Markets and economies would recover at some point of time. Equity markets are already going berserk. This crisis is truly a crisis of economic thinking and so many hallowed ideas have just been shattered.
Archive for July 20th, 2009
Knowledge at Wharton has a good interview of Nandan Nilekani. Great insights on India’s demography dividend (he says there are two curves of the dividend), inequality (we need to close the gap fast and dont have much time)), the barriers to India’s growth (lack of – Education, English and Roads), balance between markets and regulation, Satyam (it was a fraud and has not damaged Indian corporate image) etc etc.
The best part is why he wrote the book on India:
India Knowledge@Wharton:Normally when corporate CEOs write books, they tend to write either about their biggest deals or about their perspective on management theory or philosophy. You wrote a book about India. Why?
Nandan Nilekani:Well, you know, I wanted to do something different. My role in the last several years has been going around the world and projecting India in global forums and all that, and I was not able to answer a lot of questions that people would ask me. They would ask me, “Why is it that you have such beautiful campuses like Infosys and such large slums? Why is it that there are so many billionaires and so many poor people? Why is it that you have all the educated people in technology and the world’s largest illiterate population? Why is it that you guys seem to coexist in the 17th Century and the 21st Century at the same time?” When asked questions like these, I was not able to give very convincing answers, so I felt the need to get down to the bottom of, “Why are we the way we are?”
The other important thing, I felt, was that India had a very small window of opportunity. It had this huge demographic dividend and this young population, but that demographic dividend could well become a demographic disaster if we did not make the right investments in our human capital. I felt that window of opportunity was passing by, so I thought it would be good to write it down and say, “Hey guys, we have this beautiful opportunity, let us not mess [it up].”
Also I found that a lot books on India were written from a particular perspective, an economist’s view or a sociologist’s view. I felt that to really give India its due you had to take a much more holistic look at it — which is why I looked at the country from all these angles. I interviewed 126 people, and it is a sort of a composite of all that.
India- a place full of contradictions.
When did the theoretical work begin on inflation targeting specifically?
A. The theoretical work was done almost contemporaneously with the practical work. That was what was so interesting. The theoretical work on inflation targeting was led by Lars Svensson, who used to teach at Princeton and is now the deputy governor of the Swedish Central Bank, and Carl Walsh, who teaches at the University of California–Santa Cruz. The theoretical work all came out in the late 1980s, early 1990s, and the first actual inflation targeter was the Reserve Bank of New Zealand in 1989, followed by the Bank of Canada in 1991 and then the Bank of England in 1992. So it all took place in a very short period of time.