US relaxes grip on Internet

Quickly following the rise of G20,The US government has relaxed its control over how the internet is run.

It has signed a four-page "affirmation of commitments" with the net regulator Icann, giving the body autonomy for the first time. Previous agreements gave the US close oversight of Icann - drawing criticism from other countries and groups.The new agreement comes into effect on 1 October, exactly 40 years since the first two computers were connected on the prototype of the net.

'Global system'

The Internet Corporation for Assigned Names and Numbers (Icann) is a not-for-profit private sector corporation - set up by the US government - to oversee critical parts of the internet, such as the top-level domain (TLD) name system. Top level domains include .com and .uk.

can Sept'09 be marked as the start of globalization 2.0?

Another Indian Success Story - Auto Clusters

From Swaminomics : India has overtaken China as a car exporter this year, exporting 201,138 cars in January-July against China’s 164,800. What’s more, Indian exports in this period went up 18%, while China’s fell by 60%.

Of other big Asian exporters, Korea’s exports have fallen 31% and Thailand’s 43%. In a terrible global recession, India is the only country with zooming exports. Hyundai has long made India an export hub for small cars, and aims to export 300,000 India-made cars this year. Maruti-Suzuki comes second in exports, with Tata, Mahindra and others well behind. Nissan is about to build a new factory in India specifically for exports. India looks like exporting half a million cars in 2009-10, and should cross the million mark within five years.

Mr. Aiyar feels that cheaper and quicker R&D talent is what has clinched the auto industry leadership for India. However Indian Auto Industry is also known for its Clusters (like in Coimbatore and Chennai) which are low cost sweatshops. Mr. Aiyar also points out that Indian Auto Industry was not planned top-down strategic but emerged bottom up cut-throat competition. This bottom up emergence is the growth of the small and medium size entrepreneur driven clusters growth.

India set to ride on 3rd Wave of IT Outsourcing

According to Sudhakar Ram is chairman and managing director of Mastek, a Mumbai-based IT solutions company, Another wave of IT outsourcing is brewing.

Here is a summary of his article from businessweek:

Over the last 30 years, the Indian IT outsourcing industry has gone through two stages. The first wave was characterized by staff augmentation—"body shopping," as it was then called—and established that Indian IT professionals were as good as their Western counterparts. The second wave saw the establishment of offshore development centers. Started during the 1990s to fix the Y2K bug, these centers evolved to deliver software maintenance and incremental developmental services for a fraction of the cost U.S. companies would pay for similar work at home. Second-wave firms now also deliver ERP implementation and maintenance, infrastructure management, and testing services. Today, India exports more than $25 billion of IT outsourcing services and is the mainstream destination for offshore programming. It commands more than a 70% share of the global offshore outsourcing market.

Over the last few years, we have seen a third wave emerge: a growing reliance on outsourcing companies for high-end strategic work. Indian firms have won a significant portion of the work through strategic outsourcing deals like the one announced recently with BP (BP). Large Indian IT services firms are today seen as being on a par with companies like IBM (IBM) and Accenture (ACN) for delivering strategic cost advantages.

Leveraging Third-Wave Indian IT Companies

While the problems of legacy systems have been known for quite some time, corporations have been reluctant to address this issue for two reasons—risks and costs.

The risks associated with legacy modernization are twofold: requirements management and large program execution. Requirements management is a risk because of scant organizational knowledge and documentation about these core legacy systems. Many have tried reverse engineering with little success. In many ways, reverse-engineering software code is like assembling a jigsaw puzzle. Imagine putting together a 1,000-piece puzzle without the picture on the box.

The only viable method for addressing the requirements challenge is a combination of forward engineering, reverse engineering, and pragmatic business support. In brief, this approach entails strong teams of local domain and subject matter experts re-specifying requirements in conjunction with the business users. This effort must be supported by teams of business analysts and technical analysts who reverse-engineer the software code. From time to time, executive support must make pragmatic decisions on inventing new business rules/logic where the old rules are indecipherable or obsolete.

Third Wave Indian firms recognize this need for multiskilled teams. They have strong domain experts and subject matter experts in the countries where they operate, supplementing the technical resources from India. They recognize that the Second Wave approach of working to a customer-given specification will work for application maintenance and minor enhancements, but will fail in large-scale transformation programs. These firms bring in deep domain expertise and are committed to co-creating the application vision in collaboration with their customers. They work side by side, in an iterative fashion, to develop and deliver the ultimate solutions.

In the area of large program expertise, Third Wave firms have the track record of much higher rates of successful delivery, largely due to their mature software engineering processes. The offshore model brings in cost efficiencies which make the legacy transformation programs more affordable. In addition, the collaborative requirements and design processes actually help in increasing the proportion of work that can be performed offshore, making the economics even more attractive.

In summary, it is imperative for large U.S. and European financial institutions to modernize their legacy IT infrastructure in order to survive, innovate, and flourish in the coming years. The costs and risks associated with embarking on such major transformation programs locally may be prohibitive. Third Wave Indian firms offer a more attractive alternative to deliver these programs successfully.

Ring of Fire and Fight against Red Terror

Popular Perception so far has been that India has significantly gained from globalization and was on the way of becoming a Economic Superpower while its neighbours had all failed.

Not long ago, Citing unrest in other neighbouring countries like Pakistan, Nepal, Myanmar, Sri Lanka and Bangladesh, Chidambaram said, India is in the middle of a "fire ring". "We are in the middle of fire ring. But we should not be singed in that big fire. We are trying to douse the fire and we don't want it to spill over, although it has already spilled over a bit in the form of home-grown terror outfits like the Indian Mujahideen," he said.

