Global Food Crisis: The Struggle Between Biofuel and Famine

In a previous entry entitled, "Redirecting India's Economy: Shifting Dependence from a Service-Based Economy," I explored the blogosphere to discover the new developments in India being debated while leaving my personal comments and questions to contribute to the discourse. This week, I have decided to blog about the intensifying topic of the global food crisis (see graphic, right) that is making headlines across the world. The major debate takes place as an international financial crisis has led to rising commodity prices, which have inflated food prices to levels unaffordable for the rural poor in underdeveloped countries that exist on less than $1 a day. To better understand the gravity of this situation, statistics report that the world experienced a 181% increase in global wheat prices with a 83% rise in overall global food prices over the thirty six months leading up to February 2008. In fact, the World Bank is meeting today to discuss an international plan proposed to reduce hunger by providing food aid to desperate people. Meanwhile, more economists are pointing to the surge in biofuel production as the principle, preventable culprit in rising food costs. In an effort to combat global warming, biofuel has become big business in countries looking to reduce their dependence on foreign oil. Incentives through government subsidies have sparked the allocation of domestic agriculture towards the production of biofuels, such as ethanol and biodiesel. The tradeoff of utilizing the crop for fuel instead of its traditional purpose as a food source has contributed to the higher global food prices, which have resulted in violent protests from Brazil to Egypt. As a daily reader of international news that analyzes the effects of events on the BRIC nations, I became attracted to this debate and chose to offer my personal thoughts on two highly regarded blogs. The first post I commented on, Biofuels: A Threat and a Cause of World Hunger is written by Maggie Thornton, a professional journalist who produces daily entries on the Maggie's Notebook blog. While she only addresses biofuel production as the root problem to world famine, I found a second external post entitled, Left’s Favorite Economist Paul Krugman: Biofuels Are A Scam, which provides a diversified set of reasons that have created this global hunger. Published by Iraq war veteran, Pat Dollard, on the Pat Dollard blog, this entry originates from an excerpt taken from an opinions article written by the reputable economist, Paul Krugman, of the New York Times. In addition to publishing my comments directly on the authors’ respective blogs, I have also posted these comments below.

"Biofuels: A Threat and a Cause of World Hunger"
Comment:
Thank you for a concisely constructed post on the evil effects of biofuel production on global famine. You clearly have conducted extensive research and gathered relevant quotes to support your argument against biofuels. I believe the unique structure of your entry, which incorporates passages from various secondary sources, is an effective method to engage your readers. By providing extracts from these external websites, which you justify and support with your own opinion, the readers are presented with a multitude of viewpoints on which they can accept or reject on their own discretion. For example, you take excellent snippets of information from the NY Times and the UK Telegraph which validate the credibility in your underlying argument. Having read other articles regarding this topic, I was pleasantly surprised to witness a fellow blogger lambasting an American biodiesel company and the hypocrisy of former vice president, Al Gore. I agree with your remark that in both cases, it is all about the money. Despite asserting to be an environmentally friendly company and compensating his own carbon footstep by unscrupulously purchasing carbon credits respectively, you accurately disprove their illegitimate claims. Given the ulterior motive of money that seems to be a common theme amongst governments and politicians around the world, what do you think should be done to provide greater transparency in political decision making? It is a sad reality that most Americans are not even aware of the negative effects of biofuel production (see image, left), such as starvation in developing countries, which is why I am glad that this crisis has found itself in the headlines of news media around the world lately. Overall, this is a strong post that addresses critical issues, but could benefit from the following suggestion. Although your first excerpt from the NY Times does mention both rising energy costs and a growing middle class in India and China as forces accounting for increasing food prices, you did not personally elaborate on these alternative causes nor did you consider any additional reasons, such as droughts and poor political policies. I feel your post could have been even stronger if you identified these factors, instead of solely focusing on biofuel production as the primary culprit. At this point in time, do you think it is more important to reduce reliance on foreign oil through biofuel subsidies or prioritize the same agricultural land for food consumption needs to prevent future global famines?

