Tuesday, February 28, 2006

Entrepreneurship Development: Concept and Context

Many developing countries including India are in a state of transition. They are striving to move from a subsistence-oriented, tightly integrated, inward looking local economy to a surplus seeking, market led, outward looking economy. Such a move is possible only with the emergences of a multitude of a small-scale and rural enterprise in all works of life. This requires building up of a wider base of population capable of entrepreneurial behaviour. If we take India as an example in the context of development, we find that the initial build up of entrepreneurial activity took place in urban center. This was followed by a trickle down effect in rural communities over time. Development strategy today, however, seeks a more proactive and immediate change in India. While much of policy making in this regard treats enterprise creation as a function of appropriate economic conditions(made possible through institutional and economic interventions), others have emphasized training and attitude change as vital elements in the process. But it needs systematic observations and research into the process through which entrepreneurship emerges and sustains itself.


Enterprises and entrepreneurs have been in the center stage of modernization since the days of Industrial Revolution. Economists, sociologists, psychologists and anthropologists have studied this concept, usually within the frontiers of their respective disciplines.

Models of entrepreneurship and research associated with them have identified several major issues such vagueness in definition, conceptualizing entrepreneurship as a trait, significance of innovation in entrepreneurship, meaning of activities in the post-enterprise creation stage, validity of measures of entrepreneurial propensity and significance of demographic factors.


Evolution, Frontiers, divergence & Stagnation

For a long time there was no equivalent for the term ‘entrepreneur’ in the English language. Three words were commonly used to connote the sense the French term carried: adventurer, undertaker and projector; these were used interchangeably and lacked the precision and characteristics of a scientific expression (Gopakumar, 1995).

Richard Cantillon (1680-1734), gave the concept some analytical treatment and assigned the entrepreneur an economic role by emphasizing on ‘risk’ as a prominent entrepreneurial function (Gopakumar, 1995).

J.B say and J.H. von Thunen. Jean Baptiste say (1767-1832), the French political economist assigned the entrepreneur with a crucial role-‘coordination’ and made a distinction between the entrepreneur and capitalist (Say,1967).

A dynamic theory of entrepreneurship was first advocated by Schumpeter (1949) who considered entrepreneurship as the catalyst that disrupts the stationary circular flow of the economy and thereby initiates and sustains the process of development. Embarking upon ‘new combinations’ of the factors of production-which he succinctly terms innovation-the entrepreneur activates the economy to a new level of development. The concept of innovation and its corollary development embraces five functions: 1) introduction of a new good, 2) introduction of a new method of production, 3) opening of a new market, 4) conquest of a new source of supply of raw materials and 5) carrying out of a new organization of any industry. Schumpeter represents a synthesis of different notions of entrepreneurship. His concept of innovation included the elements of risk taking, superintendence and coordination. However, Schumpeter stressed the fact that these attributes unaccompanied by the ability to innovate would not be sufficient to account for entrepreneurship (Gopakumar, 1995).

According to the Havard School (Cole,1949) entrepreneurship comprises any purposeful activity that initiate, maintain or develop a profit-oriented business in interaction with internal situation of the business or with the economic, political and social circumstances surrounding the business. This approach emphasized two types of activities: the organization or coordination activity, and the sensitivity to the environmental characteristics that effect decision making.

Despite its stress on the human factor in the production system, the Havard tradition never explicitly challenged the equilibrium – obsessed orthodox economic theory. This was challenged by the neo-Austrian School who argued that disequilibrium, rather than equilibrium, was the likely scenario and as such, entrepreneurs operate under fairly uncertain circumstances. The essence of entrepreneurship consists in the alertness of market participants to profit opportunities. A typical entrepreneur, according to Kirzner (1979) is the arbitrageur, the person who discovers opportunity at low prices and sells the same items at high prices because of intertemporal and interspatial demands.

To sum up, major theories and expositions from Cantillon to Kirzner view the entrepreneur as performing various functional roles as risk taker, decision maker, organizer or coordinator, innovator, employer of factors of production, gap seeker and input completer, arbitrageur, etc. The most appropriate definition of entrepreneurship that would fit into the rural development context, argued here, is the broader one, the one which defines entrepreneurship as: “a force that mobilizes other resources to meet unmet market demands”, “the ability to create and build something from practically nothing”, “the process of creating value by pulling together a unique package of resources to exploit an opportunity”.


