Arindam Banik

FDI, Skilled Labour and the Caribbean's Emerging Competitive Disadvantage

This article analyses why the Caribbean economies have not been able to take advantage of their physical proximity to the highly developed economies and the likely role of shortage of skilled labour in this. Our analysis reveals that the twin trends of growing need for FDI and lack of enough highly-skilled workers is giving rise to the emerging competitive disadvantage of the Caribbean countries. We show that in spite of having achieved high levels of human development, including high literacy levels, the higher education and skill development strategy of the region lacks vision especially in terms of the development of institutional aspects. The Caribbean economies may be able to partly neutralize the advantage typically enjoyed by large economies by making effective use of information technology, especially in the area of services. But the associated need for highly skilled and knowledge-intensive workers would require continuous upgrading of educational and training systems.

Project management and development of human capital in the Caribbean: three case studies

Purpose – The purpose of this research is to demonstrate the primacy of adequate human capital for successful completion of infrastructure projects in developing countries.Design/methodology/approach – A case study approach is used and three Caribbean infrastructure projects analyzed using a common framework to identify links between project success and availability of adequate human capital.Findings – Explains how the scarcity of human capital at executive and managerial levels may have disastrous consequences for successful project completion, particularly in developing countries.Research limitations/implications – Developing countries like those of the Caribbean that have done well in human development rankings can still suffer from scarcity of human capital.Practical implications – The funding agencies need to emphasize the estimation, provisioning and development of human capital for funded projects and ensure the continued availability of the same until project completion as much as they do for phys...

Aging population, emigration and growth in Barbados

Purpose - The purpose of this paper is to highlight the dual effect of demographic changes and emigration of young people on the economic growth of small Caribbean economies and the serious economic challenges arising therefrom. Design/methodology/approach - The paper develops a theoretical model leading to a hypothesis that is later tested on Barbados. Findings - Rising incomes have had very significant demographic changes in Barbados and other small Caribbean economies while proximity to large developed economies have contributed to emigration. Together, these have caused capital outflows from the economies as well as simultaneous shortage of skilled workers and high rates of overall unemployment. Research limitations/implications - Economic vulnerability of small states needs further detailed study. Practical implications - One implication for the small Caribbean economies is to restructure their labour market through sustained skill development programmes so as to reduce the skill gap between the demand and supply of specific skills. Originality/value - Although demographic shifts and their effects are widely studied, this paper highlights the special vulnerability of the small Caribbean economies to lower fertility, ageing and emigration.

Assessing the Barriers to Trade in Services in South Asia

This study aims to assess barriers to service trade in the education, health, telecom, transport, travel and tourism, and banking and insurance sectors of selected South Asian economies such as India, Sri Lanka, Pakistan, Nepal and Bangladesh, including both trade and domestic restrictions. The analysis is focused on the computation of aggregate and modal service trade restrictiveness indices (STRIs) by sector, drawing on information gathered based on detailed questionnaires. The conclusions highlight that while significant regulatory reforms have taken place in certain (for example Telecom) service sectors over the last decade, a broad range of restrictions still remain. The most significant change in these service sectors has been the lifting or softening of the constraints imposed on foreign equity participation. Interestingly, the economies in terms of regulatory reforms are more open to non-South Asian economies and not so much open to each other. However, reforms have had varying degrees of impact on market structure depending on the country and the sector.

Exogenous technological change and wage inequality in rural India: a theoretical note

Purpose - The purpose of this paper is to develop a theoretical model to explore the economic consequences of an exogenous skill-biased technological change. Design/methodology/approach - The paper develops a theoretical model based on assumptions and conditions that replicate those of a government-sponsored poverty reduction programme in India. Findings - The paper finds that, under certain stated conditions, wage inequality between artisans with improved toolkits and those without is likely to increase, while, under a different set of conditions, this is likely to decrease. Research limitations/implications - Actual wage inequality implications of specific exogenous skill-biased technological changes need to be studied to take the theoretical model further. Practical implications - One major implication is that, when government help is provided by way of an exogenous skill-biased technological change to a fraction of workers, it may have the unintended consequence of increasing wage inequality between the beneficiary and the non-beneficiary workers. In extreme cases, it may even lower the equilibrium wages of the non-beneficiary workers. Originality/value - The paper brings out the critical role of efficiency units of workers with skill-biased technology (artisans with improved toolkits) and those without these in determining the wage inequality between these categories of workers (artisans) based on a theoretical model of the trajectory along which the rural economy moves.

