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- 06 Aug 2008
- Working Paper Summaries
Fixing Market Failures or Fixing Elections? Agricultural Credit in India
There are strong theoretical reasons to believe that politicians manipulate resources under their control to achieve electoral success. Yet, compelling examples of this manipulation are heretofore rarely documented in scholarly literature. Cole's paper presents evidence that government-owned banks in India serve the electoral interests of politicians. It also analyzes how resources are strategically distributed. Key concepts include: Findings show that the costs of redistribution are considerable: The estimated effect of 5 to 10 percent higher levels of credit in election years is substantially larger than the average annual growth rate of credit. Efforts to isolate government banks from political pressure, as is done with many central banks, may reduce these effects. Agricultural credit lent by public banks is substantially higher in election years. More loans are made in "swing" districts in which the ruling state party had a narrow margin of victory (or a narrow loss) than in less competitive districts. This targeting is not observed in nonelection years or in private bank lending. Closed for comment; 0 Comments.
- 28 Feb 2008
- Working Paper Summaries
Colonial Land Tenure, Electoral Competition and Public Goods in India
How is the impact of historical institutions felt today? This comparative analysis by Banerjee and Iyer highlights the impact of a specific historical institution on long-term development, specifically the land tenure systems instituted during British colonial rule. The paper compares the long-term development outcomes between areas where controls rights in land were historically given to a few landlords and areas where such rights were more broadly distributed. The paper also documents the impact of these differing historical institutions on political participation and electoral competition in the post-colonial period. Key concepts include: There are large differences in the development trajectories of areas that had different land tenure systems under British colonial rule. In particular, areas that were put under the control of landlords lag behind in the provision of public goods such as schools and roads compared with areas in which control rights in land were given to small cultivators. These differences are discernible even four decades after the end of colonial rule, and three decades after the landlord-based land tenure systems were officially abolished. Political participation and literacy levels are lower in landlord areas, but these differences are not sufficient to explain the differences in public goods provision. Closed for comment; 0 Comments.
- 04 Feb 2008
- Research & Ideas
Podcast: The Potential Partnership of India and China
Even without cooperation between them, China and India appear headed toward economic superpower status in the coming decades. But what if they worked together? In this podcast, Harvard Business School professor Tarun Khanna discusses the possibility of Sino-Indian cooperation and its impact on global business. Closed for comment; 0 Comments.
- 28 Jan 2008
- Research & Ideas
Billions of Entrepreneurs in China and India
Entrepreneurship in both China and India is rising dramatically and thriving under quite different conditions. HBS professor Tarun Khanna explains what it all means in this Q&A about his new book, Billions of Entrepreneurs: How China and India Are Reshaping Their Futures and Yours. Plus: book excerpt. Key concepts include: In China and India, much of entrepreneurship is in response to constraints—societal, political, or other. The business landscapes of China and India differ in two main respects: their degree of openness to outside influence, and the extent and type of government involvement. Foreign direct investment pours into China. India has embraced foreign direct investment much less, for good and bad reasons. Traditionally, India has been more open to ideas than has China. In India, caste is both less important and more important than it used to be. Closed for comment; 0 Comments.
- 17 Dec 2007
- Research & Ideas
The Rise of Medical Tourism
Medical tourism—traveling far and wide for health care that is often better and certainly cheaper than at home—appeals to patients with complaints ranging from heart ailments to knee pain. Why is India leading in the globalization of medical services? Q&A with Harvard Business School's Tarun Khanna. Key concepts include: Medical tourism is a new term but not a new idea. Patients have long traveled in search of better care. Today, constraints and long waiting lists at home, as well as the ease of global travel, make medical tourism more appealing. Superior medical schools, a low cost of living, family preferences, and the barriers to foreign accreditation mean that Indian doctors may prefer to work in India rather than elsewhere. The medical services industry is evolving quickly. Khanna expects to see dynamics in China similar to those in India and in other parts of Southeast Asia. Closed for comment; 0 Comments.