Alternative Approaches


Socio-Cultural Approaches

Some scholars have stressed the importance of socio-cultural milieu in entrepreneurship development. They suggested that the socio-cultural history accounts for the performance of entrepreneurial functions by a considerable number of individuals.

Several writers have used a comparative framework to highlight the ways in which different societies, with differing interests, attitudes, systems of stratification and the like, operate to produce different kinds of businessmen and different patterns of entrepreneurial behaviour (Swayer,1952).

Psychological Approaches

The focus in entrepreneurship shifted from the act to the actors (Shacer & Scott,1991) in the work of McClelland(1961). According to McClelland and Winter(1969) need for achievement (n-Ach) is responsible for economic development. Greater the development of n-Ach, during early socialization of people, the more likely the economic development will be achieved. A society with a generally high level of n-Ach will produce more rapid economic growth. Achievement motivation could be included through training in self reliance, rewarding hard work and persistence in goal achievement, and creating interest in excellence. In spite of being criticized (Schatz,1971; Smelser,1976), McClelland’s(1987) analysis has triggered off the ‘traits approach’ to comprehended entrepreneurial behaviour.

In another psycho-social theory Hagen(1962) relegates economic variables to a relatively minor role and has put an emphasis on certain aspects of the personality. More recently, several other psychological approaches to entrepreneurship have been suggested. Hisrich(1990) identifies several characteristics of entrepreneurs in terms of (a) conditions that make entrepreneurship desirable and possible,(b) the childhood family background, (c) the education level, personal values and motivations and (d) role modeling effects and other support systems. Bird(1989) has also examined entrepreneurial behaviour by focusing on work and the family background, personal values and motivations.

Contemporary Focus

The two most common approaches used in researching the characteristics of entrepreneurs have been the trait approach and the demographic approach (Robinson et al.,1991). In the trait approach, the entrepreneur is assumed to be a particular personality type whose characteristics are key to explaining entrepreneurship as a phenomenon (Gartner,1988;1989). Following McClelland(1961,1987), many other researchers have explored areas such as achievement motive, locus of control, risk taking, innovation etc.

In demographic approach, demographic information is used to arrive at a profile of a typical entrepreneur assuming that people with similar background posses similar underlying stable characteristics. The approach presumes that by identifying demographic characteristics of known entrepreneurs it will be possible to predict entrepreneurship in unknown populations (Robinson et al.,1991). The demographic variables found most examined are family background, birth order, role model, marital status, age, education level of parents and self, socio-economic status, previous work experience and work habits.

First, the approach assumes that human behaviour is strongly influenced by demographic characteristics such as sex, race, or birth order.


Second, the practice of using demographic characteristics as surrogates for personality characteristics is not appropriate. There is also a lack of adequate empirical evidence in this regard.


Third, the approach does not help predict who will or will not be an entrepreneur on the basis of knowledge of one’s birth order, level of education or parental heritage. Besides, demographic characteristics being static in nature cannot explain a dynamic multifaceted phenomenon like entrepreneurship.


Hannan and Freeman(1977) have used the population-ecology model (PEM), to analyze the concept of entrepreneurship. The PEM seeks to predict the probability of births and deaths within a population of firms within a given industry niche, conferring the environment rather than the person with the status of the key entity in determining organizational survival. Recent research following this approach are focused on the presence, characteristics and change in a population or organization in an ecological context provided by the host society (Reynolds, 1991). Deficiencies of this model have been pointed out by Bygrave and Hoffer(1991). These models, while making statistical predictions at the population level, fail to predict the fate of specific firms.


Entrepreneurship: An Integrative Behavioural Framework

The key elements identified are Personal Resourcefulness, Achievement Orientation, Strategic Vision, Opportunity Seeking and Innovativeness.


Personal Resourcefulness

The root of the entrepreneurial process can be traced to the initiative taken by some individuals to go beyond the existing way of life. The emphasis is on initiative rather than reaction, although events in the environment may have provided the trigger for the person to express initiative. This aspect seems to have been subsumed within ‘innovation’ which has been studied more as the ‘change’ or ‘newness’ associated with the term rather ‘proactiveness’.


‘Personal resourcefulness’ in the belief in one’s own capability for initiating actions directed towards creation and growth of enterprises. Such initiating process requires cognitively mediated self regulations of internal feelings and emotions, thoughts and actions as suggested by Kanungo and Misra(1992).


