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There's a lot of hype surrounding India. The US clearly wants to boost the country to provide a Western-oriented alternative to China. No other country has the scale comparable to China and India's demographics are much better (26 million births compared to China's 10). The Indian diaspora is very successful in the US and largely pro-American and anti-China. So what's not to like here?
To India boosters like Noah Smith, there's pretty much nothing to be skeptical of. He sees the emergence of an Indo-US alliance in all but name as a necessity.
For this alignment to make sense, India must actually become a real alternative to China. Is this plausible?
First, India's economic structure is dominated by services and elite services at that (IT exports). Its manufacturing sector has been very weak. Modi tried to change this with his 2014 "Make in India" campaign. We've now gone almost a full decade since then and there's basically been zero movement on this issue. India boosters will claim that this is simply because decoupling never really got serious until now. But the problem with this line of argument is that the rhetoric is changing. Even Raytheon's CEO is claiming decoupling is impossible; the new watchword is "de-risking" which is a tacit admission that China's integration into the world's supply chains is far greater than the Former Soviet Union ever was, which is why the analogies to the Cold War are often misleading at best.
Second, a key part of China'a ascent was built on skilled, but cheap labour. Economists often overstate the importance of labour costs. What matters is productivity. Labour costs can increase as long as productivity increases faster: this is what drives long-term growth.
Nobody is denying that India has cheap labour, but is it skilled? Moving past the rarefied IT, pharma and finance sectors that dominate India's services, we find a much bleaker landscape.
50% of Indian kids are functionally illiterate. Female literacy has actually worsened over time. Though this is partly a function of the school system taking in far more kids than before. Yet Vietnam and Indonesia did the same yet did not notice such a fall. Finally, there's no improvement over the past decade.
We can argue over whether education matters much for simple manufacturing. Economists like the heterodox Ha-Joon Chang of South Korean descent has argued that it really doesn't. Perhaps this was true when SK, JP, TW and other East Asian "tigers" took off in the 1960s. Today, everything is far more digital, even relatively simple manufacturing. Workers need to read basic instructions and should at least be able to operate basic machinery, which in turn requires them to read and operate screens. Being unable to read a simple sentence immediately disqualified half the Indian workforce.
If India were to really become a fully fledged alternative to China, then it means that it would need to scale the value-added ladder the way China has. It can't just produce toys or textiles. It would have to create a fully industrial ecosystem covering the greatest sophistication. Simply put, does India has the human capital base to pull that off? The data seems to draw us to a stark conclusion: not really.
Poverty cannot be an explanation either. Vietnam had a similar per capita GDP to what India has now in the mid-2010s. Yet it did very well in international tests and it has continued to draw in a great number of manufacturing projects in a way that India has been unable to. Some of this may be related to government: Vietnam is a one-party dictatorship like China and can bulldoze through various projects of importance. But a more important explanation is simply that Vietnam has the same combination that China had a generation ago: skilled labour but at cheap rates.
In short, if American elites are now betting big on India supplanting China - or at least becoming a real viable alternative - for manufacturing then it is very likely that they will become disappointed. By the same logic, any talk of decoupling (or "de-risking") is likely to run into the hard wall that the alternatives are either too small (Vietnam) or not up to par (India).
On a sociological note, we should acknowledge that discussions on India are colored by their diaspora in the West, primarily in Anglo countries. This group are an incredibly elite selection, particularly in the US. They come from highly privileged homes with house maids and a cultural aversion to manual labour, and by extension manufacturing. It can hardly be surprising that India was ground zero for fantasies that developing countries can "leap frog" manufacturing into prosperity, despite there being virtually no examples of this in world history (barring petrostates, financial êntrepots like Singapore etc).
I've hoped to convince you of becoming more realistic about India's prospects, even if I support a move to diversify away from China for obvious geopolitical reasons. India's own potential can be hotly debated. Certainly their smart fraction is highly capable and we know that smart fractions are important for driving prosperity. The question before us is if India's much less capable "middle" will prevent it from rapid convergence once the easy gains from growth are gone. East Asia managed to educate the broad masses to fairly decent levels whereas India clearly has not. Should we really expect them to emulate East Asia given these sharp differences? As things stand, the West's current policy completely ignores this question.
Let’s look at this thru a lens of being a consultant if say I was advising the WH on the viability of the plan.
Are Indians actually smart? I honestly don’t know. We get higher caste Indians here and heavily filtered from a giant population. If they are then one can probably make an assumption India could replace China. I have some doubts here because India has always been the “next big thing” for perhaps even centuries and it never happens. Sort of feels like a better Africa. They were never the leader or a great power of civilization like China has often been.
The de-risking from China is likely accurate. It’s too smart of a country not to make many economic and technological gains. I’ve bought into a lot of Galeevs rhetoric but it does appear Russia has never been a real great power and all of their Soviet tech was mostly imported from the west. They existed as a feudal state for military protection thru their entire history. Perhaps the Russians could have been a great power but the military threat was always too much which kept them limited to resource extraction and military. China is obviously pass that stage.
Probably a good ally. But I would never expect them to take the next step and be more because it’s never worked before.
I've seen average IQ figures as low as the 70s for India. Of course, there are some smaller ethnicities that are akin to Jews in being oasis of higher IQ for one reason or another, but largely due to consistent endogamy.
The really smart ones are rightly fond of fleeing or have already fled. They know they'll do much better in an economy that doesn't seek to redistribute most of the wealth they create after taxing it away from them.
It would seem to me then that india either has higher standard deviations of IQ or have cloistered high IQ populations. A 70-80 high IQ country just isn’t go to throw off the amount of US tech executives that India has accomplished even with massive population. As an American it seems very odd to view India as a low IQ country because of how many Doctors and first-world quality engineers they throw off. As an American it feels like India has Einsteins hiding in subsistence farming. Perhaps the caste system led to this.
India still has childhood malnutrition problems.
Some of them exacerbated by ideological reasons- the Hindu opposition to meat eating is likely a contributing factor.
I was under the impression that the upper castes (and the wealthier castes) were more likely to practice strict vegetarianism than the lower castes. Obviously meat is still going to be harder to afford for the poor in lower castes, bit I don't think it would be as much of an issue.
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