Fast Growing
19 March 2008
Recent discussion concerning the impact of china on the world's booming economy has over shadowed major economic developments in other nation. It is impossible to ignore China, which has the world's fastest growing gross domestic product (GDP), increasing by in 9.3% in 2005.
But the rest of the world also has begun to take notice of the second and third fastest growing economies - India and Russia, which expanded by 7.6 and 5.9%, respectively. India is holding steady with the fourth largest GDP in the world, trailing only the United States, China and Japan. Russia has been trumpeting its achievement of overcoming a protracted economic slump to join the list of the top 10 largest economies.
India and Russia demonstrate how nations can begin to flower despite having diverse politics, geography economic dynamics, and more.
The 15 June issue of The Kiplinger Letter noted that India was headed in the direction of becoming “the new China…the next big global mover and shaker.” Between now and 2012, India is expected to invest US$320 billion in airports, railways, roads, seaports, and power generation and transmission.
SC&RA members that supply the equipment and services necessary for India's expansion should benefit from that spending spree. The Association already has established a good relationship with India; four of our member companies are based in that nation, and we hope to add others in the years to come. Because the Indian government is no longer intervening in its currency markets, the value of the Indian rupee is stronger compared with the US dollar.
In addition, American higher education continues to fuel business ties between the US and India. Indian grad students consider US colleges to be the most attractive option for a range of advanced degrees, ensuring that more Indian business and tech leaders will be US-trained. In fact, India will continue to be the top source of foreign students and US universities. Students from China will stay at number two.
Despite its rapid growth, the Indian economy continues to have its share of problems. Of 175 nations examined by The World Bank, India was ranked 134th in ease of doing business in 2006, up four slots from 2005.
No significant improvements were noted in categories where the picture was particularly bleak. In 2006, India ranked:
173rd in enforcing contracts. On average, it took 1,420 days to settle a dispute.
139th in trading across borders. The cost to export was US$864 per container, and the cost to import was US$1,244 per container.
155th in dealing with licences. To obtain necessary licences and permits required 20 procedures over a period of
270 days.
Overall, doing business in Russia is somewhat easier than in India today. Russia was ranked 96th in ease of doing business in 2006, up one slot from 2005. It is also becoming easier to start a business in Russia, requiring an average of only seven procedures in 28 days. However, Russia still comes up short in other areas, ranking: 163rd in dealing with licences. To obtain necessary licences and permits required 22 procedures over 531 days.
159th in getting credit. Credit information, public registry coverage and private bureau coverage remain virtually nonexistent.
143rd in trading across borders. The cost to export and import was equivalent at US$2,237 per container.
Unlike India, Russia has no companies that belong to SC&RA. In fact, Russia is the only nation among the top 20 economic leaders without a representative in the Association.
That may change as Russia looks to further expand its economy by reaching beyond its borders. A noteworthy example is a joint venture agreed to by the Russian and Italian governments on 23 June, which would result in a 900 km pipeline that could carry as much as 30 billion cubic metres of gas annually from Russia into Europe through the Black Sea. If this project overcomes regulatory hurdles, construction could begin next year.
This project, and others in the works in Russia and India, will increasingly transform the global economy. SC&RA will work to ensure its members receive the key information to be involved in some of these projects.
