Saturday, February 15, 2014

Sri Lanka Leads South Asia in Human and Economic Development

Since the end of the civil war in 2009, Sri Lanka has been booming even as the rest of South Asia region has lagged.
Per Capita GDPs South Asia Region Source: Economist

Sri Lanka's per capita income has quintupled over the last two decades from about $700 to $3500, significantly outperforming all other South Asian economies. During the same period, Pakistan's per capita GDP has increased from $500 to $1300 while India's is up from $400 to $1400.


In addition to its high per capita GDP for the South Asia region, Sri Lanka has also excelled on Human Development Index (HDI), a key indicator of social development assessed each year by the United Nations Development Program (UNDP).

Human Development Index in South Asia Source: UNDP
Sri Lanka has the fastest growing economy with the highest social indicators in South Asia region. Its economy grew at 7.2% last year and it is expected to post 8% growth this year. With a literacy rate of 91% and life expectancy of 76 years, the UNDP ranks it among countries with high human development. It has achieved this progress in spite of a 26-year-long violent insurgency by the Tamil Tigers (LTTE) which it successfully ended in 2009.


By contrast, both India and Pakistan continue to lag Sri Lanka in terms of both economic and social indicators. India's economy has slowed in recent years. India's per capita GDP has shrunk in US dollar terms this year, significantly reducing the gap with Pakistan whose GDP has also seen slow growth since 2008. India suffers from low levels of human development with a rank of 136 among 187 countries. Pakistan ranks even lower at 146.

GDP Per Capita in US$ Source: World Bank
Pakistan's per capita GDP remained essentially flat in 1990s before doubling in years 2000-2008 on Musharraf's watch when Pakistan joined the ranks of middle income countries with per capita income of $1000 or more. Pakistanis have seen a very modest growth in their incomes since 2008.

While India's human development is still low, it has continued to make steady progress in the last two decades. Pakistan's human development progress briefly accelerated in years 2000-2007 on President Musharraf's watch. Pakistan's HDI grew an average rate of 2.7% per year under President Musharraf from 2000 to 2007, and then its pace slowed to 0.7% per year in 2008 to 2012 under elected politicians, according to the 2013 Human Development Report titled “The Rise of the South: Human Progress in a Diverse World”. Going further back to the  decade of 1990s when the civilian leadership of the country alternated between PML (N) and PPP,  the increase in Pakistan's HDI was 9.3% from 1990 to 2000, less than half of the HDI gain of 18.9% on Musharraf's watch from 2000 to 2007.

There is much Pakistan can learn from Sri Lanka's record on human and economic development as well as fighting violent insurgencies. It is especially important today as its economy and education suffer in the midst of a growing Taliban violence that threatens the very existence of Pakistan.

Related Links:

Haq's Musings

Can Pakistan Learn From Sri Lanka to Defeat TTP? 

South Asia Lags in UN MDG Goals

History of Human Development in Pakistan

Musharraf Accelerated Economic and Human Capital Growth in Pakistan

Politics of Patronage in Pakistan

Will "Last Chance" Talks With TTP Succeed?




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Tuesday, February 11, 2014

Japan Offers to Finance Modern Mass Transit System in Karachi

Pakistan's federal government and Sindh provincial government are close to a deal with Japan International Cooperation Agency (JICA) to finance a modern mass transit system befitting the megacity of Karachi with a population of nearly 20 million, according to a Pakistani TV Channel.

KUTC Trains Source: KUTC

The mass transit project will feature modern trains with automatic signalling and telecommunication system. An automatic train control (ATC) system will be set up. The train stations will feature computerized ticketing and vending machines, automated ticket gates and elevators. It will be run by Karachi Urban Transport Corporation (KUTC).

Project History:

The $2.5 billion project will revitalize and modernize the Karachi Circular Railway (KCR). Opened in 1964, the old KCR ran from Drigh Road in the outskirts to the center of the city of Karachi. It ceased operations in 1999 after it suffered huge losses.