- 01 Oct 2007
- Working Paper Summaries
Team Familiarity, Role Experience, and Performance:Evidence from Indian Software Services
In contexts ranging from product development to service delivery, a significant amount of an organization's work is conducted by "fluid teams" that strive for innovative output. Fluid project teams exist only for the duration of a single project, and are comprised of members who may join or leave a team during the course of a project. In such settings, simple measures of cumulative output may not accurately capture team experience, particularly when changes in team composition are substantial over time. This study of an Indian software services firm, Wipro Technologies, considers an approach for capturing the experience held by fluid teams. It extends the concept of team fluidity in a way that allows for greater granularity in the measurement of team experience and a finer understanding of the determinants of team performance. Key concepts include: The findings underscore the need to use caution in assuming cumulative output wholly captures experience when team membership is not constant from one project to the next. These results build on previous research on team familiarity by considering longitudinal data on the individual members of teams. The findings also emphasize the importance of considering role experience and studying experience at different levels of seniority. Closed for comment; 0 Comments.
- 13 Aug 2007
- Working Paper Summaries
Diasporas and Domestic Entrepreneurs: Evidence from the Indian Software Industry
Several recent studies have highlighted the important role that cross-border ethnic networks might play in facilitating entrepreneurship in developing countries. Little is known, however, about the extent to which domestic entrepreneurs rely on the diaspora and whether this varies systematically by the characteristics of the entrepreneurs or their local business environment. The Indian diaspora is estimated at over 18 million people spanning 130 countries. Given that formal institutions in India remain weak and hence the informal barriers to trade are higher, do diaspora networks serve as substitutes to the functioning of the local business environment? Do they help entrepreneurs to circumvent the barriers to trade arising from imperfect institutions? This study examines the extent to which software entrepreneurs within India vary in their reliance on expatriate networks. Key concepts include: Entrepreneurs located outside software hubs—in cities where monitoring and information flow on prospective clients is harder—rely significantly more on diaspora networks for business leads and financing. Those who rely more on diaspora networks also have better performing firms. This benefit from the diaspora is stronger for entrepreneurs who are based outside hubs. Benefits from the diaspora accrue most to entrepreneurs who have previously lived abroad and returned to India, compared with those who have not lived abroad. Professional rather than ethnic ties may well form the basis for these networks. Policymakers in developing countries could leverage their diasporas to help with domestic entrepreneurship by developing links between the diaspora and smaller cities rather than with hubs. Closed for comment; 0 Comments.
- 19 Mar 2007
- Research & Ideas
Handicapping the Best Countries for Business
India? South Africa? Russia? Which are the best countries for a firm to invest in? In a new book, Professor Richard Vietor looks at the economic, political, and structural strengths and weaknesses of ten countries and tells readers how to analyze the development of these areas in the future. Read our Q&A and book excerpt. Key concepts include: Governments create the overall environment for successful competition in the global economy. Bad government can only lead to less competitive businesses. To be competitive, countries need to offer businesses sound fiscal and monetary policies, secure property rights, high savings and investment, an absence of corruption, and exports that are competitive in enough areas to eventually balance imports. Business people must understand where markets and countries are headed by analyzing the present and then extending current performance trends forward three to five years. Although each has issues, Singapore, China, and India are currently the best bets for FDI and, pending political stability, so is Russia. Closed for comment; 0 Comments.
- 14 Feb 2007
- Op-Ed
Tata-Corus: India’s New Steel Giant
By acquiring Anglo-Dutch steel firm Corus, India's Tata Steel is now one of the world's top five steel makers. Professor Tarun Khanna says the fact that the deal is the largest out of India and generated by the private sector makes this a notable event. But now comes the hard part—making the merger work. Can Tata avoid mistakes made by Chinese companies? From The Economic Times/India Times. Key concepts include: Tata's acquisition of Corus is notable not only for creating a new steel giant, but also because this deal was a private sector venture far from Indian government influence. Tata should be able to make the merger work by virtue of its position of financial strength as well as previous cross-border experiences. The West should not underestimate this heretofore relatively unknown competitor. Closed for comment; 0 Comments.