"Left’s Favorite Economist Paul Krugman: Biofuels Are A Scam"
Comment:
I would like to thank you for your clear cut analysis regarding the current world hunger crisis. This topic is a emerging global dilemma that has caught my interest in the past couple of weeks. I had not previously considered the "biofuel scam," which critics blame for the starvation that is currently plaguing the world, until I came across your well construed post. As evidence from the article's persuasive tone, I firmly believe your ability to exude charisma through your prose is a quality trait that distinguishes you as a successful writer from others. In terms of the context, I also concur with the four key causes of this global emergency: the increased demand in emerging markets, high oil prices, bad weather, and most importantly, the rise in subsidized biofuel production. While I believe the facts and statistics that you incorporated in your entry are necessary elements, some of them are not well supported and seem a bit deceiving. For example, you claim that Brazil's use of ethanol from sugar cane actually "accelerates the pace of climate change by promoting deforestation." Even though ethanol production in Brazil may be indirectly related to global warming due to deforestation, you do not provide any empirical evidence supporting your assertion. How can you be so sure that Brazil's ethanol initiatives contribute more to global warming, rather than serving their intended objective of abating it? Although I understand the logic behind your statements, you lack well supported facts that would make your argument much more plausible. By integrating more numerical statistics throughout your entry that are linked to external sources, I am certain your work will become even more solid than it already is. Aside from my suggestions, I have much more to gain than criticize about this topic, such as learning about the shrinking of precautionary grain inventories. In response to this current food shortage, what are your thoughts on implementing mandatory grain reserves in the supplier countries to prevent similar situations from occurring in the future? Lastly, I admire your initiative in providing valid solutions in your closing remarks, as I too, hope to see a pushback against biofuel to ensure that no human has to starve to death because of excessively inflated food prices.

The Rising Star: All Eyes on Brazil

In a country where people give any excuse to party, soccer is considered a religion, and much of life is spent on the beach, Brazil is not only an attractive destination for tourists, but also for foreign investment. In 2007, total foreign direct investment in Brazil amounted to a new record of $34.6 billion. Unlike the other BRIC nations, Brazil differentiates itself with its stability, democracy, neutrality with other countries, and a lower GDP growth rate of 5.3%; the reason for this smaller number is due to the fact that it is wealthier and more urbanized than India and China. Under the presidency of Luiz Inácio Lula da Silva, as seen in the graphic to the right, since 2002, Brazil has benefited from a period of political and economic stability. As a result, president Lula has received a high approval rating of 66.8% from voting-age Brazilians. Much of this support has come from the poorer classes of society that have experienced heightened standards of living largely due to governmental handouts. On an economic level, the inflation rate has remained relatively low at around 4%, which has been implemented to allow Brazil to maintain levels of long-term sustainable growth. Its main source of international influence derives from its vast reserves of natural resources, which enable it to be an export-driven nation that ships goods, such as soya, ethanol, iron ore, beef, and machinery. Over the past couple of years, Brazil's success in exports was helped in part by productivity gains coupled with high commodity prices around the world. As the global demand for natural resources continues to escalate, this South American superpower sits in a secure and advantageous position to meet these needs for years to come. However, in order to capitalize on its foreseeable prosperity in the future, Brazil must address some of the major issues confronting it, such as the endangered Amazon rain forest, corruption, crime, and insufficient infrastructure.

With one of the largest reservoirs of carbon dioxide, Brazil's Amazon rain forest plays a critical role in regulating earth's ecosystem by abating the effects of global warming. Unfortunately, the Amazon is being deforested at an alarming rate as it is seen as a source of inexpensive land for farmers to cultivate sugar cane and soybeans on, and for ranchers to use as pastures for cattle. It is not surprising that 75% of Brazil's carbon emissions are attributed to the destruction of the rain forest. The irrevocable costs of environmental devastation do not justify further expansion into the country's northwest to satisfy demands for grazing land and agriculture.The prevention of illegal deforestation must be made a priority not only for Brazil, but also for the rest of the world because the worldwide effects will take a much more serious toll on planet earth than on this single nation alone. To resolve this problem, the Brazilian government and forest preservation organizations around the world have to realize that the net environmental benefits of preventing further annihilation of the Amazon outweigh any economics profits in the long-term. One solution would be to create carbon-credit markets, whereby the government sequesters intact areas of the forest while selling carbon credits to individuals, companies, and countries interested in lowering their carbon footprints. Meanwhile, Brazil must take more stringent measures to avert and penalize the bribing of Amazonian governors for allowing tracts of land in the Amazon to be illegally sold off.