Achievement-Orientation

While personal initiative and purposeful behaviour can be view as a good starting point of an entrepreneurial effort, many such initiatives fail. The archetype successful entrepreneur is supposed to epitomize achievement motivation (McClelland,1961) which facilitates the creation and development of enterprises in competitive environments. While critics have raised serious questions regarding the unique or overarching significance of n-Ach in the emergence of entrepreneurship (Smelser,1976), this element of personality has continued in the mainstream of entrepreneurship theory (Shaver & Scott,1991). People with high n-Ach are known to seek and assume high degree of personal responsibility, set challenging but realistic goals, work with concrete feedback, research their environment and choose partners with expertise in their work (Kanungo & Bhatnagar, 1978). Such characteristics of high n-Ach people contribute to successful completion of tasks that they venture to take up. Hence, we see achievement orientation as a set of cognitive and behavioural tendencies that are oriented towards ensuring that outcomes such as enterprise creation, survival and growth are realized.


Opportunity-Seeking

The context in which an individual brings to bear his/her initiative, achievement orientation and visioning have a strong bearing on what it produces; when these forces are directed towards realizing surplus or value in a market environment, over a period of time, we see the creation of enterprises. This perspective of the entrepreneur as a merchant adventurer, who in Cantillon’s view balances out imperfections in the market (Gopakumar,1995) in pursuit of what Bentham terms wealth, provided the historical basis for the development of entrepreneurship. The wealth is seen as the reward the entrepreneurial individual gains for the risk taken or exercise of judgment where there is greater possibility for error; this distinguishes between certain return from wage labour, and return from risk-oriented production for the market. Hence ‘opportunity seeking’ would include one’s ability to see situations in terms of unmet needs, identifying markets or gaps for which product concepts are to be evolved, and the search for creating and maintaining a competitive advantage to derive benefits on a sustained basis.


Innovativeness

Schumpeter(1949) went on to conceptualize entrepreneurs as persons who are not necessarily capitalists or those having command over resources, but as ones who create new combinations of the factors of production and the market to derive profit. Innovativeness refers to creation of new products, markets, product-market combinations, methods of production and organization, and the like that enable the enterprise to gain competitive advantage in the market.


It is evident that each of the dispositions referred to may be found in all types of individuals (entrepreneurs and non- entrepreneurs). Then how can we relate these dispositions to entrepreneurship? We propose that when these five elements converge at high intensities, in non-restrictive environments, it is likely to give rise to enterprise formation. Therefore, one may find individuals who had created enterprises in the past now turning weak because they may no longer be proactive enterprise creators; instead they may be content to play the role of managers in their stable business, or turn to community leadership, and the like. Hence, this perspective lends to a process view of entrepreneurship.

Peter Drucker on Entrepreneurship

Systematic Entrepreneurship

“The husband and wife who open another delicatessen store or another Mexican restaurant in the American suburb surely take a risk. But are they entrepreneurs? All they do is what has been done many times before.”

Purposeful Innovation
“Systematic innovation means monitoring seven sources for innovative opportunity.”

The Unexpected
“The unexpected success is not just an opportunity for innovation; it demands innovation.”

Process Innovation
“We may understand a process and still not have the knowledge to do the job.”

When Industry Structure Changes
“Four near-certain, highly visible indicators of impending change in industry structure can be pin pointed.”

Demographic Changes
“Static populations staying in one place for long periods of time have been the exceptions historically rather than the rule.”

Knowledge-Based Innovation
“Knowledge-based innovation has the longest lead time of all innovations.”

Bright Ideas
“Bright ideas are the riskiest and least successful source of innovative opportunities.”

Principles of Innovation
“Purposeful, systematic innovation begins with the analysis of the opportunity”

Entrepreneurial Policies
“How can overcome the resistance to innovation in the existing organization?”

Entrepreneurial Practices
“In business that want to create receptivity to entrepreneurships, special care is therefore taken that the opportunities are also attended to.”

Measuring Innovative Performance
“For a business to be receptive to entrepreneurship, innovative performance must be included among the measures by which that business controls itself.”

Structures
“To be an entrepreneur on the side rarely works.”

Where Can I Contribute?
“As a new venture develops and grows, the roles and relationships of the original entrepreneurs inexorably change. If the founders refuse to accept this, they will stunt the business and may even destroy it.”

