China's underpopulation problem.

Opinions about events beyond our borders.
March 7 2006 1:16 PM

China's Underpopulation Crisis

India has one, too.

(Continued from Page 1)

But India has a demographic problem of its own. If China's comparative advantage in attracting foreign investment lies in its enormous supply of unskilled labor, India has profited from its considerable pool of skilled workers, many of them English-speaking, who have filled the country's growing number of high-tech and service-sector jobs.

But that pool is in danger of reaching its natural limit, as well. According to a report released in December by McKinsey & Co. and the Indian IT trade association Nasscom, if the flow of service-sector jobs continues to grow at its current rate, and if India fails to enact substantial reform of its education system, the country will face a shortfall of 350,000 business-process staff and 150,000 IT engineers by the end of 2010. As the shortage of qualified workers grows, the expansion of India's service sector could shift into reverse, at an enormous cost to the country's still-fragile economic development.

Advertisement

India's world-class IT and engineering schools are not the problem. In fact, India already graduates five times as many engineers each year as the United States. The real problem lies in India's universities and in its woefully uneven level of primary education. The McKinsey-Nasscom report suggests that only 25 percent of India's university graduates have the basic skills—including the minimum level of spoken English—needed for work in the sectors that have fueled India's recent growth. The percentage of Indians who leave school by age 10 is 40 percent. Not coincidentally, 40 percent of Indian citizens are illiterate.

The most formidable obstacle to Indian efforts to reform its education system is that local governments control education policy. As a result, development of a coherent solution to the shortage of qualified faculty, inadequate educational infrastructure, and the current system's inability to produce the skilled workers its fast-changing economy demands will be both profoundly difficult and time-consuming.

There's very little chance that China and India can quickly solve these problems. It will be decades before China can redress its demographic deficit, particularly given the central government's deep reluctance to ease immigration restrictions. In the short term, India's education system can be improved at the margins, but the country's factionalized politics ensures that the level of policy coordination between the central and regional governments necessary for broader reforms is unlikely to develop anytime soon.

For the next several years, China and India will continue to profit from large inflows of foreign investment, but investors in these states will do well to remember that past performance is no guarantee of future results.

TODAY IN SLATE

War Stories

The Right Target

Why Obama’s airstrikes against ISIS may be more effective than people expect.

The One National Holiday Republicans Hope You Forget

It’s Legal for Obama to Bomb Syria Because He Says It Is

I Stand With Emma Watson on Women’s Rights

Even though I know I’m going to get flak for it.

Should You Recline Your Seat? Two Economists Weigh In.

Doublex

It Is Very, Very Stupid to Compare Hope Solo to Ray Rice

Or, why it is very, very stupid to compare Hope Solo to Ray Rice.

Building a Better Workplace

In Defense of HR

Startups and small businesses shouldn’t skip over a human resources department.

Why Is This Mother in Prison for Helping Her Daughter Get an Abortion?

It’s Fine to Use Facebook to Serve People With Legal Papers, Court Rules

  News & Politics
Foreigners
Sept. 23 2014 6:40 PM Coalition of the Presentable Don’t believe the official version. Meet America’s real allies in the fight against ISIS.
  Business
Moneybox
Sept. 23 2014 2:08 PM Home Depot’s Former Lead Security Engineer Had a Legacy of Sabotage
  Life
Outward
Sept. 23 2014 1:57 PM Would a Second Sarkozy Presidency End Marriage Equality in France?
  Double X
The XX Factor
Sept. 23 2014 2:32 PM Politico Asks: Why Is Gabby Giffords So “Ruthless” on Gun Control?
  Slate Plus
Political Gabfest
Sept. 23 2014 3:04 PM Chicago Gabfest How to get your tickets before anyone else.
  Arts
Brow Beat
Sept. 23 2014 8:38 PM “No One in This World” Is One of Kutiman’s Best, Most Impressive Songs
  Technology
Future Tense
Sept. 23 2014 5:36 PM This Climate Change Poem Moved World Leaders to Tears Today
  Health & Science
Science
Sept. 23 2014 4:33 PM Who Deserves Those 4 Inches of Airplane Seat Space? An investigation into the economics of reclining.
  Sports
Sports Nut
Sept. 23 2014 7:27 PM You’re Fired, Roger Goodell If the commissioner gets the ax, the NFL would still need a better justice system. What would that look like?