WEBVTT - India: All Growth, No Jobs 0:00:04.280 --> 0:00:06.960 Hello, and welcome to Stephanomics, the podcast that brings the 0:00:06.960 --> 0:00:15.680 global economy to you. The Indian economy has grown by 0:00:15.720 --> 0:00:18.640 at least six or seven percent in nearly every one 0:00:18.680 --> 0:00:21.880 of the past twenty years. That's almost double the growth 0:00:21.960 --> 0:00:24.800 rate it achieved in its first fifty years as an 0:00:24.800 --> 0:00:29.479 independent state. But somehow that success isn't translating into jobs. 0:00:29.960 --> 0:00:33.400 In fact, less than half of the working population is 0:00:33.440 --> 0:00:37.040 working or even actively looking for work, and the vast 0:00:37.080 --> 0:00:40.400 majority of Indian women are out of the workforce altogether. 0:00:41.040 --> 0:00:43.879 So what's going wrong and how important will it be 0:00:43.960 --> 0:00:46.760 for the newly elected Prime Minister nor Indo Moody to 0:00:46.880 --> 0:00:49.440 fix it? While a few minutes I'll talk about it 0:00:49.560 --> 0:00:53.239 with Bloomberg columnist and writer Mihir Shama. I'll also have 0:00:53.360 --> 0:00:56.320 some brand new research on exactly how the US China 0:00:56.400 --> 0:01:00.520 trade wars and tariffs are destroying economic activity the US, 0:01:00.720 --> 0:01:04.320 China and other countries. But first, here's my colleague Aniban 0:01:04.440 --> 0:01:07.360 Nag who took a closer look at India's job shortage 0:01:07.480 --> 0:01:23.000 with fellow reporter Fristie p Anywell. That is the busy Promhabib, 0:01:23.080 --> 0:01:26.560 the station here in central Mumbai with thousands of commuters 0:01:26.720 --> 0:01:36.920 mill in and out during the morning rush hour. The 0:01:36.959 --> 0:01:40.560 Indian railways are famous as one of the biggest employers 0:01:40.560 --> 0:01:44.200 in the world, and this particular station is being manned 0:01:44.200 --> 0:01:48.040 by a station master, booking clerks and a few sweepers. 0:01:49.480 --> 0:01:53.440 These jobs don't pay much, but a staggering twenty eight 0:01:53.520 --> 0:01:56.640 million implied to do one of them recently, and the 0:01:56.720 --> 0:02:02.520 department that runs the railways announced agnes. One of those 0:02:02.800 --> 0:02:05.559 who try to get a railway job was sish Kumar. 0:02:08.400 --> 0:02:10.600 I wanted to stick to a job with computers, but 0:02:10.680 --> 0:02:13.800 it's so difficult to land a job. If someone knows you, 0:02:13.919 --> 0:02:17.160 then you get a job. Otherwise it's next to impossible. 0:02:19.160 --> 0:02:24.440 About We met Sorresh there his one room, rented a 0:02:24.520 --> 0:02:27.960 house that is a stone's throw away from an open 0:02:28.040 --> 0:02:31.240 drain and part of one of the most densely populated 0:02:31.280 --> 0:02:35.880 colonies of Delhi. He's medium built and dressed up for 0:02:35.919 --> 0:02:40.800 work in a formal cotton shirt and trousers. It's morning, 0:02:41.280 --> 0:02:44.120 but he's already starting to sweat in the Indian summer, 0:02:44.560 --> 0:02:47.359 where temperatures can soar past hundred and ten. They raised 0:02:47.400 --> 0:02:51.200 farre and high. He's thirty years old and holds a 0:02:51.280 --> 0:02:55.720 diploma and computing from a private institute, but he's working 0:02:55.760 --> 0:02:59.320 as someone's driver, his wife as a maid. I was 0:02:59.360 --> 0:03:02.519 hoping for older than that when he moved here from 0:03:02.560 --> 0:03:06.760 India's central region of mad Depradation. But he recognizes he's 0:03:06.800 --> 0:03:10.320 one of the lucky ones back in the village. There's 0:03:10.400 --> 0:03:13.120 so much poverty. We can't even open our own business 0:03:13.480 --> 0:03:16.080 and there are no banks to offer support with loans. 