CAMBRIDGE, MA–It’s been a pretty stellar decade so far in the world’s largest democracy. The economy is growing at nearly 9% a year, GDP per capita has nearly doubled, and its largest multinationals are on a global feeding frenzy, gobbling up anything they can get their rupees on.
From steel makers and aluminum manufacturers to fabled liquor empires and Britain’s beloved Tetley Tea, corporate India is expanding aggressively in its quest to unseat Japan and China, Asia’s two incumbent economic powers. Perhaps not surprisingly, capitalism suits the former British colony well — at least in the aggregate — and with the birth of the world’s cheapest car and a play for Ford’s premium European business, Tata looks set to usher in a new era of Indian industrial leadership.
It isn’t just that the Nano will cost a symbolic 1 lakh (US$2500) , or that its 33 horsepower engine will reach speeds of 65 miles an hour, or that transportation in India will be revolutionized in ways that inventors of the Segway only dreamed. More important than the car itself is its underlying raison d’etre: the emergence of India’sswelling middle class, set to grow from 50 million today to nearly 600 million by 2025. Following similar demographic and economic trends in China, these first-generation middle class consumers will fuel the next cycle of global economic growth for automobiles, electronics, mass media, food, and pretty much everything else we’ve come to take for granted over the last fifty years.
The story isn’t all roses, but the challenges of sustainable and responsible economic development are slowly being addressed. Technological advances in agriculture, structural advances in micro-finance and micro-capitalism, infrastructural developments within and between major urban centres, and demographic trends will continue to fuel investment and innovation across the continent.
That said, for those of us living in the peaceful economic bosom of the G8, India’s latest foray into industrial design and manufacturing could spell the beginning of the end of heavy industry in Western markets, and fuel the push to reinvent the economies of the developed world. Traditionally, systemic shifts of this magnitude involved sizeable labour migrations and ultimately some measure of political instability.
One can only hope that Canadian policymakers — particularly in auto-dependent Ontario — are students of economic history and move to educate and innovate away from their 20th century manufacturing addictions before the knowledge-based industries of the future are too far out of reach.