In relation to bribery, corruption remains a major challenge facing Brazil's development. Similar to other third world countries, government officials are often paid to permit the occurrence of illegal activities or to expedite otherwise time-consuming procedures, such as the processing of official documents. In order to reduce the amount of corruption, it is in the nation's best interest to simultaneously minimize the amount of bureaucracy that impinges on the efficiency of doing business in Brazil. The general mentality in Brazil is that people are rewarded for their "ability to navigate around the bureaucracy," summarizes economist Simeon Djankov. By implanting fewer bureaucratic controls, there will be less of an incentive for businessmen and officials to break the law in order to carry out deals. In correlation with corruption is the issue of crime, which has plagued the nation's largest cities. One of the most crime-ridden areas is Rocinha, the favela (shantytown) pictured to the left, which is violently ruled by gangs of drug dealers. Through a stronger educational system, more employment opportunities, and a greater effort to dissolve gang related activities, the number of prison entrants will assuredly decrease as crime falls. The overpopulated penitentiaries, where gang chiefs operate and make orders from inside, are "human warehouses, universities for crime, factories for revolt," comments prosecutor Fernando Capez. It is clear that eliminating corruption and crime go hand in hand and will require bold steps on the government's behalf to ensure a safe and ethical society in Brazil's future.

The last key success factor that Brazil encounters is improving its infrastructure. The money that is received from its export-driven revenue should be reinvested into the roads, ports, and other foundations that help transport these same goods. Infrastructure investment does not even account for 2% of its GDP, which ideally should be at least 3%. Transportation costs amount to nearly 13% of Brazil's GDP compared to 8% in the US, a clear indicator that room for improvement exists. To emphasize the gravity of this issue, an interesting statistic predicts that by 2013, the consumption of ethanol in Brazil will double. If this is true, the country will need to invest $90 billion in new mills as well as $2 billion for railways, pipelines, and storage. As a byproduct to build up its framework, not only will greater transportation efficiencies arise, but also the creation of jobs that will help shrink its high unemployment rate of around 10%. Brazil's international influence can be attributed to the currently inflated commodity prices; however, its long run success depends on the critical infrastructure needed to accommodate this future prosperity. The country's extensive exigencies for road and rail networks is just one of several proposals needed for Brazil to maintain sustainable growth throughout this century. Bestowed with a plethora of natural resources, evidence verifies there is much untapped potential to ensure its emergence as a global superpower. While it is important for Brazil to strategically develop its infrastructure, lower corruption and crime rates, and preserve the Amazon, perhaps the latter is the most difficult challenge confronting Brazil. An undesirable consequence shared by all the flourishing BRICs is the inevitable depletion of resources and the environment. For Brazil, the fate of its long-term success depends on how well it can support its accelerated growth while concurrently making strenuous efforts to prevent the destruction of its rain forest.