0:03:16.639 --> 0:03:18.919 In Delhi, at least you can get a job. I 0:03:19.000 --> 0:03:21.160 am driving as I have a home to run and 0:03:21.280 --> 0:03:31.079 send kids to school. Sy Ha's a job, but he's 0:03:31.160 --> 0:03:35.600 under employed. India's economy is not getting the best out 0:03:35.640 --> 0:03:40.280 of him. Twelve million Indians entered the labor market each year, 0:03:40.920 --> 0:03:44.200 and an increasing number of them are under employed, lights 0:03:44.360 --> 0:03:52.560 race or not in work at all. It was like 0:03:52.760 --> 0:03:55.800 any week of December that we were told that they 0:03:55.800 --> 0:03:58.880 will be letting go of the staff and then from 0:03:58.920 --> 0:04:02.080 there try and if they can survive this stress, which 0:04:02.160 --> 0:04:05.600 also did not happen because in April almost everybody was 0:04:05.680 --> 0:04:10.360 asked to go. We found a woman we call Alia 0:04:10.760 --> 0:04:13.320 because she did not want us to use her real name. 0:04:14.720 --> 0:04:16.960 We met up in Bloomberg's office in New Delhi, where 0:04:17.000 --> 0:04:21.599 she lives. Aliyah, who's in her mid thirties, lost her 0:04:21.680 --> 0:04:25.560 job as a marketing and communications manager after her company's 0:04:25.600 --> 0:04:29.400 sales failed to gain traction, just as the country was 0:04:29.520 --> 0:04:32.160 put through a huge challenge of changing much of the 0:04:32.200 --> 0:04:35.760 currency in circulation. Did they tell you what was the 0:04:35.839 --> 0:04:39.200 reason for that? No, they just told that they were 0:04:39.279 --> 0:04:42.680 not able to kind of sustain the operations that they 0:04:42.720 --> 0:04:45.640 were having. Her mother isn't aware she has lost her job. 0:04:46.760 --> 0:04:50.560 Her father knows the truth and can sometimes get despondent 0:04:50.880 --> 0:04:55.720 about her job prospects. Aliyah says she has been able 0:04:55.760 --> 0:04:58.520 to get some work here and there. She has even 0:04:58.600 --> 0:05:01.680 managed to repay a Carlo, but it has been tough. 0:05:03.560 --> 0:05:06.840 I take up freelance projects from time to time, and 0:05:07.000 --> 0:05:10.360 I try to and obviously try to find, you know, 0:05:10.520 --> 0:05:13.880 anything that I can apply to. So what I mostly 0:05:14.160 --> 0:05:16.760 get as a response is that either there are too 0:05:16.800 --> 0:05:19.600 many aspirants buying for a singular job and so the 0:05:19.640 --> 0:05:23.640 competition is obviously increased. A part of it was also 0:05:23.960 --> 0:05:26.040 given to the fact that you know, I'm looking for 0:05:26.800 --> 0:05:29.240 a job role which is intermate management kind of position 0:05:29.279 --> 0:05:34.200 and order fresh level, and also the fact that you 0:05:34.279 --> 0:05:38.720 know the plans keep changing. A lot of positions that 0:05:38.839 --> 0:05:42.520 are that are actually they think are available go on 0:05:42.640 --> 0:05:46.360 hold for no reason. There's a lot of uncertainty in 0:05:46.560 --> 0:05:49.799 terms of organizations in terms of what they they're planning 0:05:49.839 --> 0:05:52.440 for the next six months to a New York time earlier. 0:05:52.680 --> 0:05:55.840 Part of the official jobless numbers, and that is probably 0:05:55.880 --> 0:05:59.840 the tip of the iceberg. The bigger problem is that 0:06:00.400 --> 0:06:04.760 half the working age population and of women are not 0:06:04.960 --> 0:06:08.760 even included in that official jobless total, but they're not 0:06:09.240 --> 0:06:13.960 looking for work at all. India is not the only 0:06:14.040 --> 0:06:18.960 developing country struggling to bring women into the workforce. What 0:06:19.200 --> 0:06:22.200 is troubling is that the situation has been getting worse 0:06:23.120 --> 0:06:26.360 even as the overall economy has been doing quite well. 0:06:27.760 --> 0:06:31.720 According to the World Bank, nearly twenty million women, a 0:06:31.839 --> 0:06:35.520 number roughly equivalent to the population of Sri Lanka, dropped 0:06:35.520 --> 0:06:38.640 out of the workforce between two thousand and five and 0:06:38.760 --> 0:06:43.480 two thousand and twelve. Economists tell us that this is 0:06:43.480 --> 0:06:47.800 an enormous missed opportunity, but don't take their vote for it. 0:06:48.640 --> 0:06:52.080 Ask Christine Lagard, the head of the International Monetary Fund, 0:06:53.320 --> 0:06:57.000 you can increase US t DP by five because you 0:06:57.080 --> 0:07:01.720 can increase Indian GDP by twenty seven and decent. If 0:07:01.760 --> 0:07:04.680 you look at diversification, we have now documented evidence of 0:07:04.760 --> 0:07:08.200 the fact that when women participate in the economy and 0:07:08.320 --> 0:07:10.640 in the labor market as much as men do, you 0:07:10.720 --> 0:07:16.400 have a more diversified economy. And by bringing women to 0:07:16.560 --> 0:07:19.280 the to the labor markets, giving them access to finance, 0:07:19.680 --> 0:07:23.840 you reduce the inequality. What would that take in India? 