Here is the kind of problem I often think about: Take a very poor district in India. What does it take for it to become one of the rich places in the world? How does per capita GDP go from $1K to $25K-50K? What is “catch up”? How long would it take?
It comes down to having skills and know-how in the workforce and developing those skills require employers who will invest in that workforce to develop those skills and know-how. So going from $1K to $25K is the process of employers and the workforce advancing together. Employers and workforce advancing together to develop skills and know-how needs commitment to the cause, discipline to stay the course, curiosity to learn new things and ultimately the faith that it can be done. We have to find these within ourselves. An inner journey first.
The good news is that the time to catch up has been shrinking. I believe it can be done in about 15-20 years today and it used to take 30-50 years. Why? Technologies have widely diffused. Second, new fundamental breakthroughs are slowing and that allows faster catch up.
Regional economic engine
Source: TW
I want to discuss the idea of the “economic engine” for a region - a region could be a city or district.
I always ask “what do we sell to the rest of the world from this region, to balance against all the things we buy from the rest of the world?” - that stuff we sell from our region is the economic engine.
Now we take the revenue from that economic engine and consider the “value added in the region” - which includes all the labor income as well as the profits paid to people in the region.
Now regional prosperity is very easily understood: what is the value added per person (include all the population of the region) by our “economic engine”? If that measure is high, we have a prosperous region. Today, if a rural district in India is able to achieve even $1000 per capita value added in its economic engines, it would be prosperous. This would be a measure of “value added per capita by what the region exports to the world outside this region”.
Lets say Zoho adds an economic value of $100 million a year to the Tenkasi region. With a population of about 1.4 million in the district, Zoho’s own contribution to regional prosperity would be about $70 per person at the entire district level.
We need such economic engines at every district level in India, in all our 800+ districts. That is the key to balanced regional development.
If Zoho could do $300-400 million per year in value addition in Tenkasi, the region would feel reasonably prosperous. Of course the assumption is that there will be other economic engines emerging too because of the “multiplier effect”.
My goal is to demonstrate this at a few rural districts. In that sense, I consider myself an experimental economist🙏