Critical Resources: Diversifying BRIC Knowledge with Think Tanks

This week, I chose to further explore the internet in search of additional resources that will compliment the content I publish in my blog posts as well as provide you, my reader, with alternative sources of data that may be useful for your further explorations of the BRIC nations. Using the Webby and IMSA criteria when selecting the various websites and blogs, I have added ten more links to the linkroll on the right. I will now briefly evaluate each of these distinguished webpages, which primarily consist of think tanks that serve as a great tool for information gathering. The Center for Global Development, one of its photos to the left, clearly has a diverse scope of research concerning global poverty and inequality, but lacks a comprehensive regions section that could benefit from an ability to search on a per country basis. An interactive section that strengthens the site is its public blog, where intellectuals actively discuss their opinions and ideas. A think tank that actually produces most of its content via its blog is the Globalisation Institute, which compares and contrasts the effects of globalization on developing countries. Although new posts are made almost bi-weekly, the entries are made exclusively by only a couple writers while no dialogue is encouraged through a comments section. Aesthetically the site appears unsophisticated, especially with the detracting Google ads on the right column. Foreign Direct Investment is the online portal for its magazine that covers themes relating to cross-border investments. While this think tank releases priceless insight relevant to the BRICs, it should definitely consider revamping its lackluster visual design. An example of a clean and modern looking webpage is that of the Institute of Economic Affairs. I highly recommend this site because it relays issues of concern in a manner that is sensitive to a broad group of readers, such as politicians, students, journalists, and businessmen. The Peterson Institute for International Economics is a well established organization that divulges several forms of publication regarding global economics. Despite a homepage that creatively introduces leading hot topics around the world, its follow-up links should be better optimized to ensure that nuances are fixed, such as making readings chronological. A website with a similar theme is The World Economic Forum, which discusses international economic policies at its worldwide conferences. It has a superb layout with effective pull down menus and a refined navigation tool. The World Resources Institute provides a more humanitarian and environmental outlook on global trends which is imperative to consider when combating the negative byproducts of developing nations. In addition to focusing more on pinpointing regional issues, I feel the site should more importantly focus on reorganizing the awkwardly placed sections on its homepage. The Center for Strategic & International Studies releases a plethora of research regarding global challenges, all of which come from highly credible sources. The only rant I have about the site is that it lacks interactivity in any form between its writers and viewers.

Aside from eight think tank recommendations that I gave above, I have added a news publication and blog link that will also help diversify my readers' research options on the BRICs. The Financial Times Emerging Markets is a site that I often frequent and constantly rely on to learn of new developments in the marketplace. This webpage compiles in depth content and interactive features that are not easily located by a reader's eyes, which could be relocated through a succinct sections menu. An excellent blog that I stumbled up mistakenly when exploring the web is NextBillion.net, which discusses sustainable business in underdeveloped countries. While it is clear that this is a professionally executed blog with superior content, it could probably appear even more credible with a layout that has a more serious tone and is more horizontally spread to eliminate excessive vertical scrolling. Overall, I believe this week's focus on locating informative think tanks to further my research on the BRICs was a success.

A New President: Future Changes in Russia?

Russia experienced a solid annual GDP growth rate of 7% during the last eight years under the control of former president, Vladimir Putin. With public approval ratings as high as 81%, Russians claim him responsible for the rise in higher living standards and the reemergence of Russia onto the world scene. On March 1, Dmitry Medvedev, seen with Putin in the image to the right, was elected to be the presidential successor after winning over 70% of the votes. Being handpicked and directly supported by Putin to inherit the throne, Medvedev has much to prove that he is competent to continue and build on the legacy that Putin has established. However, there are some prevalent shortcomings with Russia that Medvedev must consider and amend during his tenure, such as its legal structure, overreliance on petrodollars, and development of its infrastructure. Whether he does exercise power that is independent from the influence of Putin and how effective he is in implementing his policies will determine the extent to which Russia will be a world power.

In 2003 the destruction of Yukos, Russia’s largest oil company, and the imprisonment of its owner, Mikhail Khodorkovsky, on accounts of fraud and tax evasion negated any moves to strengthen Russia’s legal system. Consequently, this symbolic move to crackdown on Russia’s oligarchs has instilled a sense of trepidation in many business owners. Putin’s economic advisor, Andrei Illarionov, best summarizes the past and current feelings toward its judicial system when he states, “Instead of cultivating the rule of law, as Mr. Putin promised, Russia was subjected to the rule of thugs.” A byproduct of the backward legal system is the rampant corruption that has risen to worse levels since the 1990s. Unfortunately, it is still common to read news of the mafia carrying out illegal operations and making mob hits. Although the Kremlin acts as an activist against corruption, media headlines often verify the inextricable link between the government and the mafia. On the corruption perceptions index, Russia ranks a mere 143 out of the 179 countries surveyed. At such a poor standing, eradicating corruption is an imperative step for Russia to become a more globally reputable nation.