0:07:24.280 --> 0:07:28.560 We asked some Toshirotra, a professor at New Dearle's Jawaharlal 0:07:28.640 --> 0:07:33.200 Nehru University. He's an export and employment and labor issues 0:07:33.520 --> 0:07:37.200 for girls. If you want to make sure that they 0:07:37.280 --> 0:07:45.280 get jobs, then we have to ensure that childcare. Affordable 0:07:45.400 --> 0:07:51.240 childcare is much more easily available. UM, public transport is 0:07:52.240 --> 0:07:56.720 much safer than it has been in the past. UM. 0:07:57.560 --> 0:08:02.080 And above all, of course, job growth, non agricultural job 0:08:02.160 --> 0:08:08.000 growth has to happen in construction, in manufacturing and in services. 0:08:08.280 --> 0:08:11.080 You wouldn't know there's a problem from the latest election results. 0:08:11.960 --> 0:08:14.360 Prime Minister in the Rain the Remote won the country's 0:08:14.440 --> 0:08:18.200 massive vote last month with an even larger majority than before, 0:08:19.280 --> 0:08:22.520 but he does recognize the issue. One of the first 0:08:22.560 --> 0:08:25.760 decisions after taking office for a second five year term 0:08:26.320 --> 0:08:29.720 was to form a committee of senior ministers to try 0:08:29.840 --> 0:08:34.120 and address rising on employment. Oh yeah, says it's hard 0:08:34.200 --> 0:08:36.520 time they deal with the issue because it's a lot 0:08:36.600 --> 0:08:42.400 bigger than the numbers indicate. Comar, the driver, blames India's 0:08:42.480 --> 0:08:46.760 education system for the lack of opportunities. Way was that 0:08:46.880 --> 0:08:49.160 that can't be there? Who made the English community? My 0:08:49.280 --> 0:08:52.440 English is weak in the villages. They don't teach much English. 0:08:52.720 --> 0:08:55.400 I started studying English only in the fifth grade and 0:08:55.520 --> 0:08:58.079 not the first. If I have to blame anyone, it 0:08:58.200 --> 0:09:01.480 is perhaps myself. So I think I should have more 0:09:01.559 --> 0:09:05.319 complications of degrees. It can really need to lay out 0:09:06.320 --> 0:09:09.800 the lack of suitable opportunities. So someone like Coomar risk 0:09:09.800 --> 0:09:15.199 astonishing the country's image as a major investment destination. Not 0:09:15.400 --> 0:09:19.880 only that there's a chance of social unrest. Above all, 0:09:20.360 --> 0:09:23.240 it poses a challenge to policy makers who are keen 0:09:23.320 --> 0:09:27.760 to read the demographic dividend of a young population, which 0:09:27.840 --> 0:09:31.160 means it can be a major drive of economic growth. 0:09:32.720 --> 0:09:36.960 The time is ticking, though, by the share of India's 0:09:37.000 --> 0:09:42.120 population to that of working age will start declining. India 0:09:42.400 --> 0:09:44.720 will have to act fast if it has to harness 0:09:44.760 --> 0:09:49.199 that demographic dividend. By providing jobs to millions sooner rather 0:09:49.280 --> 0:09:53.559 than later. Kumar thinks it's already too late for him, 0:09:54.240 --> 0:09:57.080 but he's still holding out hope for the next generation. 0:09:58.320 --> 0:10:02.040 A year, I have given up hopes of getting a 0:10:02.120 --> 0:10:05.000 better job. I will get along with whenever it takes. 