Wednesday, September 3, 2008

ICA Fundamentals

ICA Fundamentals
Filed under: General
Posted by: site admin @ 9:58 am

A useful resource and note from the ICA Institute’s Newsletter Editor of Academic Resources and Industry Reports, Dr. SV Char:


Download .pdf of ICA Fundamentals Table

Ang Lee’s latest spy movie set in Shanghai is entitled Lust, Caution. Likewise, the title for the attached statistical table about the fundamentals for India, China and the US could also be Stats Fundas, Caution. They have a variability of their own and are ever-changing, including for as predetermined and unchanging an item as Land Area!

And population data varies moment to moment. Yet, these figures bring out the comparative magnitudes and help approximate our inferences and alter them down the road in the light of more info. Also governments and statistical agencies keep refining their data.

Hence the need for caution and thanks Ang Lee!

The comparison of economic and demographic fundamentals of the three countries of India, China and the USA, together with aggregates for the world can be vividly revealing. Such a comparative Table provides a 360 degree perspective and brings out the comparable scale of each nation’s economy and its sub-sectors.

For instance, in much of the discussions, there is little reference to the fact that though China’s population is 1.3 billion, larger than India’s 1.1 billion, by virtue of possessing a land mass of 9.33 million sq. kilometers, 2.8 times larger than India’s 3.29 million, the density of population is just 363 for China as against 852 for India. This implies less breathing space and legroom in India for people, for business and for local, state and the federal governments. Does it pressure India to use all spaces more productively? Does it mean less national highways like in the USA and smaller buildings, warehouses, play grounds, and so forth?

Two more questions pop up here.

First, China has land quarrels with almost every one of its sixteen contiguous neighbors. Some kind of an unwritten moratorium is in place and so there is not much noise and gun battle.

Second, even if China’s land area is more, is it suitable for cultivation? Have you seen the Great Wall of China, 4000 miles long? In almost all photographs of the Wall you will see mountainous terrain and that should clear out qualms about cultivation. And India is better placed than China. And yet, if food grain output is more in China than India, what gives? Farm productivity?

The Table does generate much disbelief and questions for discussion.

Take another example of how comparative Tables like this one can be more edifying than mere words. Income distribution in India, we learnt in school, is highly skewed, the rich and the upper middle classes drawing off large chunks of India’s aggregate income. And so we would expect the Gini coefficient to be pretty large. Sorry to disappoint the pundits, it is much smaller for India at 0.33 (meaning less inequality in income distribution) than in communist China with a Gini of 0.44 or the USA at 0.45. South Africa’s and Brazil are closer to 0.6. Well, the answer lies in China’s increasing prosperity and the two-tier new classes that are now emerging.

Also the confiscatory taxes in the initial decades of India’s development must have had a hand in this.

Question: Are such increases in Gini inevitable as affluence spreads and the governments of such countries opt for more free play for market forces, an incentive to achieve more prosperity? A profound topic for a doctoral dissertation!

The Table of ICA Fundamentals hints intuitive answers to several of contemporary developments. Take a look at electricity generation in India and in the other two countries.

India’s is far behind. However, in terms of non-fossil fuel source of power generation, India’s statistics are better than China’s. India has had more nuclear reactors than China.

And so the latter is playing catch up. The recent discussion about nuclear cooperation between India and the USA elicited reaction in China. This assumes new meaningful in this setting.

See what a comparative Table can do! Each row is worth studying! This is our work-in-progress and there will be more of it in the Blog to follow.

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