Reforms have to be made to Russia’s judicial system to infuse a stronger sense of trust between the business people and its leaders, which will assuredly promote economic growth and healthy competition. Widespread corruption has served as a hindrance to reaching the country’s full potential. One of the primary reasons why corruption is so pervasive stems from the high levels of regulation and bureaucracy that have remained with Russia since the fall of the Soviet Union. In Russia it is accepted that in order to get anything done, forms of bribery have to be given to officials to turn a blind eye to the rules, as seen in the following quote from a citizen, “If everyone followed every rule and instruction in Russia, the country would grind to a halt.” The more insidious form of bribery comes directly from the Kremlin, which entails state officials and their friends acting in collusion in unscrupulous business deals. The extent to which Medvedev and his administration can abate corruption is a fundamental challenge that the rest of the world will be expecting him to stand up to, in hopes of being perceived as a more lawful and first world superpower.

The collapse of the Soviet Union led to the privatization of large scale state run corporations, usually in the oil, gas, mining, and metal production industries. The ability of powerful businesspeople to acquire, reorganize, and turn poorly run Soviet-era assets into lucrative entities is the primary reason for Russia’s influential economic position today. The fact that its economy is still supported by a few of these giant companies poses a problem in terms of insufficient competition, bureaucracy, and lack of diversification. According to the World Bank, small and medium sized businesses make up less than 15% of the GDP, while only 5% of firms have been newly formed in the past ten years. The limited effect that these startup companies have on large incumbents to generate greater productivity is a clear factor of weak competition. Despite foreign direct investment doubling to $27.8 billion last year, this amount accounts for only 2.2% of its GDP. Investment from overseas investors could be significantly increased if Russia were to eliminate the unnecessary red tape that is deterring them from recognizing its true value.

According to the Institute of Economic Analysis, oil and gas made up 31.6% of Russia’s GDP in 2007, up from 12.7% in 1999. Oil, being refined in the graphic to the left, has saturated its economy due to its overdependence on natural resources, which make up 80% of the nation’s exports. A major problem is occurring as petrodollars are flowing into Russia and are raising the disposable income of consumers; however, domestic manufacturing is growing at a much slower rate. The ruble has been appreciating rapidly and as a result, has hurt Russian producers. In addition, there is a lower demand for Russian produced goods that are often seen as low quality, compared to the highly desired foreign brands. The emergence of Russia’s state capitalism is attributed mainly to a combination of its appreciating currency and rising oil prices around the world. The reality is that no economy can have sustainable growth in the long run if it is over reliant on oil; the nature of this commodity creates instability because it is highly volatile in the global markets, especially for a natural resource that will eventually be depleted. In order to capture the vision of a promising economic outlook, Russia must make every effort to diversify from petrodollars and concentrate on developing its domestic manufacturing, which will serve as an alternative stimulus to its economy. To build upon its domestic production capabilities, Russia should focus on developing its infrastructure.

A common theme amongst the BRIC nations is the necessity of solid public services that should be able to support high levels of growth in developing nations. Although it has been seventeen years since the demise of the Soviet Union, Russia’s infrastructure is still the key piece of the puzzle that is missing. Encompassing the largest land mass of any country, Russia faces a colossal challenge to renovating and constructing roads and highways that will allow for the efficient transportation of goods and humans. One initiative, that the government has proposed to spend $170 billion on, is its long-term Modernization of the Transportation Infrastructure in Russia program. This proposal led to a 80% increase from 2006 to 2007 in the federal budget for road building. The Kremlin’s ambitious plans for improving its streets and highways is just one of the many initiatives needed for Russia to sustain its future growth through diversifying its oil dependent economy and ensure its emergence as a global superpower. Hopefully under the reign of Medvedev will Russia be able to reform its legal system, diversify its economy, and develop its infrastructure.

