India on the Up and Up?

With latest figures show that the Indian economy grew at an annual rate of 5.7% in the first quarter of 2003, the Economist asks whether India is getting ready to rock'n roll:

because of a confluence of benign trends, economic optimism abounds. India's GDP is expected to grow by at least 6% this year, thanks partly to demand from a more robust global economy, and, more importantly, to the most bountiful monsoon for many years. Almost half of India's GDP still comes from the countryside.

A stockmarket surge has been barely dented by the Supreme Court ruling or even, for more than a few hours, by the deadly terrorist bombings in Mumbai last month. Earlier this month, the index covering the Mumbai exchange touched levels not seen since February 2001, having climbed by more than 50% since April. Profits of companies included in the index were up by an estimated 50% in the second quarter of 2003, compared with the same period in 2002.

True optimists look far beyond the stockmarket. Painful reform and restructuring in the 1990s, they say, is paying off. Shorn of the protections and blandishments of what became known as the “licence raj”, and more open to foreign imports, India is now producing companies that can compete with any in the world. These include not just the well-known successes in information technology and pharmaceuticals, but also businesses in “old economy” industries: cars and car parts, motor-cycles, cement and steel.

In 2002, a subdued year for the world economy, India's exports grew by 19.2%, a rate beaten only by China, whose currency, Indian exporters point out, is notoriously undervalued, whereas the rupee has, unusually, been appreciating against the dollar. However, India's is still, in global terms, an economy that has a long way to go before it looks very much like a tiger. Last year it accounted for just 0.8% of world exports.

It is true that many Indian firms are exhibiting new signs of self-confidence. Indeed, China itself, long seen by Indian businesses as a threat, is now seen by some as an opportunity. The success there of Indian steelmakers, to take an old economy example, has been such that they have been exceeding the quantitative quota (3% of steel imports) that China imposes on them.

Asked to explain the rosier outlook, manufacturers cite one factor above all: the sharp decline in interest rates—from an annual rate of roughly 12% to half that—in the past five years. Besides beautifying company balance sheets, this is encouraging consumers to borrow, to buy cars, for example, and build houses.
Source: The Economist
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India to Sign Asean Trade Deal

Hot on the heels of the Cancun fracas, India announces a new trade deal with the south East Asian Nations.

India is to sign an agreement next week with the 10 member states of the Association of South East Asian Nations (Asean) leading to the creation of a full free trade area within a decade. Yashwant Sinha, India's foreign minister, said the framework agreement had been negotiated over the past year, and would be signed next week at the Asean summit in Bali, Indonesia. India is also close to signing bilateral trade deals with both Singapore and Thailand. "We are getting much more deeply engaged in south-east Asia," Mr Sinha told the Financial Times in an interview in London. "This will certainly boost our trade and economic relationship with the region."

Progress on negotiating the framework agreement with Asean has been unusually rapid by Indian standards, in a sign of the importance of the deal to both sides. India has watched with some misgivings neighbouring China's dramatic trade growth with Asean over the past decade. But Indian officials say Asean also wants to counter-balance China's growing economic dominance of the region by strengthening ties with a market the size of India. Indian exports to Asean were $4.8bn (£2.9bn, ?4.1bn) last year, just 8 per cent of its total exports. Officials say this could rise sharply.

The deal would go some way to answer those critics who point out that India imposes higher tariffs on developing country imports than on western ones. India has been criticised for playing an influential role in helping bring about a collapse of the trade talks in Cancún last month. "If we have regional trading arrangements with Asean, they will become beneficiaries of lower tariffs with India," said Mr Sinha.
Source: Financial Times
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Bulgaria: Only Pensioners Here

Little by little the Bulgarian reality is sinking into the popular consciousness. My Bulgarian research assistant has sent me this cutting from the Bugarian press:

Unemployment and poverty drove away the young people. In 2 decades Bulgarian population will be of pensioners mostly.

Over 1,000,000 people emigrated from this country in the wake of 1989, the Bulgarian National Radio released, quoting data of the Generalia 21 Youth Organization. Of them, 840,000 were aged under 29. According to the statistics, young people living in Bulgaria are only 1,150,000. Their number is expected to fall down to 1 million in a decade, and in two decades it is expected to be reduced to 670,000. Young people are emigrating en masse for unemployment, dramatically low living standards and social instability. Soon the population of Bulgaria will be constituted of pensioners mostly, commented experts at the discussion on youth policy-making held in Borovets. The other reasons for the fall in population are the low birth rates and high death ones. Annually, Bulgaria's population is decreasing by 45,000 to 50,000 people in average.

Trying to Stay on Top

So Huawei and Cisco have reached an agreement. It's hard to see who will be the main beneficiary here. In the short term it's a victory for Cisco, but at the price of seeing Huawei coming out of China to offer competition. Presumeably later, as Huawei gets its own market share, a clearer identity and more experience it will develop its own legitimate products and then will really be able to comptete. This is another of the details about patents, they sometimes only offer limited protection when a rival has sufficent resources and determination to get round the problem.

won a victory in its battle over technology piracy claims on Wednesday when Huawei, the emerging giant of the Chinese communications equipment business, agreed to modify some of its products. The legal fight is the most prominent recent dispute over intellectual property rights involving the fast-growing Chinese technology industry.

For Cisco, protecting its technology has become increasingly important as Huawei has moved beyond the domestic market to sell switches and router equipment in North America and Europe. The companies said that Huawei had "voluntarily made changes to certain of its router and switch products". The changes will be reviewed by an independent expert. If the changes are accepted by the independent expert, the two sides said they expected the legal action to end.

Cisco had accused the Chinese company of "systematic and wholesale infringement" of its intellectual property, including copying parts of the source code underlying the software that operates its routers. It also claimed that Huawei had gone as far as lifting some passages from its product manuals verbatim. Resolving the legal dispute could free Huawei to compete far more aggressively in overseas markets. It has agreed a partnership with 3Com, the US networking equipment company, to produce and sell equipment jointly.

A preliminary court injunction in the Cisco case has limited Huawei's international expansion. The injunction prohibited the Chinese company from selling products worldwide that included source code that infringed a protocol developed by Cisco. Huawei was also forbidden to let engineers who had seen the Cisco code work on developing a rival version and was ordered to stop distributing user man- uals and online help pages in the US. Wednesday's agreement with Cisco goes much further, blocking any global sales of Huawei products that infringe on Cisco's intellectual property. Huawei has agreed to sell only products that have been amended to deal with the Cisco complaint. The changes that will be submitted for independent review cover amendments to part of Huawei's source code, user manuals and online help screens.
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