The Insurance Sector In India: Its Potential Attractiveness to US Insurance Companies

India at a glance
Population:1 Billion
Economy: 5th largest in the world in terms of Purchasing Power Parity (PPP)
GDP growth Rate: Over 6% per year on an average for the last decade
Savings Rate: Around 26% of GDP Estimated middle class
population: 300 Million
Insured population: 70 million only
The Life Insurance Scenario in India
Since 1956, with the nationalization of insurance industry, the state-run Life Insurance Corporation of India (LIC) has held the monopoly in that country's life insurance sector. General Insurance Corporation of India (GIC), with its four subsidiaries, was its counterpart in the casualty sector. Over time, taking advantage of its monopoly and virtual prerogative in establishing premiums, LIC has evolved into a monolith. With around 600,000 agents in every nook and corner of the vast country, it has created an enviable brand name, particularly among the rural population of the country. It has around $40 billion as its life fund and is a strong player in the financial sector. However, on the qualitative side, it has very little to take pride in. And there lies the potential for foreign players to challenge this behemoth.

As is typical with monopolies, the premium rates charged by LIC are among the highest in the world, and its track record in customer service can, at best, be called shabby. With a huge unionized, rigid workforce mostly in the clerical category, LIC runs the risk of high fixed cost, which will be the deciding factor in productivity in the competitive scenario. While boasting full-scale automation of its operation, the truth is that its technology is outdated. The new players, with the state-of-the-art technology under their belt, will be in an advantageous position. 80% of LIC's business is procured by 20% of its ill-trained agent force. The foreign player, with the domestic partner's strong brand value, can test the unconventional distribution channels like brokers, the Internet, the banking distribution system, etc. Although foreign players may be tempted to keep their operation in the big cities for the 'creamy layer' of the society, the real market lies in rural India, which accounts for the lion's share of LIC's present business. The foreign player must learn to adapt to Indian realities. The well-publicized failures of world famous consumer goods companies like Electrolux, Whirlpool, Reebok, Nike etc. to gauge the Indian psyche and sentiments demonstrate the concept. They failed in the areas of realistic pricing, product promotion and reaching to the consumer. The foreign companies need to know the "ground realities" to the details.

Political Scenario
Until recently, India continued to be one of the few remaining countries of the world to remain insulated from the direct foreign investment in its insurance sector. However, things are changing now with the passage of Insurance Regulatory Development Act (IRDA) through Indian Parliament in late 1999. A much awaited and much debated act, it met with strong resistance from the political institutions of India and took almost six years to see daylight. Though first recommended by Malhotra Committee on Insurance Reforms in 1994, what emerges is a diluted form of the original recommendations. However in the long awaited period of its passage, the issue was nationally debated and was finally 'de-politicized,' meaning that the reform path is 'irreversible.'

IRDA, for the time being, prohibits 100% foreign equity in insurance. It requires the Indian promoter to invest either wholly in an insurance venture or team up with a foreign insurer, with a cap of 26% of equity for a foreign partner. The Indian promoter is permitted to divest only after 10 years to the Indian public, through a public offering of shares, at which time the equity structure will provide for equal participation between the Indian and foreign partner with a share of 26% each in the share capital. The underlying tone of the 26% cap for the foreign insurer is to ensure that financial interest substantially vests with the Indian promoter, permitting the foreign co-promoter a definite say in direction and management (By Indian Company Law, 26% is the minimum equity to move a resolution or vetoing a resolution in Board of Directors' Meeting). It is important to note that the 26% level is the bargained solution by the privatization proponents (read Government) in the face of stiff political resistance. The main two political poles of Indian politics – the Congress Party and the Bharatiya Janata Party (BJP)- are both in favor of the reform. Only the extent of the reform and who-will-bell-the-cat-and-get-the-(dis)credit factor bar them in reaching a consensus for more sweeping reforms. The populist out-of-fashioned socialistic jingoism, masking these parties' rightist ideology, is fast losing its appeal to the masses. This will only hasten the reform process.

Comparison with China

Currently India and China are the most lucrative insurance markets in the world. India and China constitute the home of half of the population of the world and their recent rapid economic development makes them attractive for foreign investment. Though India's economic development is not as rapid as China's, it enjoys comparative strength in the socio-political front. India is the world's largest democracy and democracy is deep- rooted in its social and political institutions. The executive and the judiciary system are the continuation of British legacy, which ruled India for 200 years. English, the unofficial language of correspondence and instruction, is well spoken by the educated. Another strength is its abundant highly educated skilled workforce. India's stride in the fields of software and logical ability is well known in the world. The savings rate is quite high in US standards. All this makes India an attractive destination of US insurance companies.