Efforts to revive it began in 2005 with a feasibility study conducted by Japan External Trade Organisation (JETRO) completed in 2006. UK-based Scott Wilson Railways was appointed to validate the report prepared by JETRO. Japan International Co-operation Agency (JICA), which is funding the project, sponsored a final study prepared by Special Assistance for Project Formulation (SAPROF). US-based consultants Louis Berger validated the final report. The progress has so far been slow and halting but it now appears that the new government of Prime Minister Nawaz Sharif is pushing to make it happen.

Project Scope:

The JETRO study has recommended that the project be done in two phases.

Phase I of the project will include a 28.3 km circular section from Karachi Cantonment to a proposed station at Gulistan-e-Johar. About 9 km of this section will be elevated.



Phase II will consist of the 14.8km circular section from Gulistan-e-Johar to the proposed station at Liaquatabad. This section will have two dedicated tracks along the main line. Phase II also includes a 5.9 km airport line from Drigh Road to Jinnah International Airport. This extension will either have an elevated or underground track. Other bridges, culverts and underpasses, wherever necessary, will be constructed for the project.

Project Funding:

Japan International Co-operation Agency (JICA) is providing the entire funding for the project through a soft loan. The loan is payable in 40 years by the stakeholders of the City District Government Karachi, Pakistan Railways and Government of Sindh. The Karachi Urban Transport Corporation (KUTC) is planning an international tendering process for the project, which will be awarded on a turnkey basis. The winning contractors will operate it for the first two years of operation.

Rolling Stock:

The new KCR will be served by electric multiple units (EMU) with a capacity to carry 1,400 passengers. The maximum speed of the EMUs will be 100 km/h. About 290 trains are expected to operate daily at six-minute intervals.

Infrastructure Construction:

Proposed Station Design 
The project will include the construction of 19 underpasses and three overhead bridges. About 23 stations are planned for the project. The stations will feature computerized ticketing and vending machines, automated ticket gates and elevators.

The existing KCR has about 22 level crossings. Since the railway line passes through the major commercial areas of the city, these level crossings need to be removed to ensure that trains can operate every 6 minutes. The level crossings are expected to be removed and replaced by underpasses or overpasses.

Economic Impact:

There will be significant positive economic impact of this megaproject. In addition to its obvious benefits for the businesses owned by Prime Minister Nawaz Sharif's family, there will be thousands of new jobs created for ordinary Pakistanis during construction and later to operate the system. It will help stimulate Pakistan's stalling economy.

Japan's Interest:

Japan's commercial interest in Pakistan has recently been validated by JETRO survey of Japanese companies doing business in the country. It indicated that Japanese companies have "strong intentions to expand their business for the reasons of “sales increase” and “high growth potential.” in Pakistan. Clearly, the Japanese see significant future potential in Pakistan to increase their economic footprint in the emerging growth market.

Current Status:

The city and the provincial governments have already begun to remove squatters in and around the existing KCR track to begin new construction. Each of the estimated 5,000 affected families is being promised an 80-square-yard newly built home. The Japan International Cooperation Agency (JICA) is providing financial assistance for the resettlement project, while the KUTC will give an additional Rs 50,000 in financial aid to each affected family, according to a news report.

Future Concerns:

One of the key concerns is how will the system be managed after the first two years of operation by the turn-key contractors? Will it suffer the same horrible fate as the previous public transport systems have in Karachi? Will it be used to hire political cronies of the ruling politicians? Will it be headed by incompetent and corrupt managers hand-picked by politicians? If the politicians are serious about ensuring a well-run mass transit system in Karachi, they will need to take a page from the Delhi Metro Rail Corp (DMRC) system in India.  It is being run very well by an independent professional management team without political interference in its day to day hiring, firing and other management decisions.

Summary:

It is certainly welcome news that Karachi, the world's fastest growing megacity, will finally have a mass transit system that its residents need and deserve. Let's hope this time it's for real.

Related Links:

Haq's Musings

Saving PIA, Railway and Education

Politics of Patronage in Pakistan

Incompetence Worse Than Corruption in Pakistan

JETRO 2013 Survey of Pakistan

Pakistan on Goldman's Growth Map

Karachi is World's Fastest Growing Megacity



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Sunday, February 9, 2014

Indian GDP, Per Capita Income Decline in USD Terms in 2013-14

Advance estimates by Indian Central Statistical Office (CSO) indicate that India's GDP for year 2013-14 is $1.7 trillion, down 9% from $1.87 trillion reported for the previous financial year. However, Indian economy has grown from Rs. 100.2 trillion in 2012-13 to Rs. 105.4 trillion in 2013-14 in terms of local currency.