0:10:05.480 --> 0:10:20.920 The kids should have better prospects. So I'm very happy 0:10:20.960 --> 0:10:24.440 now that I can speak to one of Bloomberg's key 0:10:24.920 --> 0:10:28.959 India columnists, Mihir Shama, about what this means for in 0:10:29.000 --> 0:10:32.839 his economy and what Prime Mr Modi might be able 0:10:32.880 --> 0:10:35.000 to do about it going forward, having just been re 0:10:35.160 --> 0:10:39.320 elected last month. Here, I guess one question people might 0:10:39.360 --> 0:10:43.079 be asking. I started the program mentioning that India was 0:10:43.080 --> 0:10:46.240 an economy that had grown six or seven percent a year, 0:10:46.559 --> 0:10:48.920 pretty much every year for the last twenty years. How 0:10:48.960 --> 0:10:51.679 has it done so well while not finding jobs for 0:10:52.360 --> 0:10:56.520 maybe half of its working age population. I think that 0:10:57.200 --> 0:11:00.720 the real joblessness is a relatively recent phenol. The real 0:11:00.800 --> 0:11:04.719 jobless growth is a relatively recent phenomenon. Um Up to 0:11:04.800 --> 0:11:09.559 around twenty eleven, I think jobs were getting created. A 0:11:09.640 --> 0:11:12.240 lot of those were in, for example, the construction sector, 0:11:12.280 --> 0:11:15.839 which has traditionally managed to soak up large numbers of 0:11:15.920 --> 0:11:21.079 relatively underskilled people, particularly from rural areas, in a rapidly 0:11:21.160 --> 0:11:25.679 expanding urban economy. Around twenty eleven or twenty twelve, the 0:11:25.800 --> 0:11:29.000 economy begins to slow. You know, you have the crisis, 0:11:29.080 --> 0:11:31.640 then you have the post crisis stimulus, and then when 0:11:31.679 --> 0:11:35.160 the stimulus over reaches in around twenty twelve, the economy slows. 0:11:35.200 --> 0:11:40.479 Investment slows for some reason. Um that slowing is reflected 0:11:40.600 --> 0:11:44.559 in the job growth numbers are both official and unofficial, 0:11:45.280 --> 0:11:47.920 but is not showing up as much as one would 0:11:47.960 --> 0:11:51.880 expect in the new GDP statistics, which has led many people, 0:11:51.960 --> 0:11:55.880 as as it happens, to start questioning India's growth figgers themselves. 0:11:56.640 --> 0:12:02.199 But the truth is that from after liberalized fastion, the 0:12:02.360 --> 0:12:08.600 first ten, fifteen, even twenty years were pretty good for jobs, 0:12:09.480 --> 0:12:12.000 not as great as they could have been, but not bad. 0:12:12.480 --> 0:12:15.160 It's really in the past father, nor though year, that 0:12:15.240 --> 0:12:18.240 we've begun to see something of a crisis. And if 0:12:18.280 --> 0:12:20.559 you look at the structure of growth, I mean, is 0:12:20.600 --> 0:12:22.720 it is it to do with the composition of growth 0:12:23.080 --> 0:12:26.760 that you're not getting the jobs. Like our our economist 0:12:27.080 --> 0:12:29.880 at Bloomberger, Abishek Gupta, has looked at how in a 0:12:30.000 --> 0:12:32.760 sense the whole is not necessarily in the manufacturing silence 0:12:32.800 --> 0:12:35.640 in service sector, and the inability to inability to unleash 0:12:35.720 --> 0:12:37.640 the service sector is that a big part of it. 0:12:39.800 --> 0:12:43.760 No country in history has been able to um incorporate 0:12:44.040 --> 0:12:49.760 unskilled people from the rural economy into a growing middle 0:12:49.840 --> 0:12:55.360 class with secure jobs without building a manufacturing sector. It 0:12:55.520 --> 0:12:59.080 is possible, surely, perhaps to do it without but unless 0:12:59.080 --> 0:13:02.320 you've got oil or something, you can't. There's no there's 0:13:02.360 --> 0:13:05.880 no roadmap. It's never been done before. India has been 0:13:06.000 --> 0:13:11.079 d industrializing since the late nineties, which means that the 0:13:11.200 --> 0:13:14.800 contribution of industry to GDP peaked in around nine ninety 0:13:14.840 --> 0:13:17.520 seven and since then it has been going down. That's 0:13:17.559 --> 0:13:22.360 not okay because what that gets replaced with is, of 0:13:22.480 --> 0:13:26.240 course an increase in the proportion of the service sector 0:13:26.520 --> 0:13:29.079 in g d P. And the service sector is not 0:13:29.640 --> 0:13:34.400 you know, we're not talking high level it stuff here, 0:13:34.559 --> 0:13:36.800 all right. That maybe the image of India, But what 0:13:36.920 --> 0:13:41.520 the service sector actually is is very very small enterprises 0:13:41.640 --> 0:13:45.520 one person, two persons, three people working together. In the 0:13:45.600 --> 0:13:49.640 Prime Minister's words, even a guy frying up dumplings is 0:13:49.679 --> 0:13:52.960 also a job, right, But those aren't the kind of jobs. 0:13:53.040 --> 0:13:55.520 I think that people think about when they want them, 0:13:55.800 --> 0:13:57.520 and those aren't the kind of jobs that create a 0:13:57.520 --> 0:14:00.760 sustainable middle class. There is really no on for even 0:14:00.960 --> 0:14:06.280 right now after what could repleeve math manufacturing export oriented 0:14:06.320 --> 0:14:10.240 math manufacturing as the creator of job So I know 0:14:10.360 --> 0:14:13.200 you like giving primers demodi advice which he doesn't follow. 