Insurance sector reforms have been slow to take shape, taking nearly a decade. Thanks to the proposed reforms, quite a few global insurance majors are streaming into the country. A burgeoning middle class, high per capita savings, and low penetration of insurance are some of the key factors responsible for the tremendous interest foreign insurance companies are showing in the Indian insurance industry. An insurance survey by LIC and KPMG reveals interesting facets of the emerging trends in the Indian insurance industry. The annual growth in the average insurance premium in India has been 8.2 per cent compared with the global average of 3-4 per cent. Insurance density in the country, based on per capita premium, was $5 in the life insurance segment and $2 in the general segment. Compared with the Indian life insurance standard, insurance density stood at $3,236 in Japan, $1,079 in the US, $18 in Brazil and $14 in Mexico.
The share of life insurance premium to GDP was 1.29 per cent in India, which is abysmal in the global standard. Despite these opportunities, however, there is also a rough ride ahead for the new players in India. This is because, unlike in the West, insurance is sold more as an instrument of savings in India than as a product offering protection and security. LIC's 1996 insurance survey reveals that more than 40 per cent of insurance-buyers look at insurance products as a means of savings. Risk coverage is only a secondary objective. Nearly 26 per cent of the insurance policies sold are on considerations of old age security. Only 18 per cent of insurance policies are sold on death risk considerations. Between expectation and reality, of course, there is a bridge. Will the average citizen reach out to private players and invest his lifetime's earnings with them? Here, the new companies probably will be fighting a mindset. The Life Insurance Corporation and General Insurance Corporation, by virtue of their monopoly status, are so deeply entrenched in the popular psyche that it would likely reqiuire Herculean effort to sell the idea of private insurance products. They have to educate the people, and integrate the sector with its world counterpart by shifting its leaning from savings to risk hedging.
The economic reform process in India is 'irreversible' and is producing a strong efficient financial system in the model of its US counterpart. The insurance companies will only hasten the process. From a socio-economic development point of view, the huge amount of funds that will be at the disposal of players will be directed in desired avenues like infrastructure, housing, safe drinking water, electricity and primary education. The growth of the debt market, which hitherto had been a neglected child of the capital market, will also get a boost as the funds from insurance companies start flowing into the kitty of the corporate sector. Once again this will boost demand and growth by raising employment levels. Similarly, stock market investments will further aid the growth of the capital market and equity cult. The multiplier effect will be enormous. Policyholders will get better pricing of products from insurance majors. Permission to invest more in corporate equity and debt instruments would also enhance returns on policy funds. Once the benefit of opening the sector becomes noticed in the society, the misplaced concern regarding 'flight of money outside the country' will be removed from the mindset of people, which should aid in garnering popular support for the free, competitive liberalized economy.

Summary

Facing the reality of a saturated home market, the US insurance companies must look outward and concentrate on the real growth economies like India and China. Since the gestation period of the typical insurance business is around ten years, it is high time to make their presence felt in India. The new players will have to prove their creditworthiness. It will be a time consuming and difficult task to win customers away from LIC and gain their trust. Their track record and brand value in overseas market will not help them much in getting immediate brand recognition in India. Though they may piggyback on the brand names of their local partner, in the long run, it is their persistent track record and creditworthiness, which will matter. So, being among the first will be a deciding factor in the success in this business. Already several companies have entered into the market and a dozen companies have joined with foreign partners (see table). The real growth in twenty-first century will come from the countries like India and China. Delay may doom future efforts to stake a claim in these high potential markets.

What EU has to offer the world marketer?


European union is a very good example of the merits of unification among countries. Through this article the history of formation of the European Union has not been elaborated, rather the focus is on the lucrative ness of the European union as a market for the rest of the world.

European Union was formed in 1957 and since then has evolved to form a conglomeration of large number of countries. European Union (EU) name was accepted by 25 member states in 1992. Key activity of the EU is the establishment and administration of single market consisting of a custom union, a single currency (which has been adopted by 12 member states till now), a common agriculture policy, trade policies and fisheries policy.

If we look from the international market perspective, EU seems to be a very lucrative market. This is the major reason that is encouraging more and more countries to join the union. The EU now contains 454 million consumers and accounts for 23 percent of the world’s export.