India-Pakistan Per Capita GDP 1990-2012 Source: World Bank


Source: Economist Magazine


CSO estimates India's economic growth rate in the current financial year at 4.9 per cent, a faster pace than in the previous year, mainly on an improved performance in the agriculture and allied sectors.

India's per capita income is estimated at Rs. 74,920 (US$ 1201) for the fiscal year ending on March 31, 2014, according to Indian media reports. It is up from Rs 68,757 in 2012-13 in Indian rupee terms, but down based on current USD exchange rates.

While India's growth has slowed a lot in recent years, the recent decline of Indian economy in USD terms is the result of  a sharp drop in the value of Indian currency against the US dollar. The Indian rupee has plummeted from 47.80 in 2012 to 54.30 in 2013 to  62.30 to a US dollar now.


The free fall of Indian rupee has dashed the hopes of many in India, including former finance minister and current President Pranab Mukherjee, who were boasting about a $2 trillion economy as early as 2012.

India is now among "The Fragile Five", a phrase first used by Morgan Stanley report last August amid an emerging-market rout caused by investors pulling out their money on speculation the Federal Reserve would soon reduce its bond purchases. That month, the Indonesian rupiah, South African rand and Brazilian real fell to the lowest levels in more than four years and the Turkish lira, like the Indian rupee, was at its weakest rate ever.

The continuing weakness of the Indian rupee and the slow growth of Indian economy are likely to help the electoral fortunes of the Indian Opposition led by the  Hindu Nationalist BJP leader Narendra Modi.

Related Links:

Haq's Musings

Indian Economy Shrinks to $1.84 trillion in 2012-13

Pro-Modi Candidate in Silicon Valley Congressional Election

India's Hyphenation: India-Pakistan or India-China?

India's Share of World's Poor Jumps as World Poverty Declines

Forget Chindia--Chimerica Will Rescue the World

World Bank on Poverty Across India

Superpoor India's Superpower Delusions

Are India and Pakistan Failed States? 

India Home to World's Largest Number of Poor, Hungry and Illiterate

India Leads the World in Open Defecation

India Tops in Illiteracy and Defense Spending

Indians Poorer than sub-Saharan Africans

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Tuesday, February 4, 2014

Can India-born CEO Satya Nadella Save Microsoft in Post-PC Era?

Microsoft, the world's largest software company, has named Satya Nardella, an Indian-American company veteran of 20 years, as its new CEO to replace its long-time leader and Bill Gates' pal Steve Ballmer. It's clearly a matter of great pride for not only his fellow Indian-Americans in the United States but also in India, Nadella's country of birth. I offer my sincere congratulations and best wishes to Mr. Nadella and his fellow Indians who are celebrating it as their own success. The question on everyone's mind now is whether he has what it takes to bring back the Wintel-era glory to Microsoft.

Wintel Era:

Wintel (Windows+Intel) represented the most successful period for Microsoft and its partner Intel when the two companies together made history with the personal computer revolution. Working for Intel as an engineer in 1980s and 1990s, I had a chance to work with both Microsoft and Intel executives to help bring about the PC revolution. Both companies offered products that worked well together to address the needs of hundreds of millions of PC users in that period. Both companies enjoyed phenomenal growth and high profit margins. I met Bill Gates several times in the two decades at frequent Intel-Microsoft executive meetings. I also got a chance to work with other Microsoft executives including Paul Maritz, Rob Glaser, Nathan Myhrvold, Carl Stork and others.

One particular incident with Bill Gates that I remember was at the 80486 CPU launch event at McCormick Place in Chicago. Gates insisted on doing the 80486 CPU demo at the event. Gates was a real geek at the time. He showed up wearing a rumpled shirt. His hair was uncombed. As he began the rehearsal under a spotlight aimed at the stage, he started complaining that he couldn't see under its glare. Intel marketing manager suggested to him to not look directly into the light to avoid it. Somehow we got through the rehearsal and, later, the actual launch in front of the media and the analysts went quite well.

