political space for themselves in the world. It's also a test of how much know how and technology can be restricted today. Two books that highlight Indian strategies to create space for economic and political progress work checking out are Foreign Minister Jaishankar's "Why Bharat Matters" and Sreeram Chaulia's "Friends: India's Closest Strategic Partners".
I don't think simply saying the word "MAGA" constitutes an ideology...it's clear that Trump's ideology is about economics isolationism, similar to Peron or Franco.
It might have been you that mentioned this, but he seems to think that the time period in which America was "great" was when William McKinley was President. Among other things, McKinley was also a Tariff Man, and he went to war with Spain and took Cuba and the Philippines from them...
I always feel Noah is overly biased against China in these articles. India *may* be a great opportunity in the future, but for now it’s corruption, treatment of women etc make me feel like that future is a long way off
I’m honestly sick of hearing the same old spiel about India’s social issues. The US had Jim Crow, China was super corrupt—and they still made it big. Every major economy has faced ugly problems on the way up. What really matters is whether India can line up the right inputs for manufacturing, not whether it’s flawless from day one.
Oh, and by the way, if China seems “perfect” at the moment, that’s probably your bias talking. Plenty of great powers looked unstoppable—until their own arrogance got the best of them. Thinking you can contain the entire world only works for so long. History’s a revolving door: nations that rise too fast and too proud often trip over themselves eventually. India’s got a shot, so long as it can get its manufacturing game right—no country ever needed to be flawless to move forward.
There have been meaningful, significant changes in Indian society over the past couple of decades in key areas such as levels of violence and gender equity (e.g. sex ratio at birth). Many of these are at root about more effective governance and the priorities of leaders. I recommend the work of economist Shamika Ravi for quantitative insights into grassroots level changes. Please see the following articles on gender balance and levels of violence:
Trump’s claim the world is unfairly treating the U.S. is like billionaires complaining about corporate and personal income taxes. That all Americans were so unfairly treated would be the American Dream:
I was already somewhat unhappy by how people use the concept of “fairness” to prevent things that help some groups without hurting anyone. But Trump’s constant ranting about that word is really turning me against fairness as a concept. Make things better for people, try to help the worse off in particular, but don’t worry too hard about whether things are “fair”! Life isn’t fair, but we can make it better, even if it’s still unfair.
Noah. Did you conveniently forget to mention the high tariffs that India has had for decades, or did I miss it? And do you expect India’s to come down to levels as low as the US’s tariffs were?
I’m no lover of tariffs, but it is one of the bad ways to encourage foreign investment ( e.g., factories with good technology)in your country.
One could make the argument that manufacturing with robots and AI can be done efficiently in the USA.
(Tarriffs are awful because they are 1) unpredictable and 2) unpredictable. If we know there will be long term tarriffs, we can build and manufacture anything here in the USA. But why do that, if the situation is temporary.)
Everything can be made in the USA at a very reasonable, low cost, using automation more than labor.
I expect onshoring to continue. Of course, I'm biased, as I built and run a factory here in the USA, in the Heartland of America.
China is at least a decade ahead of the US in robotics, the result of years of massive government and SOE investment. Absent a similar form of industrial policy here, which will never occur, the US will lag in adoption of robotics for decades to come.
“Also, it’s easier to sell products in a country if you also produce those things inside that country — transport costs are lower. . .”
This is why Mexico has been a good fall back strategy for U.S. corporations withdrawing from China. In addition to lower wages, transports and logistics to your largest market (U.S.) are less expensive and simpler. And yet Trump decides Mexico is unfairly treating the U.S. American OEMs for autos, high-tech medical technologies, etc. would beg (literally) to differ.
EU and India could make great partners, although some of the 'cultural differences' such as the rather abhorrent treatment of women, the (technically illegal) caste system and the mistreatment of religious minorities don't sit very well in the EU, politically. (But they might, rightfully, think the same about the way we treat cows...) However, it wouldn't be the first time that we'd ignore morals to make money, and some of our current (populist) leaders probably look quite aspirationally at Modi's nationalism and the way that mosques get destroyed.
Too bad none of this will really help the environment. But 'après nous, le déluge' I guess.
Oh, and since we're on an economics blog and are talking about India I have to say it; Sen is one of the best and most interesting economists, ever.
Now lets see how many of you will disagree with that ;-)
The expansion of Chinese FDI will have an impact on China’s current account. Its trade surplus ($386,063 million in 2023) was partly offset by a recurring deficit in primary income (-$148,242 in 2023). China does not report to the IMF the components of the net primary income balance, which includes receipts and payments on FDI, portfolio dividends and interest and bank income. But the primary income deficits of other emerging markets that received inflows of FDI in the 1990s and 2000 such as Mexico and Turkey are substantially due to their FDI payments to foreign firms, and there is no reason to think that China’s situation is different. FDI inflows may be down but there is still a substantial stock owned by foreign companies. This will change, however, as Chinese firms expand and make profits on their own foreign operations. These receipts will partially offset the outward payments, mitigating the primary income deficits and enlarging China’s current account.