Policies of the EU encourage the development and maintenance of and effective single market. As far as international marketers are concerned, to sell a product in EU it is important for them to conform to the standards laid down by the EU. It is seen that once a nonmember countries factories, farmers and merchants conform to EU standards, much of the cost of joining the union has already been sunk.

If we consider EU as a single unit, it has the largest economy in the world with the 2004 GDP of $11,723,816 million, it is expected to grow further as more countries are expected to join the union. The formation of single market has resulted in wiping out the inefficient firms. This encourages the world marketer to be more efficient, hence the formation of the EU has led to the feeling among the international market that in order to survive in the new market the firms must show efficiency and good quality standards.

For the formation of the single market, four barriers of freedom were removed namely:

People, Goods, Service, Capital.

Formation has led to labour mobilization, the various resources are properly mobilized in the union hence the quality of goods has risen to new levels, also the goods are available everywhere in the union. The prices have also decreased. the EU businesses have reached new economies of scale which is worrying many leaders in the world market who are not the part of the EU, a very good example is the competition between the Europe’s Aircraft consortium and Boeing in United states, Perhaps an even bigger concern is that lower barriers inside will create thicker wall outside, as some observers vision European Union as the ‘fortress Europe’ that favours firms on the inside but hinders outsiders by imposing obstacles such as stiffer import quotas , local content requirements , and other nontariff barriers.

Another problem that the international marketer faces in the European Union is that on the outside the union has been created and it has been declared that there is a common currency and other aspects, but still the marketing environment is heterogeneous, the companies marketing in EU are facing 14 different languages, 2000 years of historical and cultural differences and a daunting mass of local rules.

Another major area of evaluation here is that who will benefit maximum from the formation of the union. In this consumer driven economy if we look at the current scenario in EU, it is the people who will benefit most. The open barriers, increased competition and increased economies of scale will lead to low priced products, greater choice for customers of goods as well as services, great job opportunity with the European Union.

It still remains a question ‘what EU has to offer the world marketer?’

World is open now, all firms are beginning to understand that they have to go global else they cannot survive. European Union seems to be one of the biggest markets in the world with unlimited opportunities. It is true that the barriers inside EU have been removed which will certainly benefit the firms inside, but then this fact has already been realized by most companies and they are ready to invade the markets with products which can give European union companies a tough time for survival. Its not that the companies of the rest of the world will win, but they will give the union companies a stiff competition all the time. This will benefit the customers, who will certainly be the winners in the end.

Monday, February 27, 2006

Scope of Entrepreneurship development in India


Introduction
We are a very young nation – just over 55 years since independence – setting out on a path of sustained economic growth, for decades to come.

We already have over a billion fellow Indians. Within the next 20 years, we will have 400 million people below the age of 35 years – more than the entire population of the United States! Each person, in this bold new generation, will be in the prime of his or her life, striving for a better tomorrow – creating, in the process, new growth opportunities, for budding entrepreneurs!

On the most conservative basis, our domestic consumption, in virtually any sector, has the potential to at least double, or treble, from current levels – perhaps, just to catch up with a country like China!

Then, there is the entire global opportunity, across diverse sectors internationally, the "Made in India" tag is now an increasingly respected brand, valued for quality, reliability, and competitiveness.

Truly, with economic reforms in the country, and with the virtual removal of all trade barriers, the world is now our market – and our opportunity!

The pursuit of these opportunities requires an indomitable spirit of entrepreneurship!

Entrepreneurship
Entrepreneurship is ubiquitous and is reflected in all the major dimensions of civilization viz. social, political and economic. It involves creativity that is consistent with the healthy edge required to change the basis of competition.

Entrepreneurship is a creative human act involving the mobilization of resources from one level of productive use to a higher level of use. "It is the process by which the individual pursue opportunities without regard to resources currently controlled."

Entrepreneurship involves a willingness to take responsibility and ability to put mind to a task and see it through from inception to completion. Another ingredient of entrepreneurship is sensing opportunities, while others see chaos, contradiction, and confusion. Essence of Entrepreneurship is going against time with maturity and serving as a change agent.