0:14:14.440 --> 0:14:19.480 We shouldn't necessarily stop now if you're just been reelected 0:14:20.240 --> 0:14:24.880 and have some pressure on you, maybe surprisingly not as 0:14:24.960 --> 0:14:26.680 much pressure as you might think. I think if less 0:14:26.680 --> 0:14:28.720 than half of the working age population in the UK 0:14:28.960 --> 0:14:30.840 or the US we're in work, there would be that 0:14:30.920 --> 0:14:33.360 would be the only issue on the horizon. I see 0:14:33.400 --> 0:14:35.440 that that's not really the case in India. But if 0:14:35.480 --> 0:14:40.200 you're under pressure to deliver m after this election victory, 0:14:41.280 --> 0:14:44.760 what leavers can he pull? I mean, what would be 0:14:44.800 --> 0:14:47.480 the key reformer is that you would think of to 0:14:47.680 --> 0:14:51.800 try and change how much jobs are being created. I 0:14:51.880 --> 0:14:53.720 think there are three things that you need to do 0:14:53.880 --> 0:14:57.200 almost immediately because time is running out for all of them. 0:14:57.880 --> 0:15:02.760 The first is to obstantively change what are called factor markets, 0:15:02.800 --> 0:15:07.440 so the markets for land and labor in particular. UM, 0:15:07.560 --> 0:15:10.280 it's very difficult to fire people in India which is 0:15:10.360 --> 0:15:14.320 why very few people hire them. We have incredibly small 0:15:14.960 --> 0:15:18.840 textile production facilities, like our textile factories are you know, 0:15:18.960 --> 0:15:21.840 maybe an average of fifteen or sixteen people in India 0:15:22.000 --> 0:15:25.240 as opposed to over two to three in just in 0:15:25.280 --> 0:15:28.840 Bangladesh next door. And so we're uncompetitive when it comes 0:15:28.920 --> 0:15:33.280 to producing textiles, which is a labor intensive sector. Um 0:15:33.960 --> 0:15:37.480 So you need to change the laws that constrain the 0:15:37.600 --> 0:15:42.760 sale of land, that constrain hiring and firing workers. That's 0:15:42.840 --> 0:15:45.680 point one. Point two is that you have to ensure 0:15:45.760 --> 0:15:50.520 that you get embedded into global supply chains. Currently, India is, 0:15:50.760 --> 0:15:53.720 like many other countries around the world, moving in a 0:15:53.840 --> 0:15:57.360 somewhat protectionist direction. We're putting up tariffs on you know, 0:15:57.480 --> 0:16:00.520 things like mobile phones and the idea areas to try 0:16:00.520 --> 0:16:04.640 and create a domestic electronics manufacturing sector, but obviously we 0:16:04.840 --> 0:16:07.520 know that's not going to happen because of the way 0:16:07.600 --> 0:16:11.320 that that manufacturing is now organized globally. Um So you 0:16:11.400 --> 0:16:15.000 have to embed yourself in these global supply chains rather 0:16:15.080 --> 0:16:18.320 than you know, extracting yourself from them. And the third 0:16:18.440 --> 0:16:20.600 and I think really the most important at this point 0:16:21.040 --> 0:16:25.520 is that you need to work on basic educational and skills. 0:16:26.360 --> 0:16:29.320 We have some of the worst schools in the world. 