Foreign Investment: India

It is often argued that free trade is better than restricted trade, which in turn is better than no trade at all. This argument may not always apply to the FDI made by MNCs in the respective host countries. Sometimes, the interests of the MNCs are in conflict with those of the host country. An MNC is primarily interested in global profit maximization, which may not necessarily lead to greater investment and employment generation in the host country. Nevertheless, there is room for bargaining to bring about Pareto-improvement, which can be evidenced by gradual removal of restrictions on foreign investment in developing countries by the respective governments, to attract FDI.

Poverty and earning compulsions for the family have pushed children out of schools: A study in dropouts in basic education level in North-East India

Purpose - – The purpose of this paper is to examine factors that explain dropout of children from primary schools in Lohit district of Arunachal Pradesh, India. Design/methodology/approach - – The field survey was carried out in two phases, one, during January to April of 2010 and two, between August and November of 2011. The entire research work is based on stratified random sampling. The population in Lohit district is a set of tribal and non-tribal (mostly general) people. The district has two major tribes – Findings - – The authors find that children dropout of school is affected by number of factors such as earning compulsions, household work, access to school, school time not suitable and parental unawareness. Research limitations/implications - – It is imperative to mention here that “earning compulsion” can be described only as a derivative of the major problem of abject poverty. Practical implications - – By highlighting the role of appropriate intervention as well as incapacitation, the authors believe that the findings presented above shed light on some important factors that explain dropouts. Social implications - – The evidence provided in this paper underscores the importance of social interactions in analysing individual outcomes. Originality/value - – The findings may have significant bearings in reducing dropout rates in India.

The Effects of Exogenous Technological Change on Wage Inequality in Rural India

This article develops a theoretical model that studies the economic benefits to skilled rural artisans receiving toolkits under a given poverty reduction programme. The model encompasses the frameworks for understanding the relationship between the supply of skilled labour (artisans) with improved toolkits, changes in rural economic activities and the relative incomes. Consequently, it provides a natural setting to infer their empirical relevance. The counterfactual analysis from a large sample of data reveals that once the toolkits are provided to the rural skilled artisans, the artisans as a broad social group are more likely to have benefited from the programme. Less benefit can be, but is not necessarily, associated with poor education level and other assets owned by the rural artisans. More interestingly, while the real wages of skilled workers are expected to rise due to the use of skill-biased toolkits, the wages of unskilled workers may either remain unaffected or even fall. The issue of supply of skilled labour has, therefore, become an area of immense interest largely because of the rising inequality in the relative wages of skilled and unskilled labour.

Asian Infrastructure Investment Bank: Role and Implications for Emerging Asian Economies

The global financial crisis provides a number of reasons for Asia to develop infrastructure for regional connectivity, to achieve sustainable economic growth, strengthen competitiveness, create opportunities for business and reduce overdependence on the financial resources of the West. The Asian Development Bank (ADB) estimates infrastructure investment needs in the decade between 2010 and 2020 to be far more than what the World Bank or the ADB are able to finance. In this context, this chapter explores the background behind Asia creating the Asian Infrastructure Investment Bank (AIIB) and examines the infrastructure investment milieu in the Asia-Pacific Region. It puts forth the framework, purpose and functions of the AIIB along with the challenges faced with respect to the establishment of the bank in the existing global multilateral financial framework. The AIIB provides an opportunity for Asian economies that have long been under-represented in the existing global multilateral financial frameworks, to look to the bank to meet their infrastructure investment needs, provided the lending terms are competitive.

Exchange Rate, Foreign Borrowing and Economic Stability in Barbados

This paper shows how sound macro-economic management generates reputation-building behaviour in the international lending market. While current account deficits need not imply an imminent devaluation, their impact on foreign exchange reserves and the manner in which they are funded are important analytical factors in explaining credit worthiness and foreign borrowing. It suggests that the amount borrowed from the international market in the current year is due to macro-outcomes in the lagged year. Similar result appears to hold for exchange rate, external debt and change in foreign reserve.