Current Perspective
In a country like India, social (value system) and cultural issues hold their importance besides issues related to infrastructure. Any innovation to succeed in our society needs to be accepted by our value systems and cultural issues. It will not be wrong to say that Dot.com (or any innovation) will not succeed until and unless a high level of awareness is achieved and the idea is taken to the common people. An acceptance by the mass in itself is a kind of social innovation. Further, in our country, where the population is more concerned about making both ends meet, entrepreneurial activity will achieve sustainability only when support is provided both at the societal and governmental levels.

Scope of entrepreneurship development in India
In India there is a dearth of quality people in industry, which demands high level of entrepreneurship development programme through out the country for the growth of Indian economy.

The scope of entrepreneurship development in country like India is tremendous. Especially since there is widespread concern that the acceleration in GDP growth in the post reforms period has not been accompanied by a commensurate expansion in employment. Results of the 57th round of the National Sample Survey Organization (NSSO) show that unemployment figures in 2001-02 were as high as 8.9 million. Incidentally, one million more Indian joined the rank of the unemployed between 2000-01 & 2001-02. The rising unemployment rate (9.2% 2004 est.) in India has resulted in growing frustration among the youth. In addition there is always problem of underemployment. As a result, increasing the entrepreneurial activities in the country is the only solace. Incidentally, both the reports prepared by Planning Commission to generate employment opportunities for 10 crore people over the next ten years have strongly recommended self-employment as a way-out for teaming unemployed youth.

We have all the requisite technical and knowledge base to take up the entrepreneurial challenge. The success of Indian entrepreneurs in Silicon Valley is evident as proof. The only thing that is lacking is confidence and mental preparation. We are more of a reactive kind of a people. We need to get out of this and become more proactive. What is more important than the skill and knowledge base is the courage to take the plunge. Our problem is we do not stretch ourselves. However, it is appreciative that the current generations of youth do not have hang-ups about the previous legacy and are willing to experiment. Theses are the people who will bring about entrepreneurship in India.

We can take the example of Vikas Kedia - one of India's most eligible entrepreneurs; he was barely 21 when he had turned his back on a possible $ 100,000-a-year job. Vikas Kedia, a graduate from the Indian Institute of Management-Bangalore, is much in demand. He has also created history of sorts in the IIM circuit by starting his own dot-com company in Bangalore, now he has his own company which is a California and Kolkata based GRMtech.

At present, there are various organizations at the country level & state level offering support to entrepreneurs in various ways. The Govt. of India & various State Govts. have been implementing various schemes & programmes aimed at nurturing entrepreneurship over last four decades. For example, MCED in Maharashtra provides systematic training, dissemination of the information & data regarding all aspects of entrepreneurship & conducting research in entrepreneurship. Then there are various Govt. sponsored scheme for the budding entrepreneurs.

Recognizing the importance of the entrepreneur development in economic growth & employment generation, Maharashtra Economic Development Council (MEDC) has identified entrepreneurial development as the one of the focus area for Council activities two years ago.

Various Chambers of Commerce & apex institutions have started organizing seminars & workshops to promote entrepreneurship. Incidentally, various management colleges have incorporated entrepreneurship as part of their curriculum. This is indeed a good development. This shows the commitment of the Govt. & the various organizations towards developing entrepreneurial qualities in the individuals.

Promoting Entrepreneurship

In India, where over 300 million people are living below the poverty line, it is simply impossible for any government to provide means of livelihood to everyone. Such situations surely demand for a continuous effort from the society, where the people are encouraged to come up with their entrepreneurial initiative.

Encouragement at attitudinal and social level

In the future, innovation and entrepreneurship needs to be encouraged at Social levels, Governmental levels and Managerial levels. There must be a social attitude that views innovations with positive attitude and reject an innovation only when it is not acceptable.

Encouragement at physical level

At this level the encouragement will refer to two aspects necessary for entrepreneurship to thrive, one is the provision of venture capital and the other being infrastructural support. A real example is Export Processing Zones which are performing extremely well when given the support.


What will be the qualities needed to succeed in this new world?

First and foremost, we need the entrepreneurial spirit. Outside India, this spirit has been very evident in the IT industry. 35% of the start-ups in Silicon Valley are by Indians. We need to have similar risk-taking ability within the country as well. Entrepreneurs need more than technical talent, more than business savvy. What they need is the indefatigable energy and incurable optimism that enables them to take the road less traveled and convert their dreams into reality. It is a force that beckons an individual to pursue countless opportunities. Entrepreneurs must learn how to overcome the risk of failure, or of vulnerability. The institutions can give them valuable insights and also support them in this.

