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Tuesday, January 24, 2012

India and Japan. Old Myth, New Dance.

Come read my new piece "India and Japan. Old Myth, New Dance." in NRI Magazine. Thank you! 

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On a month–long trip to Japan a couple of years ago, I visited the Todai–ji Buddhist temple in Nara. Aside from being the largest wooden building in the world, Todai–ji faces a telling walkway— the outer stone slabs are from India. Moving inward, the stone originates sequentially from China, Korea, and Japan, tracing Buddhism’s path. Buddha never left India. Centuries later, shortly after Columbus mistook Native Americans for “Indians,” ironically, Japanese locals confused Portuguese colonists in Goa with “Indians.”

Today, we’re been fed a steady diet of myth. Over the past few decades, no two countries have been more misperceived than India and Japan. Check India’s sparkling narrative as the “world’s fastest growing free market democracy.” The Bharatiya Janata Party (BJP) billed a fattening middle class as “India Shining.” On the other hand, Japan’s lethargic post–80s hangover has been dubbed “the lost decades.” But, unwieldy soundbytes and empty political calories obscure truth. And truth is strange. For example, India— yes, the Technicolor, doe–eyed, Bollywood–hip–thrusting, Gandhian–nonviolence–toting India— is the world’s largest weapons importer. A myopic, single–minded obsession with GDP has shrouded twin realities— India is not shining and Japan is not lost.

Unmistakably, India’s rise is real. It’s organic. It has pulled millions out of poverty into dignity, choice, and security. You don’t need to hear it from Tom Friedman. Listen to the Tamil buzz in a Chennai living room with my relatives. Ask the man who used to sell pani-puri on a Mumbai side street, the fisherman in Kerala, the single mother in Andhra Pradesh selling beauty products as a Hindustan Lever Shakti entrepreneur, the millionaire retailer in Chandigarh, the Delhi family getting off of a scooter and into a car, or the farmer in Madhya Pradesh selling soybeans using echoupal Internet kiosks.

But, we, enchanted by India, have been looking through rose–colored glasses. India’s rise is not patently unique. It has just overshadowed equally impressive growth among other countries in Asia that we ignore. Moreover, as Jean Dreze and Amartya Sen recently detailed, on many measures India has actually fallen behind its peers.

In the horserace with China, India has not translated economic growth to development. Belying Jupiter–sized malls and Audi adverts, India’s standard of living has actually fallen behind the rest of the world in the past two decades. According to the World Bank’s World Development Indicators 2011, only five countries outside Africa— Afghanistan, Bhutan, Pakistan, Papua New Guinea, and Yemen— have a lower youth female literacy rate. Children bear the brunt. India places sixth from the bottom, above only Afghanistan, Cambodia, Haiti, Myanmar, and Pakistan, in childhood mortality. India is dead last in the entire world with its proportion of underweight children. In terms of Gross National Income (GNI) per capita, India’s company includes Afghanistan, Iraq, Haiti, and Yemen.

Most surprising is what Dreze and Sen’s social report card reveals. In terms of quality of life— life expectancy, infant mortality, under–5 mortality, maternal mortality, immunization, schooling— India fell from the top of South Asia in 1990 to second to last in 2009, above only Pakistan. In industry, companies like Wipro and Infosys are expanding globally. But, India’s fabled outsourcing engine tallies less than 1% of the country’s economy and employs fewer than 0.1% of its people. Moreover, with its American English and love of NBA basketball, the Philippines has overtaken India as the hub of call centers. India’s greatest challenge isn’t China or fuel prices. It’s hubris.

On the flipside, for decades, Japan had always been held up as an economic basket case, an image of malaise, a showpiece of what not to do. But, I never understood this. Walking Roppongi, Shibuya, and Ginza in Tokyo or through Yokohama, even taking a Lost in Translation tour, I saw a buzzing economy— a cadence of busy commutes, twenty–somethings dressed to the tee, and orderly storefronts alongside an electric nightlife. Markets and restaurants brimmed. There was the urban dazzle. There were the manicured suburbs, the spotless metro stations, and the tallest buildings I’d ever seen. In Kyoto, I saw the Paris of Asia.

Last year, we all saw the grace of the Japanese. Quake and tsunami survivors huddled together, carving chopsticks out of wreckage. There’s something more— the myth of Japan’s “lost decades.” It’s true that Japan’s banking industry, stock exchange, and real estate market remain a pale shadow of what they were in 1990. But, as Eamonn Fingleton points out, look at what’s happened over the past twenty years— life expectancy rose from 78.8 to 83 years, the unemployment rate sits at 4.2%, and 81 high–rises have been built. Meanwhile Japan’s current account surplus tripled to $196 billion, even while every country around it became more competitive. On the other hand, the U.S. saw its current account deficit swell to $471 billion by 2010. Fingleton adds that Tokyo hosts more Michelin star restaurants than Paris. The Tokyo Sky Tree, the second tallest structure in the world next to Dubai’s Burj Khalifa, will host its grand opening this May.

So let’s renovate and refit old perceptions. India and Japan are prime for a new dance in the century ahead. As Devesh Kapur puts it, “There is perhaps no other pair of major world powers whose strategic interests overlap as much as they differ from each other socio-culturally as India and Japan. Japan is a capital-rich country with an ageing and declining population. India is a capital-poor country poised to reap a major demographic dividend… Indian food is as spicy as Japanese food is not.”

On a military level, Kapur points out that, in addition to India and Japan’s shared naval interests, North Korea’s Nodong and Pakistan’s Ghauri (Hatf–5) missiles are fitted with similar technology. India and Japan share a long, supportive economic past. Tata opened a branch in Kobe in 1891. Following several visits to Japan, Nobel Laureate poet Rabindranath Tagore praised the country’s aesthetic, elegance, and simplicity. He published Jaapaani Haaiku, a Bengali anthology of Japanese haiku. India gifted two elephants to the Tokyo Zoo to lift Japan’s spirits after WWII. The 30-year-old Maruti Suzuki joint venture holds 45% of India’s car market, selling more cars than any other automaker. Japan came to India’s side during its balance of payments crisis in 1991. For a quarter century, Japan has been India’s largest aid donor. Today, Masako Ono is Japan’s foremost expert on Indian dance.

But, commerce between the two countries totaled only $15 billion in 2010, one–twentieth the size of Japan’s trade with China. In addition to offering a large market, India offers Japan a reservoir of fresh, young talent and a base to export to Europe and Africa. Japan is looking to India to a bright future, investing $4.5 billion in a 920–mile industrial corridor from New Delhi to Mumbai, part of a $100 billion, 24–city industrial project. Japan will loan $1.7 billion for Mumbai–Delhi and Delhi–Howrah Dedicated Freight Corridor Projects and Delhi’s Phase–III metro expansion slated to open in 2016.

Fewer than 25,000 Indians live in Japan today, compared to the nearly 3 million in the U.S. It is unlikely that, in the short term, Japan will suddenly unlock its immigration gates. Japan has an enormous capability to reinvent itself, as it did in 1858 when it opened to the world and after World War II when it shifted from a military to an industrial powerhouse. Be prepared for it to do so again.