“India is the great market opportunity that China never really was. Of course companies want to put their factories there, just as soon as government policy makes it feasible to do so.”
A U.S. advanced silicon anode Li-ion battery OEM and a U.S. wind-turbine technologies and superconductivity OEM began pivots to India in early 2023. Big Pharma may or may not follow, but Indian leads the world in vaccine production — something to keep in mind before the next pandemic.
Great piece. But you forgot to mention Indian corruption and nepotism that continues to keep it from going stratospheric. India has an investment opportunity has been talked about since God was a boy.
Well, corruption is very common in poor countries, so I guess my first question would be whether it's substantially worse in India now than it was in China in the 90s or early 00s.
Noah,
Not sure if you have read this, but a good book to Alex's point - looking at generic drugs. The timeframe is early 2000's to 2010's to your point. Since then, IDK. I'd have to look deeper. I read this 4-5 years ago.
https://www.goodreads.com/book/show/42448266-bottle-of-lies
Tim
Probably. I spent about a year in Gujarat, Rajasthan, Himachal Pradesh over a three year period '86-'89, and people then complained that you needed to even pay off letter carriers to deliver your mail, and that the goondas (organized crime) were the bane of businesses without deep connections. I personally remember a bribery incident on a train trip from Varanasi to Delhi.
The Indian government passing their version of the Freedom of Information Act actually improved the corruption situation a great deal - before, a bureaucrat could simply sit on your application for something and never approve it until you paid a bribe, but now you can force that bureaucrat to tell you what's actually going on - if they're crooked, they either give you enough dirt to get them into trouble, or they get in trouble for breaking the law that says they have to tell you everything.
Be that as it may, instructing companies and workers to prevent knowledge transfer to a neighbouring developing country while pontificating about the importance of the Global South is rich. Corruption and nepotism existed in China too. The difference is higher labor participation rate of women and, crucially, a focus on primary school education while India bizarrely focused on tertiary education for decades.
https://www.economist.com/asia/2024/11/28/is-indias-education-system-the-root-of-its-problems
Not to mention India's own current flirtation with right-wing populism. It seems like maybe Modi is not quite as bad as Trump -- at the very least he is smarter and more capable of seeing his long-term self-interest, rather than saying at every moment whatever makes him feel dominant over whoever happens to be nearby -- but that's a very low bar. :-/
Modi is building a lot of infrastructure and streamlining regulations a little bit. He's also encouraging platform FDI in the electronics sector with production incentives. So he's very far from Trump in terms of economics, even though he does have protectionist instincts.
Yeah, I've heard that in his earlier roles in local and Gujarat state politics he has always been pretty economically pragmatic and effective.
He just always _also_ has played on and encouraged violent Hindu nationalism.
https://en.wikipedia.org/wiki/2002_Gujarat_riots
In some ways, a smart and effective nationalist who condones murdering a sizable minority is _worse_ than a crazy and incompetent one.
I find Modi's regime in India deeply distressing because on the one hand I totally agree with you about wanting to see India integrate as part of the "coalition of democracies". I welcome trade with India and think it's great to see migration of workers back and forth between the US and India. (We probably should have MORE Americans traveling to India to work and learn -- akin to the Slate "Go East, Young Man" series, by Henry Blodget, that was published in Slate some years back, about the opportunities for Americans to do business in China.)
It's hard to know whether, if some large slice of the public turns against him, Modi may respond by subverting India's democratic norms, the way various other would-be authoritarians have done around the world. (e.g. Orbán in Hungary, Kaczyński in Poland, Bolsonaro in Brazil, and of course Trump in the US.)
Upper caste (Hindu) Gujaratis are--or at least were, when I knew quite a few back in the '80's-'90's--pretty vocal in their at times extreme dislike of Muslims. To them, the anti-Hindu atrocities of Mahmoud of Ghazni and the Emperor Aurangzeb had apparently happened only yesterday. Instead of centuries ago. Much of their aversion curiously seemed to be diet-centric, as they're fiercely vegetarian.
By contrast, towards low-caste Hindus and Adivasis (Tribals), they seemed merely condescending and dismissive.
I don't think US companies have much of a choice. European and Chinese researches will head back in droves. Shutting out an immigration pathway will majorly hurt the research industries. Indian STEM workers and tech folks, however, will jump at the chance to work in the US even if they won't ever get a chance to become US citizens.
