The State Strikes Back

The easiest way to deal with PCTL and government unions is to enable competition. It is easier said than done in the PSTN arena.

Good Article. Any nation in order to succeed must have at least three top public institutions keeping checks and balances. For example A presidency (executive), a Judiciary (Supreme Court) and a top Legislative (elected MLAs, MPs, Senators, etc) branch with equal powers. India and Pakistan both have these but not with equal powers (Albeit India has been more successful in dividing the equal power among its top level institutes). So........ let`s hope for better future when equal institutes will exist all over Indian Subcontinent.

dude,

i posted the s&p report on chile to point out that you make claims that have no basis in reality. you claimed in the article that chile is going through an economic crisis. your claim is patently false as the s&p report clearly indicates. same can be said about your broader comment on latin america. electorate there has moved leftwards but that does not mean that all leftist governments that have come to power have reversed policies implemented by their predecessors. let me quote s&p on this once again:

Politics in Latin America: Are Governments Moving to the Left and Does This Really Affect Sovereign Ratings?

Publication date: 10-Nov-2004
Primary Credit Analyst(s): Sebastian Briozzo, New York 212-438-7342; sebastian_briozzo@standardandpoors.com


``...Instead of rejecting opponents` policies, several historically center-left parties have adopted more conservative economic approaches that recognize the importance of macroeconomic stability as a prerequisite for both medium- and long-term growth and broad social advancement. This new perspective includes not only the political will to run balanced budgets, give more operational independence to the central bank, or promote trade liberalization, but also acknowledges the importance of prioritizing technical expertise when appointing officials in charge of implementing economic policy, regardless of their political or ideological background. In addition, many party leaders also recognize the growing role of international investors in domestic economics and politics, particularly those in countries that rely heavily upon external capital flows to finance their budgets, roll over their debt payments, or to support their economic expansion.` ``

also your remark is that free market policies only work in anglo saxon countries is comical as well. countries as diverse as spain, potugal, greece, malaysia and thailand follow policies which favour free and open markets. no of these countries are anglo saxon or are being invaded by america. none of these countries are in the throes of any economic crises.

btw, it helps to do a little research if you want to be taken seriously. otherwise, you only end up shooting yourself on the foot.

faisal Uno:

it is almost alarming that you choose to ignore Chile`s past near-pathetic human rights track record, under a regime supportd by the US and its libral allies.

the article you quote states that the rest of latin american experiences low growth rates. that is my point as well. i hold liberal forces responsible for the economic collapse of cases like argentina. Bolivia ight now is in the throes of civil war as the indians have had just about enough of private corporations which show good macro-economic indicators but when it comes down to rights, democracy, freedom etc privately managed economies are just pathetic. A prsident has been ousted because of that. The question is whether the public will be overlooked and quashed or not? what does the state do when the majority of the country wants their rights safeguarded and they demand a national ecobnomy? Will the state quote flashy inicators like you have and tehn send in the military? or should the citizen of that State exercise their rights and demand what is best for them.....as they deem fit. My vote is ENTIRELY with the will of the people. You have almost the entire latin american continent to look at as a case in point (save a couple of countries)

i am not sure what you are trying to say through quoting a contradictory source....

and btw, free market liberalism perhaps does BEST for those within the confines of the United Empire of America, formerly known as the USA. In most of the third world when the Empire is not waging war and carrying out bombing campaigns its propgaating its corporations and culture. The Empire is on the offensive and private control is one such front that the international capitalist system has opened up. However there ARE people ho are affected negatively by it. In many cases the majority of a population is adversely affected by it and then they see a national economy as a way out.

My vote will always be for those who want their rights addressed and instead they find th `free` market forces sending third world armies to crush their legitimate manifestations of protest.

keep reading and cheers faisal uno.

See how india is , after mastering the service sector economy is now beginning to attack the manufacturing sector economy.They do it here in cooperation with labor, govt. and business.Some compromise is required, though by all sides.It is possible , i say!!!.

India tries to tame its red-tape jungle

Nachammai Raman, Correspondent of The Christian Science Monitor
Thu Jun 16, 4:00 AM ET

MADRAS, INDIA - As India races China to draw new business in the globalization sweepstakes, it is hobbled by the grinding bureaucratic legacy of 1950s socialism.

Foreign businesses must navigate a gantlet of clerks, codes, and certifications to garner the 70 separate approvals needed for setting up shop here. It usually takes at least three months.

But this infamous bureaucracy is getting a makeover. A new law that creates special economic zones, or SEZs, aims to streamline the process and lure foreign investors away from a booming China. The law follows a growing body of evidence that links a reduction in red tape to increased economic growth, experts say.

``I don`t see why we can`t achieve a seven-day clearance time [for businesses to open],`` says Sreekumar Chatra of PricewaterhouseCooper, Bombay, who was an adviser to the Indian government on setting up the SEZs.

So far, 11 SEZs have been set up in places like Bombay, Ennore, and here in Madras. The zones are acres of land set aside by the government on the outskirts of cities. They`re walled off and have comprehensive facilities, including their own utility services, banks, and government offices.

Fifteen-year tax breaks are given to foreign investors and many regulations, such as export tariffs, are removed from international trade. In fact, SEZs are treated as foreign territories for purposes of trade operations, duties, and tariffs.

The government`s loss of taxes and tariff revenue from the zones was one of the main concerns of the finance department prior to their creation, according to Mr. Chatra. But the government realized, ``If you don`t do this, you won`t get the [many times] larger investments,`` he says.

But tax breaks are on the bottom of investors` wish lists, according to Chatra. ``More than anything else, what Indian and international companies want is a high degree of speed, a one-stop clearance,`` he says.

Now a zone commissioner gives just one approval that is tantamount to the 70 outside of SEZs. How fast things get done will ultimately depend on individual commissioners` turnaround time, but officials claim the market itself provides checks and balances. ``If you delay [the investor`s] papers, he has the option to go to another place. So, this must be investor friendly,`` says Ramesh Ram Mishra, secretary of the department of industries in Tamilnadu.

Chatra says the next thing investors look for is ``plug and play`` infrastructure. This includes good buildings, roads, easily available utilities, transportation facilities, offshore banking, and even a special court to resolve economic disputes expeditiously.

Since the Indian government is cash-strapped, private players are persuaded to develop infrastructure in the new zones, says P.V. Jaganmohan, joint commissioner of the Madras Export Processing Zone, now upgraded into a special economic zone. ``Once they create the infrastructure, administration and monitoring will be [our responsibility].``

Investors seem willing to fork out money to build their own premises-related infrastructure because it gives them control over how things are constructed. Also, the advantages of being in a SEZ with reliable infrastructure and uninterrupted power supply may offset the extra cost, say business executives here, many of whom did not want to speak on the record.

The creation of the SEZs is India`s effort to comply with new World Trade Organization directives against protectionist markets. Recent studies by organizations like the World Bank link a reduction in red tape to economic expansion, including foreign investment. And India has reason to move fast. Right now, Asia`s giant sucking sound is foreign dollars heading to China. In 2003, foreign direct investment to China was $53.5 billion, compared with $4.3 billion to India, according to business analyst AT Kearney.

For now, the zones are being run in small designated pockets. Chatra explains that SEZs are a way of testing out deregulation ``in a controlled environment`` and then phasing in liberal policies across the country. ``There are too many rigidities in the system. All of them cannot be removed in one go,`` he says. ``That would require a revolution.``

Chatra says the new SEZ law will be a big step toward dispelling the fear among foreign investors that it`s difficult to do business in India. ``It will establish a perception that India has a very strong, competitive manufacturing base,`` he says.

The law is geared primarily toward the manufacturing sector, which is trammeled by far more regulatory constraints than information technology, for example. Because IT is a late arrival to India, it escaped many of the bureaucratic regulations governing manufacturing.

``The [information technology] sector has grown because of one thing: no interference from the government. It created the right climate,`` says K. Subrahmaniam, president and chief executive office of Covansys, a US software development unit located in the Madras Export Processing Zone.

By boosting the manufacturing sector, India isn`t necessarily staking out a position on a par with China; its ambitions are more modest.

``India could be a manufacturing base for South Asia,`` says Mishra.

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remittance figures in #1 is for may 05 and not for the whole year.

also the comments on this article on chile are laughable. here is s&p has to say about chile:

Research:
Chile: Highly Rated but Lonely

Publication date: 17-Jun-2004
Credit Analyst: Joydeep Mukherji, New York (1) 212-438-7351

The Republic of Chile is rare example of a Latin American country that has prospered through open markets. It is the highest rated sovereign in Latin America, with a long-term foreign currency sovereign credit rating of `A`. The United Mexican States (`BBB-`; all ratings herein are long-term foreign currency sovereign credit ratings)) is the only other investment-grade country in Latin America. Chile`s immediate neighbors—the Republics of Peru (`BB-`), Bolivia (`B-`), and Argentina (`SD`) all have low, speculative-grade ratings or are now in default on their debt.

Chile`s high rating reflects its successful use of monetary, exchange-rate, and fiscal policies to reduce external vulnerability, increase economic flexibility, and sustain GDP growth. Rising standards of governance, a low public-debt burden, and a strong policy framework place Chile in the `A` category of sovereigns. However, Chile`s sovereign rating is constrained by a comparatively narrow economic base that leaves it vulnerable to sharp changes in the terms of trade and by the continued dependence of the private sector on external capital inflows.

The Chilean economy is expected to grow more than 5% in 2004, with domestic demand growing even faster at perhaps 7%. This growth will outpace that of Latin America, which is projected to realize 4% growth in 2004 after growing at an average of only 2% over the past five years. While the gap between Chile`s economic performance in 2004 and that of its neighbors is small, its long-term economic performance compared with the region`s is a better reflection of the growing divergence between their credit ratings.

...Chile underwent intense political turmoil in the 1970s and endured a prolonged period of military rule, in common with many Latin American countries. While under military rule, the country began to move away from its traditional policies of: 1) encouraging import substitution through strict controls over imports, and 2) discretionary government intervention in the economy, shifting instead toward open trade, privatization, and greater use of market forces in allocating economic resources. Chile also pioneered pension reform in the region, successfully setting up funded pension funds managed by the private sector, alleviating the government`s future debt burden, and spurring the growth of domestic capital markets.

here is a breakdown by country of remittance received by pak in 2004-05. note the amount recieved from countries that can be described as socialist:

http://jang.com.pk/thenews/

``...The inflow of remittances into Pakistan during May, 2005 from USA, UAE, Saudi Arabia, GCC countries (including Bahrain, Kuwait, Qatar and Sultanat-e-Oman), UK and EU countries amounted to $108.71 million, $71.24 million, $61.32 million, $45.90 million, $28.22 million and $9.01 million respectively...Remittances received from Canada, Australia, Switzerland, Norway, Japan and other countries during the last month (May, 2005) amounted to $30.49 million.

also from the profile of margaret thatcher:

http://www.time.com/time/time100/leaders/profile/thatcher3.html

...Among her first fights: a struggle against Britain`s out-of-control trade unions, which had destroyed three governments in succession. Thatcher turned the nation`s anti-union feeling into a handsome parliamentary majority and a mandate to restrict union privileges by a series of laws that effectively ended Britain`s trade-union problem once and for all. ``Who governs Britain?`` she famously asked as unions struggled for power. By 1980, everyone knew the answer: Thatcher governs.

Once the union citadel had been stormed, Thatcher quickly discovered that every area of the economy was open to judicious reform. Even as the rest of Europe toyed with socialism and state ownership, she set about privatizing the nationalized industries, which had been hitherto sacrosanct, no matter how inefficient. It worked. British Airways, an embarrassingly slovenly national carrier that very seldom showed a profit, was privatized and transformed into one of the world`s best and most profitable airlines. British Steel, which lost more than a billion pounds in its final years as a state concern, became the largest steel company in Europe.

By the mid-1980s, privatization was a new term in world government, and by the end of the decade more than 50 countries, on almost every continent, had set in motion privatization programs, floating loss-making public companies on the stock markets and in most cases transforming them into successful private-enterprise firms. Even left-oriented countries, which scorned the notion of privatization, began to reduce their public sector on the sly. Governments sent administrative and legal teams to Britain to study how it was done. It was perhaps Britain`s biggest contribution to practical economics in the world since J.M. Keynes invented ``Keynesianism,`` or even Adam Smith published The Wealth of Nations.