AboutDr.VSR.Subramaniam Expertise Basically a B.Sc (Physics) from the University of Madras, India. Started the career in production engineering under German and Italian experts. MBA in Management from IIM, Ahmedabad (India). Ph.D (Management) from the University of Bomaby (the first ever awarded in this subject). Headed the computer centres of Multi nationals; "Data Processing expert" of the Commonwealth, London (To implement World Bank and UNDP Computer softwares); "Consultant Adviser" to the Caribbean Development Bank (CDB), Barbados. Associated with Nobel Laureate in Economic Science-1979, Arthur Lewis (Past President of CDB) & 4 more on his introduction. Visiting professor to many universities. A Trained ISO 9001:2000 Quality Auditor. Over 40 years of combined experience in Accounts, Computer Software, Economics, Engineering, Management, Science, Technology, Research & Development and Qulaity systems. Author of over 60 Application Research papers. Currently a free-lance consultant in ISO Quality Systems, Socio-Economic development acceleration, Innovative software designs. Can answer any question in Theoritical/Applied-economics with an in-depth and innovative dimension. I DO NOT ANSWER : 1. STATISTICAL data & analysis. 2. PRIVATE questions, as they do not appear for PUBLIC view & search 3. Examination & Project report oriented questions. Website http://www.drvsrs.com
Experience Experience in the area Over 40 years in Industrial, Service and Economic development sectors. Socio-economic development oriented expertise (1982-86). With Commonwealth Fund for Technical Cooperation, London as a "Data Processing Expert". With Caribbean Development Bank, Barbados (UNDP,World bank set up) as a "Cnsultant Adviser". See "http://www.drvsrs.com/drvsrs.htm" and "http://www.drvsrs.com/publication.htm". National & International awards. R & D Author at http://ideas.repec.org/e/psu50.html and http://www.ssrn.com/author=360079
Question Irrespective of all economic development tools, optimized by the computer and Internet information network, all nations are in some economic crisis. Example – USA is in a housing slump and depreciating dollar. Argentina is in a debt trap. More than nine million individuals in Britain are now believed to be struggling to pay credit card bills and mortgages, with the average owed by problem debtors hitting 30,000. IMF head and finance chiefs from Britain, Canada, France etc.. say 2008 faces the worst financial crisis since the 1930s Great Depression, What type of generalized economic strategy would you recommend to all these nations in general for a long lasting progress and prosperity ?
Answer 01) GENERAL ANOMALY
A) All the national governments in the world (developed, developing or under developed) think that their domestic and all other international wealth is their own property and they have the right to get and use them as they wish.
B) Countries like USA/UK think that they can capture and control any alien national wealth to meet their domestic demand. By doing so, they get trapped in a domestic economic crisis as a byproduct of their war and diplomatic spending !!
C) Developing nation like Argentina, India etc.. believe that the reserves and surplus funds in IMF, World Bank and all multi-nationals are at their disposal. They liberally borrow from these institutions and provide the domestic infrastructure to attract the multi nationals. But they are trapped by the after effect of non payment of interst+loans and domestic wealth export by the multi nationals !!
D) These anomaly in ther basic thoughts and actions of domestic government personnel, always lead their nation into an economic doldrum, irrespective of their current economic development status !!
02) INTRODUCTION
A) Before and during 1980-1990s, the under developed and developing nations newly exposed to independence with limited national and industrial management know-how, experimented with Prebish-Singer and international dependence models. Even now, many nations in middle and near east are in these experimental status. What is the end result ? Even countries like India with a very large techno-commercial know-how and personnel, are in the developing cycle for ever (that too over 60 years of independence, an age of a retired person !!).
B) Middle east nations enjoy a higher standard of living (I will not say development !) due to their oil resources. (Oil is a freely available commodity from underground, and fetches a price many times more than the cost of its exploration and barreling). There are no domestic agriculture or any domestic raw material sources (except crude oil), or domestic technology. They function with expatriate labor and knowhow. All essential needs are imported. Recently they are also attracting foreign investments in “free zones” to produce goods. These too import the raw materials, use expatriate labour, export the goods and enjoy a tax free super structure.