Modi is problematic and has vitriolic speeches but citing violence against Muslims as problematic while doing business with China over two decades with the widest and most comprehensive levels of persecution in modern recorded history strikes me as odd.
https://uhrp.org/insights/uhrp-analysis-finds-1-in-26-uyghurs-imprisoned-in-region-with-worlds-highest-prison-rate/
Not just that, economic development will lift people from all boats and really transform attitudes within the country as people will begin to have aspirations for a life that even people in other developing countries take for granted. I think denying 1.5 billion people an opportunity for a better life the way a majority of East Asian countries (which had their own episodes of minority persecution and outright dictators in the past) achieved is not fair.
He’s also assassinating Canadian and US citizens who have connections to a separatist movement.
I'm sure his official position would be that that's not him, it's over-zealous patriots.
But yeah. Doesn't seem like a trait you want in the leader of a major ally!
He's not "assassinating Canadian and US citizens who have connections to a separatist movement". An overzealous intelligence apparatus with some rogue officers willing to pay bounty hunters did that. I am pretty sure they've clamped down on it given the blowback internationally. They've had talks behind the scenes to resolve it. Admitting fault or handing over personnel for justice in a foreign court would be disastrous from a domestic politics standpoint. Not excusing it... just pointing out the nuance.
I certainly hope you're correct that he didn't sanction it, but this was exactly my point. _Of course_ it would be his _public_ position that he didn't. I imagine the CIA has a better idea whether that's true, than what we can know from public reporting, but even with them, if he did sanction it, the order would have been agreed on purely in conversation in a secure meeting, and they would've tried very hard to avoid leaving any kind of permanent / traceable record.
I know that wasn’t the gist of this article, but I was happy to read the linked article about Chinese investment in Morocco on several points. I didn’t know much about Morocco. First, that’s pretty cool that the median income in Morocco is $2150 a month. That has to be one of the highest national median incomes of any African country, if not the highest. Second, that Morocco has an auto manufacturing industry, and third, that there are 8 Chinese EV battery factories there. I get that it probably goes against the aims of our industrial policy, and I do want a thriving American EV and battery industry. I knew Morocco was no failed state like so many in Africa. But to learn of a prosperous Morocco is a pleasant surprise.
I don’t even agree with a lot of “neoliberalism,” but chalk one in the W column for neoliberalism and globalization.
$2150/month is over $25k/year. That doesn’t seem right since the GDP per capita is about $4.5k. What gives? Huge household sizes?
It didn’t really smell right to me, too, but I didn’t have the time to really research that article’s claim. I did look up Morocco a bit and find out it has high speed rail though, to our shame.
India represents a huge opportunity for the non-china aligned world but it has been such an opportunity for decades. It is hampered by corruption, classism, abysmal treatment of women, etc. But the opportunity is real and India and the world would be better off it it makes the moves to realize it. Modi is a cult of personality autocrat which does not help
I really like this piece as it also points to how countries, including, India strive to create economic and political space for themselves in the world. It's also a test of how much know how and technology can be restricted today. Two books that highlight Indian strategies to create space for economic and political progress work checking out are Foreign Minister Jaishankar's "Why Bharat Matters" and Sreeram Chaulia's "Friends: India's Closest Strategic Partners".
It's not Trump's *ideology* that's bizarre, the ideology is very straightforward: MAGA. What's bizarre is that he has no fucking clue *how* to MAGA.
For truly "bizarre ideology", the Democrats have no peer, which is why they lost to a sociopathic moronic criminal grifter.
I don't think simply saying the word "MAGA" constitutes an ideology...it's clear that Trump's ideology is about economics isolationism, similar to Peron or Franco.
It might have been you that mentioned this, but he seems to think that the time period in which America was "great" was when William McKinley was President. Among other things, McKinley was also a Tariff Man, and he went to war with Spain and took Cuba and the Philippines from them...
Well Trump doesn't really have an articulatable "ideology", it's more just an impressionist pastiche of emotions and images that stands in for one.
I always feel Noah is overly biased against China in these articles. India *may* be a great opportunity in the future, but for now it’s corruption, treatment of women etc make me feel like that future is a long way off
I dont think he is biased against. He points out their agenda and the implications.
I’m honestly sick of hearing the same old spiel about India’s social issues. The US had Jim Crow, China was super corrupt—and they still made it big. Every major economy has faced ugly problems on the way up. What really matters is whether India can line up the right inputs for manufacturing, not whether it’s flawless from day one.
Oh, and by the way, if China seems “perfect” at the moment, that’s probably your bias talking. Plenty of great powers looked unstoppable—until their own arrogance got the best of them. Thinking you can contain the entire world only works for so long. History’s a revolving door: nations that rise too fast and too proud often trip over themselves eventually. India’s got a shot, so long as it can get its manufacturing game right—no country ever needed to be flawless to move forward.