Building BRICs: Gathering Essential Knowledge for the Future

As I was exploring the Web in search for new material, I decided to share some of the superlative resources regarding the BRIC countries that would also serve as a repository for my blog. I selected ten websites that are a combination of organizations, news sites, and blogs that I have included to my linkroll on the right hand column of my blog. The first arena of information that I will address are the global organizations that provide more broad content and statistics about the BRIC nations. First is the Asian Development Bank, which disseminates news and publications about fighting poverty in developing Asian countries. The statistics and reports on the future outlook of two of the BRICs, India and China, contain detailed data with supporting graphs and charts. Another organization with a similar objective of combating poverty is the Department for International Development, which has profiles for each of the BRICs. Despite its ease of navigation and user friendly layout, the website lacks sufficient and up-to-date news and publications for each country. If it could maintain its site with current issues, this association would be a more solid and reliable resource to refer to. The well renown International Monetary Fund has a superb website with a great user interface. It is consistently well organized and the amount of information is not visually overwhelming throughout the website. In addition, it offers an extensive database of publications, news, and data which is why I prioritize this website when searching for information. Rounding up the organizations is the World Bank, which allows for valuable interaction for its users. The e-discussions, blogs, and polls act as mediums of communication to foster meaningful discussion on the latest developments of the BRICs. These arenas of user involvement could be improved if they were linked on the navigation bar instead of being situated towards the bottom of the homepage. The news website, Emerging Markets, is a great hub that connects its viewers with financial news about developing economies; however, it requires a free subscription which is a deterrence for many news readers. Moreover, the site prevents in depth navigation while its appearance is too bland. It was difficult to locate websites that solely publish news on the BRICs. Nevertheless, I did come across Russia BRIC Countries News which acts as a type of web crawler for news articles about the BRIC nations. While this is not a succinct and well established website, it does release highly relevant and current news. A weekly published journal that I have read for several years is The Economist, which provides accurate and compelling insight on developments around the world with frequent witty caricatures, such as the image to the right. Its website is an indispensible tool for gathering information and for encouraging healthy debate in its opinions section. In a personal effort to promote the growing use of blogs as a useful resource, I chose three blogs discussing financial developments in emerging markets. The Analysis of Economies, Financial Markets, and Stock Markets Around the World blog has thought provoking opinions with numerous statistics to support it. With a large archive of information, this blog would generate more traffic if it had more frequent posts and if consideration was put into changing the site’s layout and heading. ETFolio.com is a blog that emphasizes its slogan, “Smart, Global, Powerful.” Its sharp design and supporting side columns verify the feeling and purpose of this blog, which is also used as a marketing platform to attract potential customers to the company’s financial services. A similar valuable resource to collecting data on the BRICs is the JetFin Emerging Markets Blog, which serves as a forum for interactive commentary on important global issues. In my opinion, the blog has useful labels, linkroll, and archive sections, but could benefit aesthetically if it incorporated vivid graphics into its posts. Perusing the web and successfully locating informative websites relating to the BRIC nations was a worthy learning experience. Not only were the homepages of organizations, news sites, and blogs helpful tools to me, but I hope they will serve as convenient external resources for you as well.

Redirecting India's Economy: Shifting Dependence from a Service-Based Economy

With India's explosive growth making world headlines every week, I decided to focus this week's blog post on India after reading two news articles from the past few days of foreign corporations investing in India's future. The first article announces NYSE Euronext's decision to buy a 5% stake in the Multi Commodity Exchange (MCX), Indian's largest commodity trading platform for $55 million. Similar to NYSE Euronext's increased expression of interest in India is the press release from the second article discussing the International Finance Corporation's plan to double its investment in Indian infrastructure to about $1.1 billion by the middle of 2008. News of the ICF looking to develop infrastructure in rural areas of India demonstrates the new push to stabilizing and diversifying its strong service-based economy. So while I was perusing the blogosphere, I commented on two intriguing blogs related to these recent news events in India. The first blog called Building BRICs is a newly formed blog written by Grant, who is studying at the Graduate School of International Studies at the University of Denver. Having performed related past research and work within global economic issues, Grant has a highly credible background. I decided to comment on Indian Portfolio Investment Continues...FDI? because I was captivated by the analysis on these new economic trends in India. The second blog called Helloji: Chat & Chai is updated daily with new trends occurring in India written by two Indian bloggers Helloji and FabbyGabby. Although their credentials are indeterminable, their blog attracts many daily visitors. Despite this blog not being a highly reputable source, I commented on Of Cow and Consumerism relating to India's rise in consumerism because I considered this post to be more personal because it was actually written by Indians living in India that express their thoughts on the nation's economic situation. For convenience, my comments are posted below.