Yesterday, this myth is officially shattered by Prime Minister Manmohan singh who stated that the government is struggling against the naxalites in the north and north eastern regions of India. Expressing concern over increasing incidents of Naxal violence which he termed as the "gravest internal security threat", Singh regretted that the level of violence in the affected states continued to rise despite ongoing efforts to contain it.

Contending that Naxalism cannot be treated as a law and order problem, he said dealing with Maoists requires a "nuanced" strategy, a "holistic approach". "Despite its sanguinary nature, the movement manages to retain the support of a section of the tribal communities and the poorest of the poor in many affected areas. It has influence among certain sections of civil society, the intelligentsia and youth. It still retains a certain elan. All this adds to the complexity of the problem," Singh said. Referring to insurgency in the north-east, he said the situation in the region is "far from comfortable", especially in Manipur and Assam where current levels of violence were cause for concern.

These are regions in India that have not benefitted at all like the Indian neighboring states. A drastic policy overhauling is to made at the earliest. The review of the results of SEZs in India
is a good start. Such a review is already being held in Maharastra.

Asking state government to take the review of special economic zone (SEZ) policy, state planning commission has observed SEZs will lead to an imbalance growth in the state. Executive chairman of the Maharashtra's planning commission Ratnakar Mahajan released the outline of the targets state wishes to achieve in the 11th plan.

Out of 400 odd SEZs coming up in the country maximum are coming up in Maharashtra. Around 73 SEZs are proposed in the state, out of which 48 have so far received an in-principle approval from the state government.In this backdrop, a negative comment on SEZs from the state planning commission is going to provide much needed ammunition to opponents of SEZs. Most of the SEZs are coming up in the golden triangle of Mumbai-Pune-Nashik, which is already better developed area compared to other parts of the state. With the forthcoming SEZs in these areas, it is no doubt state's industrial growth will be multifold, but it will create further regional imbalance in the state, says the chapter on the SEZ.

Is globalization about to be rolled back in India?

Shrinking Credit Markets in US

Total U.S. consumer credit fell by a record $21.6 billion in July, Federal Reserve data showed on Tuesday, the latest hint household spending would be too weak to drive the economy's recovery from recession. Credit is still shrinking and that is going to have an impact on consumption. As such, this remains an important part of the recovery since without the smooth functioning of credit markets, the recovery may stall.

What does this mean?

1. The recovery, which many economists believe is underway, will be largely driven by goods restocking, after inventories were slashed to record low levels, government spending and historic low interest rates

2. There is no way that this recovery can be sustained unless we see a pickup in household spending. The big question out there is will we see Americans spend again to keep this recovery alive.

For Globalization, this indicator again raises the age old question : No global recovery till world finds a replacement for US consumers

BRIC's pledge $80 billion to IMF

The BRIC countries have pledged $80 billion to the IMF. China is providing $50 billion, India $10 billion, Russia $10 billion and Brazil another $10 billion. The BRIC is bargaining more say in running the Global Economy. The four countries have sought a greater say in the running of the IMF and other international financial institutions such as the World Bank, including a larger share of quotas and voting, said Brazil's Finance Minister Guido Mantega.

Some of the items to that seem to be discussed are :

1. Protectionism remains a real threat to the global economy and should be avoided, both in direct and indirect forms," said a communique by the four countries, collectively referred to as BRIC economies.

2. "We believe governments should work toward prompt and successful conclusion of the World Trade Organisation (WTO) Doha round in a way that ensures an ambitious, comprehensive and balanced outcome," the communique said

3. We propose the setting of a target for that shift of the order of 7 percent in the IMF and 6 percent in the World Bank Group so as to reach an equitable distribution of voting power between advanced and developing countries," the communique said.

"The US position paper has mentioned a figure of five percent, which in any case is very close to the BRIC position. It's virtually the same," said the source, referring to the shift demanded in the voting rights in IMF and the World Bank.

I think that parking all the billions of US dollars held by the BRIC in IMF is in the interest of both the developed and developing countries as it prevents devaluation of the dollars. If the US yielded to the BRIC demands, it would start of the globalization 3.0. Some times, there is a glimmer of hope of equality in the global economy. I wonder why global media or at least BRIC media can't drum up this story and put the people pressure to ensure that it happens for the betterment of all.

Related

Dollar role in Indian FX basket would change

Am I missing something?

is the Glass half full and half empty?

Reuters Reports:

U.S. job losses fell to their lowest level in a year last month, but the unemployment rate jumped to a 26-year high, painting a mixed picture of an economic recovery hindered by weakness in the labor market.

The Labor Department said on Friday the jobless rate climbed to 9.7 percent in August, the highest since June 1983. The bigger-than-expected rise suggested weak consumer spending would impede recovery from the worst slump in seven decades.

Employers cut 216,000 jobs, the smallest since August 2008, but the department revised upward the June and July job losses by 49,000.

Global recession ending: OECD

Yet another declaration that Global Recession is over.. does it means that while Indian Economy has shrunk, the global economy has expanded?

Reuters: The global recession is coming to an end faster than thought just a few months ago and may already be over, according to forecasts published by the Organization for Economic Co-operation and Development on Thursday.

The recovery may even prove a little stronger than previously predicted, OECD chief economist Jorgen Elmeskov told Reuters in an interview where he elaborated on the forecasts for several key economies.

"Compared with expectations a few months ago, we now have a recovery which ... may be coming a little earlier and it may be slightly stronger because financial conditions have improved more rapidly than we assumed a few months ago," Elmeskov said.

Further decline in Indian exports

BBC : India's exports declined at an annual rate of 28% in July, their tenth consecutive monthly fall, as the weak global economy continues to hit demand.