There have been meaningful, significant changes in Indian society over the past couple of decades in key areas such as levels of violence and gender equity (e.g. sex ratio at birth). Many of these are at root about more effective governance and the priorities of leaders. I recommend the work of economist Shamika Ravi for quantitative insights into grassroots level changes. Please see the following articles on gender balance and levels of violence:
1. Trend towards gender balance:
https://www.pewresearch.org/religion/2022/08/23/indias-sex-ratio-at-birth-begins-to-normalize/#:~:text=From%20a%20large%20imbalance%20of,%2C%20conducted%20from%202019%2D21.
2. Declining social violence: https://www.mercatus.org/ideasofindia/amit-ahuja-and-devesh-kapur-complexity-violence-and-fragility-order-india
India is hard to understand and I find it difficult to curate good research on the country also.
Trump’s claim the world is unfairly treating the U.S. is like billionaires complaining about corporate and personal income taxes. That all Americans were so unfairly treated would be the American Dream:
https://ritholtz.com/wp-content/uploads/2026/12/global.png
I was already somewhat unhappy by how people use the concept of “fairness” to prevent things that help some groups without hurting anyone. But Trump’s constant ranting about that word is really turning me against fairness as a concept. Make things better for people, try to help the worse off in particular, but don’t worry too hard about whether things are “fair”! Life isn’t fair, but we can make it better, even if it’s still unfair.
Noah. Did you conveniently forget to mention the high tariffs that India has had for decades, or did I miss it? And do you expect India’s to come down to levels as low as the US’s tariffs were?
I’m no lover of tariffs, but it is one of the bad ways to encourage foreign investment ( e.g., factories with good technology)in your country.
I mentioned it.
One could make the argument that manufacturing with robots and AI can be done efficiently in the USA.
(Tarriffs are awful because they are 1) unpredictable and 2) unpredictable. If we know there will be long term tarriffs, we can build and manufacture anything here in the USA. But why do that, if the situation is temporary.)
Everything can be made in the USA at a very reasonable, low cost, using automation more than labor.
I expect onshoring to continue. Of course, I'm biased, as I built and run a factory here in the USA, in the Heartland of America.
China is at least a decade ahead of the US in robotics, the result of years of massive government and SOE investment. Absent a similar form of industrial policy here, which will never occur, the US will lag in adoption of robotics for decades to come.
I don’t know if this holds true for all sorts of manufacturing.
“Also, it’s easier to sell products in a country if you also produce those things inside that country — transport costs are lower. . .”
This is why Mexico has been a good fall back strategy for U.S. corporations withdrawing from China. In addition to lower wages, transports and logistics to your largest market (U.S.) are less expensive and simpler. And yet Trump decides Mexico is unfairly treating the U.S. American OEMs for autos, high-tech medical technologies, etc. would beg (literally) to differ.
EU and India could make great partners, although some of the 'cultural differences' such as the rather abhorrent treatment of women, the (technically illegal) caste system and the mistreatment of religious minorities don't sit very well in the EU, politically. (But they might, rightfully, think the same about the way we treat cows...) However, it wouldn't be the first time that we'd ignore morals to make money, and some of our current (populist) leaders probably look quite aspirationally at Modi's nationalism and the way that mosques get destroyed.
Too bad none of this will really help the environment. But 'après nous, le déluge' I guess.
Oh, and since we're on an economics blog and are talking about India I have to say it; Sen is one of the best and most interesting economists, ever.
Now lets see how many of you will disagree with that ;-)
Chinese India-watcher expects India-US relations to cool under Trump and says there might be an improvement in India-China relations:
https://www.sinification.com/p/mao-keji-on-trump-india-and-the-world-b27
(see part 10)
Who knows? Narendra was pretty Trumpy last time around.
The expansion of Chinese FDI will have an impact on China’s current account. Its trade surplus ($386,063 million in 2023) was partly offset by a recurring deficit in primary income (-$148,242 in 2023). China does not report to the IMF the components of the net primary income balance, which includes receipts and payments on FDI, portfolio dividends and interest and bank income. But the primary income deficits of other emerging markets that received inflows of FDI in the 1990s and 2000 such as Mexico and Turkey are substantially due to their FDI payments to foreign firms, and there is no reason to think that China’s situation is different. FDI inflows may be down but there is still a substantial stock owned by foreign companies. This will change, however, as Chinese firms expand and make profits on their own foreign operations. These receipts will partially offset the outward payments, mitigating the primary income deficits and enlarging China’s current account.
Good one!
Why then do they still have terrible pollution in places like around Delhi? I was there in '19, and it was massively worse than Hangzhou was in '14.
“India is the great market opportunity that China never really was. Of course companies want to put their factories there, just as soon as government policy makes it feasible to do so.”
A U.S. advanced silicon anode Li-ion battery OEM and a U.S. wind-turbine technologies and superconductivity OEM began pivots to India in early 2023. Big Pharma may or may not follow, but Indian leads the world in vaccine production — something to keep in mind before the next pandemic.