Staged Growth and Heavy Youth Population

1/11/11
Monday morning in Bangalore.  Amazing.  I can’t believe one week had passed.  Yesterday (Monday) we met with a good friend of Mani’s from Business School and an incredibly insightful man.  


He talked a lot about the challenges and opportunities for India as an emerging economy.  He started with a question - why is traffic so bad?  Answer: Because it’s a “pay as you go” service.  Its developing.  There isn’t money to throw up roads like the U.S.  Countries have to go through phases, so medium-quality roads have to be built before high quality roads can start to find their place.  Because of this, he said India’s economy will always be 20 years behind the U.S., because progress is exactly that, progressive.  Staged.  Phased.


While India is an emerging economy, its $1 trillion GDP is still less than $1,000 per person, compared with $3,000 per person in China and $45,000 in the U.S.  It is expected to grow eight times by 2050!  So although the economy is emerging, there’s still a huge gap in purchasing power for individuals.  On average, things in the U.S. cost three times what they cost in India.  We learned about decent college grads making $900/month salaries, and when you use the multiplier, that means $2,700/month in the U.S.  This looks more comparable.  


The other crazy thing is the large youth population.  A third of India is under age 20 - this IS the future workforce of the world.  By 2020, when baby boomers are all retired, there will be a 17 million shortage of workers in the U.S.  This is a great reason to go global, and while companies realize a cost advantage for building offices overseas (including Target), another key reason is to build a location that can help sustain a quality workforce in 10 years.  So the U.S. has an expected 17 million labor shortage, but India in 2020 will have a 47 million surplus!  Right now they have their pick of jobs, but as the number of graduates continues to increase exponentially, they’re not going to have as many jobs to choose from.  In the U.S. we’re not only going to have less workers, but people are going to live longer (2020 life expectancy in the 90s!) so we’re going to need to work longer and support more elders.  Scary thought!