The OneMBA Class of 2014 is approaching the end, but before we get there we had one more international residency to complete. This final stop took us to China (by way of Hong Kong) and India; two developing countries competing to see who first escapes the label of “developing country.” So far, China has taken the lead, a reversal of the two countries’ positions from not even 20 years ago.
If future success is based on personality though, India wins here with its vibrant, frenetic and sometimes quirky culture (where else can 6 people fit on a one-seater, 100cc engine motorcycle). If success is based on food, it’s a close race, but again India edges out China, although after 4 days of local Indian food my stomach was asking for a break! Both countries were hospitable and friendly, and made visitors feel welcome and generally safe (I say generally safe, because when a Westerner drives in India, safe is not how you would describe that experience).
The growth of China’s manufacturing base has been one of the primary reasons their economy has surpassed that of India. They also have the advantage of a government with central control of the economy, which is normally seen as a negative; however, can be a positive versus a democratic government that’s subject to the whim of voters. China’s centrally controlled economy has proven an advantage because they’ve had a government who’s taken strong action over the last two decades to increase and sustain their growth rate, whereas India’s growth has stagnated due in no small part to their democratically elected governments’ focus on social programs and more protectionist policies. Each country boasts populations of over 1 billion, a fact that used to be considered a negative, but is now recognized as a unique advantage over other economies.
As usual during an international residency, we visited local businesses to get a flavor for the business climate and to understand the challenges faced by businesses in each economy. As we visited Hero Motors in New Delhi, the largest motorcycle manufacturer in the world (6,000 cycles a day), I was struck by the power of business to transform a country and economy.
As I thought about this, I realized that a developing economy is not always pretty; you have to be willing to deal with the ugliness of low wages and unsafe working conditions, as was notably chronicled in China’s case. Oftentimes, those in the West see low wages and poor working conditions as a blight that requires immediate action. And although everyone would love high wages and pristine working conditions for everyone, foisting Western labor conditions and wages on developing countries too soon can be a fatal mistake. A country cannot create the middle class bridge between poverty and wealth with strict labor and wage laws, nor can it start providing too many social programs for its people before it’s created the economic base to support the programs.
India is an example of this, as their growth has stagnated over the last decade due in part to a government deemed unfriendly to business by the Indian people. We were in India the day the government announced the results of their national elections, a big win for the “pro-business” candidate, Narendra Modi. As we walked the markets and talked to people in the streets and to our tour guides, the common sentiment was that Modi would restore economic growth and foreign direct investment in India once again. Hopefully that is the case, and hopefully those such as the Class of OneMBA 2014 will help lead the way in using business as a powerful tool to transform economies and improve lives.
Lee Lowder is an attorney who is pursuing his MBA at the University of North Carolina’s Kenan-Flagler’s Business School. HIs previous posts: