When developing economies take off, they can grow with dazzling speed. Both China and India are currently experiencing rapid expansion as thrusting young businesses serve massively underdeveloped domestic markets, while using their new dynamic and low-cost manufacturing bases to win lucrative overseas contracts from long-established competitors.
The bubbling confidence in Shanghai or Mumbai is almost palpable. Commercial genius, for so many decades constrained by the dead hand of bureaucracy or political ideology, has been unleashed. There is considerable pride in the remarkable strides that have already been made by two burgeoning economies, which seem set to dominate the 21st century.
Unfortunately this pell-mell growth of business is rapidly outpacing the existing infrastructure and attempts to improve it. Communications, so essential for successful global businesses, have not proved a problem because the private sector has rushed to provide alternatives to the underinvested public-sector infrastructure. Nor has power necessarily been a challenge, since factories with unstable local supplies anyway have their own generators to ensure that production is not interrupted. It is, however, in the more basic infrastructure, such as water and waste disposal, road and rail construction and highway maintenance, especially in busy downtown urban areas, that both India and China are falling short. Bangalore, the “garden city” of India, is also the heartland of the Indian IT industry. Mumbai prides itself as the epicenter of Indian trade and capital markets. Yet in the last 18 months both great cities have been brought to juddering halt by serious flooding. In each case, allegedly improved floodwater drainage schemes failed in the face of torrential rain. The result was catastrophic inundation that crippled businesses.
A serious lack of local government investment coupled with bureaucratic lassitude was identified among the causes of these two humiliating disasters. The world over, business beats to a far more urgent rhythm than government. But business also has the advantage of largely lower-cost investment decisions that are funded out of rapid profits. Governments cannot move so fast or so easily. It is, therefore, in the interests of business to quit blaming bureaucrats for incompetence and lack of vision. A way must be found to work with them to make rapid and substantial improvements to all the basic infrastructural services that more developed economies take for granted. This support might take the form of direct investment by business, either via partnerships with local government or full-blooded privatization. It might equally come through higher corporate taxation or via subscription to bonds raised in the capital markets to fund long-overdue investments.
What is essential is that business lines up with the local and national authorities to help build the efficient cities, services and transport infrastructure that will allow it to continue to expand and prosper. Businessmen and civil servants must support, not blame each other.