- 06 Dec 2006
- Op-Ed
India Needs to Encourage Trade with China
Although India and China have increased bilateral trade over the last five years, the amount is far less than what would be expected. Harvard Business School professor Tarun Khanna says India has primarily itself to blame. From The Economic Times. Key concepts include: China and India recorded $19 billion in bilateral trade in 2005, much less than would be expected of countries similar in size, within geographic proximity, and with shared cultural ties. Indians' fears about Chinese competition and unease over past border wars result in procedural and other roadblocks to increased trade, at India's disadvantage. China benefits from the trade more than India, both by selling more and better products to India and by welcoming Indian investment in China. Closed for comment; 0 Comments.
- 11 Oct 2006
- Research & Ideas
U.S. Tops Business Competitiveness Index 2006
The United States and Germany continue to top an annual review of the business competitiveness of 121 countries, which is compiled by Professor Michael Porter's Institute for Strategy and Competitiveness at Harvard Business School. While India climbed in the rankings, China fell. Key concepts include: The Business Competitiveness Index measures the underpinnings of a country's prosperity. While a nation's macroeconomic factors are often considered fundamental to long-term prosperity, productivity depends on microeconomic factors such as the level of company sophistication and quality of the business environment. Unless microeconomic capabilities improve, sustainable improvements in prosperity will not occur. Closed for comment; 0 Comments.
- 08 Aug 2006
- Working Paper Summaries
Managing Governments: Unilever in India and Turkey, 1950–1980
During the postwar decades, consumer-products giant Unilever survived and even thrived in developing countries such as India and Turkey even as business conditions discouraged or drove away peer companies. Why? At least five factors explain Unilever's ability and willingness to persist in such developing countries. These factors may also explain why foreign direct investment shrank to low levels in these countries, and has remained low. Key concepts include: Most important of all, Unilever became embedded in local business and political systems, functioning as a quasi-insider. Unilever held first-mover advantage. Unilever took a long-term investment horizon, believing that sooner or later as incomes rose people would want to consume its products. A decentralized management structure gave Unilever flexibility in adjusting to the different environments of developing countries. Localization of management provided a key competitive advantage. Unilever's policy of staying outside party politics meant that it had few enemies. Closed for comment; 0 Comments.
- 23 Jan 2006
- Research & Ideas
Financial Reporting Goes Global
Globalization is the key issue in determining the future of financial accounting, says professor Gregory S. Miller. And as more countries consider adopting an international accounting standard, India is positioned to be a strong leader. Closed for comment; 0 Comments.
- 28 Jul 2003
- Research & Ideas
It’s India Above China in New World Order
Can India overtake China? That's the title of an influential new article in Foreign Policy magazine. A Q&A with authors Yasheng Huang of MIT and Tarun Khanna of HBS. Closed for comment; 0 Comments.
Traveling Agents: Political Change and Bureaucratic Turnover in India
Politicians and bureaucrats are two important pillars of governance, but while politicians are motivated by short-term electoral pressures, bureaucrats are driven by long-term career concerns. This difference in the nature of their incentives is, in most cases, deliberate and constitutionally provided for. Iyer and Mani address two key questions in this paper: How do politicians facing short-term electoral pressures control bureaucrats with low-powered incentives? In turn, how do bureaucrats respond to these incentives? The authors develop a simple framework and provide empirical evidence on both the politicians' and the bureaucrats' strategies, using a detailed data set on the entire career histories of officers in the Indian Administrative Service, the top layer of government bureaucracy in India. Key concepts include: The framework suggests that instituting limits to a politician's power to transfer bureaucrats across posts will favorably affect junior officers' incentives to invest in expertise. In India there is significant political influence on the bureaucracy through frequent transfers of bureaucrats across posts, despite the constitutional insulation provided to them against political pressures. Not all officers face the same odds of being transferred. High-skilled officers are much less likely to be transferred by an incoming politician and have more even career paths. Belonging to the same caste as the politician's party base was a factor that helped officers to secure more important posts. Closed for comment; 0 Comments.