0:16:29.840 --> 0:16:33.120 According to many studies, there are kids in class eight 0:16:33.360 --> 0:16:35.280 in the you know, in their eights here of schooling 0:16:35.280 --> 0:16:37.800 in the eighth grade who cannot do maths at a 0:16:37.840 --> 0:16:40.800 second grade level, and that's the majority of So you 0:16:40.880 --> 0:16:43.600 need to intervene both of the primary level and with 0:16:43.720 --> 0:16:45.800 those who have already left school and are and are 0:16:45.880 --> 0:16:49.720 currently underskilled. So those interventions have to be massive and immediate, 0:16:49.920 --> 0:16:52.880 the educational ones. And you did mention we had at 0:16:52.920 --> 0:16:56.280 the end of that segment as well. This question is 0:16:56.320 --> 0:16:59.200 the time pressure. Um. You know, you might think India 0:16:59.240 --> 0:17:01.480 had all the time in the world given the scale 0:17:01.520 --> 0:17:03.160 of its economy and a number of people, but this 0:17:03.800 --> 0:17:07.080 key demographic point that you have a sweet spot as 0:17:07.080 --> 0:17:10.399 an economy where you have a sort of peak a 0:17:10.560 --> 0:17:15.119 number of working age people with fewer children, having fewer children, 0:17:15.200 --> 0:17:18.680 but no longer, not not getting older yet. How important 0:17:18.800 --> 0:17:20.960 is it for India to get this right before it 0:17:21.080 --> 0:17:24.560 starts seeing that demographic change and the aging that we've 0:17:24.600 --> 0:17:27.720 seen in that obviously in other countries. So one of 0:17:27.760 --> 0:17:31.359 the crucial questions in development of can a country get 0:17:31.480 --> 0:17:35.280 rich before it gets old? Right? And the truth is 0:17:35.400 --> 0:17:39.240 that we are a much younger country than a lot 0:17:39.320 --> 0:17:41.440 of others where our average age is still in the 0:17:41.480 --> 0:17:47.800 twenties where within China, Japan, But that obviously won't last forever. 0:17:48.680 --> 0:17:52.000 As birth rates begin to fall going forward, our average 0:17:52.040 --> 0:17:55.119 age will increase, which means that the proportion of people 0:17:55.800 --> 0:17:58.680 in the working age population as opposed to those out 0:17:58.720 --> 0:18:01.440 of it, will begin to Right now, we are seeing 0:18:01.640 --> 0:18:04.520 a lot of growth and a lot of dynamism precisely 0:18:04.600 --> 0:18:10.520 because that working age population is increasing in composition, in size, 0:18:10.800 --> 0:18:14.639 in proportion. That will not be the case going forward. 0:18:15.119 --> 0:18:17.560 And the bad news is it is already the case 0:18:17.760 --> 0:18:21.200 that we are facing demographic demographic pressure in some of 0:18:21.240 --> 0:18:24.320 the more advanced and developed parts of India. States along 0:18:24.359 --> 0:18:27.359 the coast in the south of India, which have higher 0:18:27.520 --> 0:18:30.800 human capital levels, which are more integrated with the global 0:18:30.840 --> 0:18:35.240 economy um which have better skills, those areas are in 0:18:35.440 --> 0:18:40.119 fact already beginning to see this demographic change. They're getting older. 0:18:41.000 --> 0:18:43.399 Where population growth is really coming from, where we have 0:18:43.560 --> 0:18:46.960 our current youth bulge, all these working age population, working 0:18:47.000 --> 0:18:49.359 age people applying for these jobs in the railways and 0:18:49.359 --> 0:18:51.879 so on and so forth. That's in the north, in 0:18:52.000 --> 0:18:55.280 the interior, and that's not that's not a part of 0:18:55.320 --> 0:18:58.440 the country that is properly connected to the global economy. 0:18:58.440 --> 0:19:01.320 It's not connected to markets. These are people who are underskilled. 0:19:01.520 --> 0:19:06.040 So there is this a regional disparity in how things 0:19:06.080 --> 0:19:10.119 are turning out that evolved a problem. Some people listening 0:19:10.160 --> 0:19:11.560 may have the same experience that I have that the 0:19:11.720 --> 0:19:16.879 the Indian business people that one sees at conferences or 0:19:17.280 --> 0:19:20.680 interviewed often on Bloomberg or in anywhere else, you get 0:19:20.720 --> 0:19:25.320 the sense of an incredibly dynamic economy really digitally switched 0:19:25.400 --> 0:19:29.479 on developing things that actually are ahead in many cases 0:19:29.600 --> 0:19:34.840 of advanced economies on the digital front um, and even 0:19:34.920 --> 0:19:39.280 on applying it to some public sector challenges. Is that 0:19:39.480 --> 0:19:41.800 just are we seeing just a tiny fraction, Because if 0:19:41.800 --> 0:19:43.600 you listen to those