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Debunking third-world myths

Animation after animation clearly shows that the world has become a much better place since the 70s, in every aspects. Globalization has brought dramatic changes to the lives of billions of people across the world, for the better. The world has become much more equitable across and within countries.[The best video you will see today via barbarindians]

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Jet Airways Ad in NY Times


While it was a pleasant surprise to see a full page Jet Airways advertisement in last Sunday’s New York Times, it was baffling why they would want to spend so much money to announce to people in United States that they fly daily from Mumbai to Brussels. Hopefully Jet Airways will fly from various cities in United States to India and capture that lucrative market.

Update: Due to attention deficit disorder, I did not notice that they were flying from New York to Mumbai and Brussels (Thanks Vivek)

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Even before Castro is dead..

In this age and era how do you still run a Communist country or state? By switching to capitalism, of course. We have seen this in China, Russia and West Bengal. Now it is happening in Cuba as well and they are not even waiting for Fidel to die

Between 1989 and 1993, Cuba’s gross domestic product fell 35%, while the island’s foreign trade slumped by 75%, says Carmelo Mesa-Lago, professor emeritus of economy at University of Pittsburgh.

As living standards plummeted, Havana residents ate many of the city’s cats. An epidemic of optic neuropathy, caused by deficiencies in nutrition and resulting in temporary blindness, struck down some 35,000 Cubans. For Raúl, economic security became a critical part of national security. “Beans are more important than cannon,” he told troops in 1994.

Although Mr. Castro has steadfastly opposed economic reforms during his 47-year communist regime, his younger brother and anointed successor, Raúl, has shown a deep interest in free-market experiments in the past. As defense minister since the 1959 revolution, he has frequently looked to the military as his laboratory.

But the seeds of economic reform in Cuba may be planted more firmly than many suspect. One piece of evidence: Raúl has traveled to China a number of times to study Beijing’s economic policies and in 2003 he invited the leading economic adviser to then Chinese premier Zhu Rongji, who played a leading role in opening up China to foreign trade and investment, to give a series of lectures in Cuba. Fidel Castro, who deeply opposes reforms, was a notable no-show, says Domingo Amuchastegui, a former Cuban intelligence officer who now lives in the U.S. and keeps close tabs on political developments on the island.[Cuba’s Military Puts Business On Front Lines (subscription reqd)]

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Well deserved Nobel Prize

Even though the Nobel Commitee gives awards to terrorists like Yasser Arafat, war criminals like Henry Kissinger and writers like Harold Pinter who is more famous for his anti-American rants, once in a while they give it to someone deserving like Mohammed Yunus.

“Every single individual on earth has both the potential and the right to live a decent life,” the Norwegian Nobel Committee said. “Across cultures and civilizations, Yunus and Grameen Bank have shown that even the poorest of the poor can work to bring about their own development.”
“Eradication of poverty can give you real peace,” the 66-year-old Mr. Yunus told reporters in the Bangladeshi capital, Dhaka, according to Reuters. “Now the war against poverty will be further intensified across the world.”

Mr. Yunus, who has a Ph.D. in economics from Vanderbilt University, has said he was inspired to start Grameen by a chance meeting with a poor woman in 1974. She made bamboo stools for a living, but had to borrow money at rates as high as 10% a week to purchase materials. The exorbitant interest left her with the tiniest of profits.

Mr. Yunus, according to his autobiography, dipped into his own pocket and lent a group of 42 basket weavers the equivalent of $27. Even that small amount improved living standards. Equally importantly, he has said, the women repaid the loans.[Microloan’ Father Yunus Is Awarded Nobel Peace Prize]

Microfinance has now led to the idea of Microinsurance which is  like life and disability coverage for low-income people in emerging markets to protect the family if the bread winner dies or falls sick.

Bajaj Allianz, an Allianz Indian joint venture, offered its first microinsurance product in the subcontinent in 2003. In August Allianz said its Indonesian unit started a microinsurance pilot project. The aim is to design and sell a product that will cover the outstanding balance of a loan in the event that the person who took out the loan dies. The policy would also pay the loan taker’s family double the loan amount.
Nonetheless, charitable groups such as the Bill & Melinda Gates Foundation, the Aga Khan Foundation USA, the Munich Re Foundation, and ACCION International are also pushing microinsurance. They see it as a complement to microfinance loans, something that can increase financial sophistication in far-flung places, while protecting people who are vulnerable from ruin when breadwinners get sick or die.[Out of ‘Microfinance’ Work Springs Insuring Loans for Impoverished]

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Surviving in a Globalized World

Often it is said that due to globalization, American companies will enter countries and create conditions in which local businesses cannot survive. This is not always true. Recently Wal-Mart pulled out of Germany since they could not adapt to German shopping habits and make profits in the eight years they were there. Now from China comes the story of online bookseller Dangdang.com, which is giving Amazon.com a run for their money.

Equally critical to success, analysts and executives say, is the ability of domestic companies to understand and adapt to some of the other peculiarities of China’s market. Ms. Yu says Dangdang had to make adjustments to the model pioneered by Amazon.com and others. For example, the vast majority of Dangdang’s Chinese buyers of books pay cash on delivery — a result of the fact that credit cards still are relatively uncommon in China.

Dangdang faltered early because of a failure to recognize the uniqueness of China’s market. Ms. Yu, a longtime credit-card user from her years in New York, felt they were essential to selling products online. But credit-card use in China was paltry, meaning many prospective customers couldn’t pay. “We didn’t get much business,” Ms. Yu says now.

So Dangdang switched to two other payment methods: cash on delivery and postal money orders. Now, only about 15% of Dangdang’s transactions are paid for with credit cards.

“Don’t try to change consumer behavior,” Ms. Yu says she learned from that experience. “If consumers don’t want to pay with credit cards, then ask them how they want to pay. If they want to pay cash, then figure out a way to get their cash.”[China’s Web Retailers Beat U.S. Rivals At Their Own Game(subscription reqd)]

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