The Wintel duopoly enabled both Intel and Microsoft to increase performance, bring down prices and still enjoy unprecedented profitability in the computer industry. Dave House, Executive VP at Intel in charge of microprocessor business, put it best when he told me and my fellow 80386 CPU engineers in 1985 that "making 80386 microprocessor chips is like printing money". He went on to explain that "it costs more than 10 cents for the US govt to print a dollar bill but Intel's cost of printing 80386 chips is less than 10% of its average selling price". I believe Microsoft made even bigger profits with DOS and Windows operating systems and PC applications in 1990s. 

RISC Challenge:

Wintel partnership came under severe strain in 1992-93 when Microsoft decided to build its Windows NT operating system to run primarily on Reduced Instruction Set Computing (RISC) processors from DEC and MIPS. Intel's CISC (Complex Instruction Set Computing) X86 architecture-based processors were considered by many as old and uncompetitive relative to RISC. RISC processors came with a reduced set of simple instructions executable within a clock period, lots of registers, more cache memory and powerful compilers which Intel x86 based CPUs lacked at the time. Intel responded to the challenge by offering much higher clock rates, larger cache memories, improved instruction pipelining, multiple execution units and highly optimizing compilers which made more efficient use of the limited number of registers and better instruction scheduling on the Intel processors. I was assigned the role of a program manager at Intel to work with Microsoft to optimize Windows NT for 80486 at the time. It was interesting to watch the competing arrogant management styles of the two companies on full display during this effort. Needless to say, Intel beat back the RISC challenge and went to become the world's largest and most profitable chip company.

PC Era Over:

The world has dramatically changed since the 1990s when Wintel ruled the roost. PC is no longer the dominant device. Smartphones and tablets have brought the era of mobile cloud computing where neither Intel nor Microsoft enjoy leadership position. Even developing like Pakistan are deploying cloud computing applications. A Google sponsored survey in Pakistan found that mobile computing is expected to overtake desktop computing this year. Several new and more innovative and powerful players have emerged to in this market. It is this new reality that stares Staya Nadella in the face.

Decline of Empires:

In a recent New York Times column, Nobel Laureate economist Paul Krugman compared the decline of Microsoft to the fall of the great empires of the past. Drawing upon the lessons of Medieval Muslim historian Ibn Khaldun, Krugman wrote:

"How could Microsoft have been so blind? Here’s where Ibn Khaldun comes in. He was a 14th-century Islamic philosopher who basically invented what we would now call the social sciences. And one insight he had, based on the history of his native North Africa, was that there was a rhythm to the rise and fall of dynasties. Desert tribesmen, he argued, always have more courage and social cohesion than settled, civilized folk, so every once in a while they will sweep in and conquer lands whose rulers have become corrupt and complacent. They create a new dynasty — and, over time, become corrupt and complacent themselves, ready to be overrun by a new set of barbarians. I don’t think it’s much of a stretch to apply this story to Microsoft, a company that did so well with its operating-system monopoly that it lost focus, while Apple — still wandering in the wilderness after all those years — was alert to new opportunities. And so the barbarians swept in from the desert". 

Conclusion: 

Krugman's comparison of today's Microsoft with ancient dynasties seems to make a lot of sense. The "Wintel" dynasty is being overthrown by hordes representing cloud computing "barbarians and tribesmen" at Apple, Google, Amazon and a whole bunch of other tech companies. Can  a Microsoft lifer like Staya Nadella, steeped in Microsoft's established culture, fend off the "barbarian at the gates"? If I were a betting man, I'd say No! But let's wait and see.

Related Links:

Haq's Musings

Minorities are Majority in Silicon Valley

Mobile Internet in South Asia

Pakistan Deploying Mobile IT Apps

Emerging Nations Deploying Cloud Computing Faster

Mobile Internet to Overtake Desktop in 2014 in Pakistan

Biometric Information Technology in Pakistan

Power Theft in Pakistan

Mobile Banking in Pakistan

Mass Literacy Through Mobile Phones

Online Education in Pakistan

Pakistan's Telecom Revolution


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