C) USSR (Union of the Soviet Socialist Republic. Formed in 1922 with Russia + other 14 Communist countries in Europe and North Asia) reached a fully developed status in 1950, using the Communist approach (closed economic policies similar to Raul Prebisch and Hans Singer theory, covering both materials and manpower, behind an iron curtain). But in late 1900s, this Eastern developed big power dwindled into pieces of several smaller developing / under developed nations (Officially dissolved on 31st December 1991). Each piece of nation diluted their Communist principles (full State control), towards private entrepreneurship, international trade approaches as well as associations and collaborations with the diametrically opposite Capitalist dominated Western USA !!
03) WHAT IS TRUE DEVELEOPMENT ?
A) Hence what is true development ?. It is building of domestic assets, know-how, an ever-cycling and growing infrastructure to provide the food, clothing and shelter in equal proportion to the population growth (Economic growth rate = Population growth rate). All other economic growth rate fixing without any relation to the population growth rate, is theoretical and the nation may become statistically developed, but practically with many below the poverty line.
B) This ratio-equalisation is achieved in developed nations through their limited population growth as well as their disintegrated family system with every member have to take care of themselves, without the central affinity of a joint family. This generates a large volume of self motivated, innovative and productive labour force, due to the compelled need for independent survival.
04) ANALYSIS
A) Many nations attract foreign investment with many tax free and money repatriation facilities. The attraction in this method is that there is no capital investment from the domestic sources and it creates a large employment potential for the domestic experts and labour.
B) Foreign investment, through assistance from World bank, IMF etc.. have to be repaid. Unless the assisted nation becomes strong enough to domestically generate a sizeable return on such investments, the nation becomes a debtor (Every developing and under developed nation today is in such an unrecoverable debt trap). The public may not be knowing that these loans have some hidden traps and conditions, not palatable by the receiving nation. Also the utilisation and implementation of the funded projects remain in the hands of the government, a bureaucrat, slow decision maker and non-productive / non cost-benefit oriented public setup.
C) If the foreign investment is from private sources like Microsoft, Ford motors etc… then they are at a very vantage point. They invest their currency at a favourable exchange rate (Ex : 1 Million US$ investment in USA = 1 M / 46.12 Indian Rupees = 21,682.57 US$ in India). They use the local labour and know-how at a considerably lower cost than what they should have to pay in their developed nations (Ex : An experienced Programmer is paid at least 96,000 US$ per year in USA. In India they can pay IRS 216,000 per year = 4,683.44 US$ or only about 5%). They take away the end product or the sales proceeds at optimum values to their nations. The developing or under-developed nations only contribute their labour and infrastructure to benefit the developed national investor.
D) The foreign investor will continue till the project period or till the environment is providing an advantageous financial rate of return. Then, they will close down, without any economic or social rate of return to the country of operation, as they are exempted from direct or indirect local taxes and other payment liabilities.
E) A good technical rate of return to the country of operation will result by a drastic indoctrination of the latest technical know-how to the domestic people. But these trained technocrats are not entrepreneurs to venture, take risks and start similar projects domestically. They are jobbers and immigrate to developed nations needing their expertise and experiences, without any contribution to their home nations.
05) MY OPINION.
My opinion about foreign borrowing and attracting foreign investment with expanded incentives will never lead any country towards development. It will only contribute to the developmental gains of developed international funding sources and the entrepreneurs. The host nation may enjoy an artificial and limited development during the period of operation of the foreign investment. Soon it will retard back to their prior status of development, when they have to repay, and withdrawal of the multi nationals.
06) MY MATHEMATICAL MODELS.
A) I have Geometrically established the following guidelines for accelerated development, related to the area of investment and implementation.
1. Domestic investments should be through domestic savings (individual / corporate / government, even though foreign to start with). [Exogenous circle. It implies that the government should provide enough incentive to motivate the savings at individual and corporate level]
2. Domestic human potential should man the domestic technology (latest technology moderated to suit local environments) [Endogenous circle].
3. Synchronise Exogenous and Endogenous circles & optimise their dimensions.
4. This is universally applicable to all developed, developing, and under-developed nations.
B) I have also Algebraically established the following guidelines for accelerated development, related to the area of productivity measurement and Management decisions. (SED = Socio-economic Development units)
1. Productivity = Sed goals/input > 1 & SED goals/output > 1
subject to output/input > 1
2. Social rate of return is important than Quantum rate of return.
3. Intangible elements are important than tangible elements. (Psycho-Socio-Inter national-Universal)
4. Management decisions are optimum when
SED goals/Input decisions > 1 & SED goals/output decisions > 1,
subject to Output decisions/Input decisions > 1
5. This is universally applicable to all developed, developing, and under-developed nations.