people, you would think, wow, India 0:19:43.680 --> 0:19:45.399 is going to be able to ride the wave of 0:19:45.440 --> 0:19:47.840 all these technological changes that are happening around the world 0:19:47.880 --> 0:19:51.840 that everyone fears India is going to clean up as 0:19:51.880 --> 0:19:54.240 a result of those changes. Well, I mean there are 0:19:54.280 --> 0:19:57.239 two things to be said there. The first is one 0:19:57.280 --> 0:20:00.480 should never trust what people in Indian business see, only 0:20:00.560 --> 0:20:04.840 what they do and when they start investing in India, 0:20:05.640 --> 0:20:08.919 then I will take their claims that India India has 0:20:08.920 --> 0:20:11.480 a bright future. Seriously, we have a crisis and private 0:20:11.520 --> 0:20:15.240 investment has been shrinking for for years as a proportional GDP, 0:20:15.920 --> 0:20:18.639 and that doesn't appear to have cleared up yet, so 0:20:18.960 --> 0:20:21.119 they don't appear to have confidence in where they're putting 0:20:21.119 --> 0:20:25.439 their money. So I don't believe anything they say about 0:20:25.560 --> 0:20:27.080 you know, when when they make all these sort of 0:20:27.160 --> 0:20:29.840 claims about India's future. The other thing about you know, 0:20:30.160 --> 0:20:33.200 can India righte the you know, automation digital wave of 0:20:33.280 --> 0:20:36.240 the future. Everybody else is worrying because they're losing jobs. 0:20:36.680 --> 0:20:38.680 I don't know. I suppose you can be more optimistic 0:20:38.720 --> 0:20:41.159 about it when you've never had the jobs in the 0:20:41.200 --> 0:20:44.600 first place. If you see the entire world moving towards 0:20:44.680 --> 0:20:47.720 an economy, you know, which is precarious when nobody has 0:20:47.720 --> 0:20:49.520 a real job where you have to work three things, 0:20:50.160 --> 0:20:52.440 and you know you have service sector jobs that don't 0:20:52.480 --> 0:20:55.440 pay enough. Well, we've lived that already. But the truth 0:20:55.600 --> 0:20:58.480 is that we are worth off because we need to 0:20:58.560 --> 0:21:01.200 at least have a phase of those manufacturing jobs in 0:21:01.359 --> 0:21:03.639 order to build the middle cloths that can then complain 0:21:04.600 --> 0:21:06.639 we've never built the middle cloth that can complain, so 0:21:06.920 --> 0:21:11.280 you're not hearing any completely well uh here, that's many 0:21:11.280 --> 0:21:13.600 people who read your college would say that's a characteristically 0:21:13.720 --> 0:21:17.000 blunt assessment of the situation for India's economy. But thanks 0:21:17.080 --> 0:21:27.359 very much for joining us. Thanks so Some people would 0:21:27.359 --> 0:21:30.119 say that we talk too much about trade wars on 0:21:30.240 --> 0:21:32.719 this podcast, but we have a lot to say about them, 0:21:33.000 --> 0:21:36.000 and this week is no exception because we have a 0:21:36.080 --> 0:21:40.200 really interesting analysis by our economists who are part of 0:21:40.240 --> 0:21:44.760 Bloomberg Economics, of the impact that trade wars are having already, 0:21:45.000 --> 0:21:49.120 particularly in China, but also on production levels and sales 0:21:49.400 --> 0:21:52.080 in the US. And I'm very glad that I can 0:21:52.119 --> 0:21:54.479 talk a bit with one of the people who crunched 0:21:54.520 --> 0:21:57.520 the numbers on this, one of our Eurozone economists, maybe 0:21:57.520 --> 0:21:59.919 a Kuza maybe. Thank you very much for joining us 0:22:00.000 --> 0:22:02.840 from Zurich, Hasty if any, thanks for inviting me. So 0:22:03.000 --> 0:22:05.000 tell me a little bit about this research, because what 0:22:05.119 --> 0:22:08.680 was interesting to me is that although often people have 0:22:08.800 --> 0:22:12.560 talked about the big picture potential impact of trade wars 0:22:12.680 --> 0:22:17.080 on global growth, you took a micro approach looking at 0:22:17.200 --> 0:22:19.679 the imports that have been affected by tariffs. What did 0:22:19.720 --> 0:22:22.520 you find so yes, we used very detailed data from 0:22:22.560 --> 0:22:25.359 the US International Trade Commission, and we looked at the 0:22:25.440 --> 0:22:30.800 different categories, the six thousand plus categories of products that 0:22:30.960 --> 0:22:34.640 have been imposed some tarifts by the US on US 0:22:34.760 --> 0:22:38.720 on imports from China. And what we've found first is 0:22:38.760 --> 0:22:41.560 that when you look at the value of imports from 0:22:41.680 --> 0:22:45.520 China across those categories which have been parift since Juday 0:22:45.680 --> 0:22:49.040 to September twenty eighteen Juday to September last year, if 0:22:49.080 --> 0:22:50.920 you look at the time series, you can see a 0:22:51.000 --> 0:22:54.280 sharp top which happens just after the introduction of the 0:22:54.359 --> 0:22:58.120 different waves of tariffs. And in total, if you look 0:22:58.280 --> 0:23:01.920 at the value of US imports from China across those 0:23:02.000 --> 0:23:05.360 categories in the first quarter of twenty nineteen, so after 0:23:05.520 --> 0:23:07.880 the introduction of all the tariffs of the first wave 0:23:07.960 --> 0:23:11.240 of tariffs, and you compare with what happened a year earlier, 0:23:11.600 --> 0:23:14.560 that is value on those goods is done by twenty 0:23:14.640 --> 0:23:18.399 six percent. That's fifteen point eight billion dollars worth of 0:23:19.000 --> 0:23:23.679 Chinese imports that have not entered the US across across 0:23:23.720 --> 0:23:27.800 those those products. What's interesting as well is that when 0:23:28.119 --> 0:23:31.440 we looked at what happened to imports of those products 0:23:31.720 --> 0:23:34.200 from the rest of the world. They have increased a 0:23:34.240 --> 0:23:37.240 little bit, but only by five point four billion dollars 0:23:37.760 --> 0:23:41.200 in the year to UH the first quarter of twenty nineteen. 0:23:41.280 --> 0:23:43.240 So in total, it's a gap of ten point four 0:23:43.320 --> 0:23:47.240 billion dollar worth of imports that has not entered the 0:23:47.400 --> 0:23:51.280 US and those categories that have been tariffed for China. 0:23:52.920 --> 0:23:55.639 Have you seen any evidence of this diversion of trade 0:23:55.800 --> 0:23:58.120 as a result of these harriffs that you just get 0:23:58.200 --> 0:24:01.320 the same products coming in from other countries rather than 0:24:01.359 --> 0:24:04.240 the reduction in imports overall. So we've seen a little 0:24:04.280 --> 0:24:08.399 bit of that, indeed, of diverge, diversion from them away 0:24:08.440 --> 0:24:11.600 from China and to other countries um as you can see, 0:24:11.600 --> 0:24:14.800 because there's still a ten billion gap in imports across 0:24:14.800 --> 0:24:18.400 those categories. It does only partly of set the impact 0:24:18.600 --> 0:24:21.480 of lower trade with China, but we've seen some of that. 0:24:21.600 --> 0:24:24.360 We've seen in particular if you look across the main 0:24:25.720 --> 0:24:28.399 trade partners for the US and the main countries in 0:24:28.520 --> 0:24:34.159 the Asian subplate chain, countries like Vietnam, Vietnam, Taiwan, and 0:24:34.840 --> 0:24:38.560 South Korea, I've seen an acceleration of their exports to 0:24:38.720 --> 0:24:41.639 the of their exports to the US. I noticed in 0:24:41.720 --> 0:24:44.000 your report that they also looked like there were just 0:24:44.080 --> 0:24:47.640 some sort of creative ways around these tarriers that were 0:24:47.680 --> 0:24:50.040 being found, like, for example, those big surge in the 0:24:50.119 --> 0:24:53.560 number of TVs coming in from China to the US 0:24:53.680 --> 0:24:56.359 which are not subject to tarriers, and a reduction in 0:24:56.440 --> 0:24:59.879 the number of TV parts coming in because those are 0:25:00.080 --> 0:25:03.440 subject to tariffs. But you would say that there's still 0:25:03.560 --> 0:25:07.639 been a real impact on Chinese producers. Yes, I think so. 0:25:07.960 --> 0:25:10.879 I think there has been a little bit of moving 0:25:10.920 --> 0:25:16.360 across categories from from tarift categories to nontarift categories at 0:25:16.400 --> 0:25:19.280 the margin, but overall, I think that's on the top. 0:25:19.359 --> 0:25:24.240 And indeed, um total Chinese imports, total imports from China 0:25:24.359 --> 0:25:27.800