The guar boom

The Guar Boom

The Guar Boom

Moneybox
A blog about business and economics.
July 18 2012 4:50 PM

The Guar Boom

There's a bean called guar that's not very nutritious but is well-adapted for growth in the Rajasthani desert in India. Except it turns out to also be well-adapted for use in fracking for fossil fuel extraction. The result is an unexpected boom in a poor region of India.

That's also a reminder that there are different ways for poor places to get more prosperous, and not all of them are equally telling about the future. India suffers from dismally low productivity in its agricultural sector which, due to its huge size, basically holds down unskilled wages across the board. When a previously low-value crop obtains a higher value—as is happening now with the guar—that becomes an increase in agricultural productivity. But it's a different kind of phenomenon from a technological, environmental, or organizational change that allowed India to actually get better at turning land and labor into guar or other agricultural commodities. The reality, after all, is that the fracking boom is all-but-certain to slow down which will damped the guar boom as well. So the question, always, for countries enjoying a boom in something they make is whether they can translate that temporary boost in income into something that lays the groundwork for longer-lasting prosperity.