"Indian Portfolio Investment Continues...FDI?"
Comment:
I enjoyed your post about the increasing surge in portfolio investment in India. A trend with the BRIC countries is their explosive GDP growth. Without a strategic plan set in place to best handle a strong GDP in developing countries, the growth is not sustainable in the long run. As you mentioned, the International Finance Corporation's decision to double investment in Indian infrastructure is a complementary decision to the nation's economic prosperity. Nevertheless, I think your post could have benefited from discussing the utilitarian allocation of the funds. As developing nations such as India flourish, it is pertinent that policies be established to prevent the social gap from widening. I feel that it is economically sensible for the IFC to target infrastructure that will "benefit small and medium enterprises and the poor." Similarly, mentioning the IFC's recognition of Indian companies that have superior environmental practices would explain the IFC's strategy of encouraging growth in an environmentally friendly manner. Given the future world outlook of diminishing natural resources and serious environmental issues, it seems that a new business trend is having an environmentally friendly image. Emphasizing the IFC's focus on appearing to be a more e-friendly and humane corporation will help appease the tensions of its protesters. Your argument that makes the link between developing infrastructure in Indian's rural areas and the amount of future foreign direct investment is strongly justified. You gave accurate insight on how developing India's rural infrastructure will lead to increased productivity per unit of labor and will in effect make it an even more attractive destination for foreign capital. India has a long way to go before it can fully orchestrate improvements in infrastructure in a country with 1.1 billion people. However, a proper allocation of resources will hopefully result in social and economic stability across the nation. This type of stability in developing countries is what investors look for to make sure their investments carry less risk than they desire. Overall your post gave me a new perspective on India's growth and what measures need to be taken to accommodate it. Besides allocating money to develop infrastructure, what other forms of social investment do you think would help support the service driven economy of India?

"Of Cow and Consumerism"
Comment:
It was a delight to read your post "Of Cow and Consumerism." You successfully linked the story between Ramu and his uncle as a learning experience not only for Ramu, but also for the Indian people as a whole. Effectively, the moral of the story leads to your main argument of attending to the 836 million people living on half a dollar a day who will determine the future of India. You successfully explained the effects of the new booming economy in India with many vivid examples of this new age of consumerism. I thought you did a good job at introducing your argument with concise and blunt statements such as, "That is the image of India: billions of buyers." You discussed the overwhelming omnipresence of consumerism in India, whether it be in the media, in the shopping malls, on the street corners, or at the IT call centers. I enjoyed reading your short and to the point style of writing, which contributes to the strategic shift in tone from more nostalgic and humorous in the beginning to a more serious tone towards the end. Your assertion that capitalistic democracy results in a nation of buyers is well supported with punctual sentences like the following, "No one is just a bystander in the new economy. Everyone is a participant. Everyone is a buyer." The opportunities for the Indian people to seek education, secure jobs at IT calling centers right after high school, and generate enough income to buy new cell phones and cars are all modern phenomena that few Indians could experience no more than a decade ago. You raise many good questions regarding the sustainability of India's consumerism while you metaphorically predict the milk will soon run out and that we will have to feed hay to the future generations. I feel your post would have benefited greatly if you provided solutions to this imminent problem instead of leaving these questions unanswered. Personally, I strongly propose that India develop its infrastructure and manufacturing industries so that it is not so reliant on the success of its service-based economy. What are your thoughts to closing the social gap in India?

Capturing the World's Natural Resources: China's Strategic Plan

As of today, China has only six car owners per 100 people. This ratio is quite small compared to the 90% car ownership in the US and 80% in the UK. What is important to realize from most comparative statistics between China and developed countries is the enormous potential for growth that is predicted from its rising middle class. Of key importance to manufacturing new products and constructing the housing for the migratory exodus of the middle class to urban centers is the absolute necessity of having sufficient natural resources to fuel this growth. Although the one-party state is still officially ruled by a communist party, China's ironically capitalistic thinking has succeeded in realizing that its ability to acquire natural resources will determine the sustainability of its rapid growth over time.

Looking at China on a per capita basis, the country is ranked approximately 100th in the world and is still vastly a developing country with low-income wages. In statistical terms, China does not have a critical impact on the world's economies. Yet, with the largest available labor force in the world, an abundance of resources, and a vast natural market-orientated economy, China has the ideal economic factors to become the super power of the century. After China opened up its economy in 1978 and abolished its centrally-planned Soviet style economic policies, it has averaged a 9.4% annual growth in GDP which has made it the fastest growing major nation in the world.

The outcome of China's economic reforms and extraordinary growth has had direct effects on its society. As real income increases on an annual basis, an influential emerging middle class comes as a by-product. With the largest population in world of 1.3 billion people, China will have a significant consumer market over the next 20 years. The logic behind this assumption is the following: as the growth per capita increases, the amount of real income increases, which creates a large urban middle class, and in effect the members of society now have more purchasing power to spend more money on goods besides food. No longer are foreign companies focusing on the urban elite as their target market, but are now aiming at the middle class Chinese workers. These consumers are beginning to discover what it is like to spend money on products that they may have never been able to purchase before, such as expensive jewelry as seen in this image to the left. As this emerging middle class develops new tastes and a consumer frenzy sets in, it is the corporations' duties to satisfy the needs of these consumers by supplying them with the products that they want. A few of the most desired products that are now in demand in China are cellular telephones, computers, TV sets, and cars, all of which will be produced more of as the middle class proliferates.

China has done a good job at strategically planning out its long term economic policies that are in response to its emerging middle class. The truth of the matter is that China is only in the early stages of its growth. With a GDP per capita below $3,000 USD, China has a long way to go before it fits its entire population with modern universal living standards. However, the leaders of this country have taken the rudimentary steps necessary to accommodate for the radical social changes in consumer behavior that await it. China has been taking proactive measures to secure the natural resources that support its manufacturing-based economy. While essential resources such as copper, iron, steel, tin, zinc, and energy have been available to produce its exported goods, China is now aggressively looking abroad to buy up the raw materials it needs for its own hungry middle class. In contrast to Japan's explosive growth after WWII in which economic initiatives focused on investing in hotels, tourism, and electronics, China's long term prosperity will be better insured with its wise decision to invest heavily overseas in factories, land, and shares in resource-based corporations. It is not uncommon to see news of China buying new state run oil facilities in Africa and portions of mining companies in Brazil. In fact, when I speak with my friend that lives in Brazil, he often discusses Chinese businessmen coming to Brazil to buy up large plots of agricultural land for producing soybeans. All this news about China stocking up on raw materials to be used for its manufacturing-based economy further supports the reality that China will soon become an economic superpower that is here to stay.

It is important to heed the immanence of China's rise to becoming a world power because it affects us in ways that may be not so obvious. Unfortunately, there is only a limited amount of natural resources on this world. Each year humans are depleting these resources as demand continues to increase due to higher standards of living across the world. As the developing BRICs grow at exponential rates, there is no doubt that the spending power of these rising middle classes will take a toll on the world's resources and mother nature. On a trip to Beijing this past summer, I was breath taken to see a thick gray layer of smog in the air every time I looked up, as the picture that I took to the right reveals. Although it is fascinating to witness China develop as a nation through its leverage on resources, the by-products of these raw materials is definitely leaving an ugly scar on earth's environment. China may have the right to say that it is its turn to take part in the industrial revolution, but the truth is that our planet cannot sustain the rate of resource depletion that is taking place worldwide. The US, China, and the rest of the world has to make the preservation of our environment a priority or else it will be nonexistent for future generations to appreciate.