Indian Entrepreneurs

1) Dhirubhai Ambani
A proud son of this glorious state of Gujarat, and a man with long ties with this wonderful city of Ahmedabad, was the greatest example of this spirit of entrepreneurship!

In a short span of less than 25 years, and without even the benefit of a formal education, Dhirubhai Ambani built Reliance, a first generation enterprise, into one of the world’s 200 most profitable companies!

He started out in life, working as a mere petrol pump attendant in Aden, Yemen. He had no technical knowledge, of any of the businesses he wished to create in India.

He had just five hundred rupees in his pocket, a vision of what he wanted to achieve, an intrinsic faith in the latent demand potential of the Indian markets, a belief in the capabilities of Indian people, and a burning desire to succeed!

The end result? He created Reliance, a Rs. 75,000 crore enterprise, in a single lifetime!

2) Azim H. Premji
In a world where integrity purportedly counts for naught, Azim Hasham Premji symbolizes just that. The 55-year-old Wipro chairman made international waves in 2000 ever since his group became a Rs 3,500-crore empire with a market capitalization exceeding Rs 500,000 million! If any stargazer had been foolish enough to predict in 1966 that a 21-year-old Indian at Stanford University would one day achieve all this, he'd have been laughed out of business. At that juncture, Premji was forced to discontinue his engineering studies in the States due to the untimely death of his father. Returning to India to take charge of a cooking oil company, the youth infused new life into the family's traditional mindset and trade.

Despite all the success, the media-shy Premji maintained a low profile, letting his work do all the talking. Until early last year the media broke the story that Azim Premji had become the second-richest man in the world… In spite of his billions, however, he still travels economy class and stays in budget hotels.

3) N.R.Narayana Murthy
An Indian IT chief who's really made it big without dropping his ethical precepts by the wayside is Nagawara Ramarao Narayana Murthy, Chairman of Infosys. Born in 1946, Murthy's father was a schoolteacher in Kolar district, Karnataka, India. A bright student, Murthy went on to acquire a degree in Electrical Engineering from Mysore University and later studied Computer Science at the IIT, Kanpur, India.

The Infosys legend began in 1981 when Narayana Murthy dreamt of forming his own company, along with six friends. There was a minor hitch, though-he didn't have any seed money. Luckily, like many Indian women who save secretly without their husband's knowledge, his wife Sudha-then an engineer with Tatas-had saved Rs 10,000. This was Murthy's first big break.

The decade until 1991 was a tough period when the couple lived in a one-room house. The second break came in 1991 when Indian doors to liberalization were flung open… Murthy grabbed the opportunity with both hands and has never looked back ever since. Today, Infosys is the first Indian company to be listed on the US NASDAQ.

While working in France in the 1970s, Murthy was strongly influenced by socialism. The bubble was pricked, however, when he was arrested in Bulgaria on espionage charges. Today, he says: "I'm a capitalist in mind, a socialist at heart." It was this belief in the distribution of wealth that made Infosys one of the first Indian companies to offer employees stock-option plans. Infosys now has 400 employees who are dollar millionaires.


Heading a company with the largest market capitalization hasn't changed Murthy's life-style much. The man still doesn't know how to drive a car! On Saturdays-his driver's weekly off-the Infosys chief is driven to the bus stop by his wife, from where he boards a company bus to work! Incidentally, Sudha Murthy is now chief of the Infosys Foundation, which channels Rs 50 million into charity every year.

Simplicity, humility and maintaining a low profile are the hallmarks of this super-rich Bangalorean. And the man is principled to a fault. Murthy's unprecedented wealth has catapulted him into the public glare. After the kidnapping of Dr Rajkumar by forest brigand Veerappan, the Home Ministry has sounded out the local government about providing Z-category security to Murthy and Premji. Both characteristically turned down the offer.

In a letter to the police top brass last month, Murthy said he was a simple man who had no intentions of annoying his neighbors and disturbing traffic with an intrusive entourage of security vehicles and personnel.

Future Perspective
Entrepreneurship as in the past will determine technical innovations, status of social institutions and political management systems. On the basis of these factors, we can expect the future to be a place where basic needs will remain and only the wants will change. India will overcome the barriers of infrastructure; we will also visualize a strong manufacturing and agricultural sector.

Entrepreneurs and not managers will be in demand, as only they will be equipped to find order in chaos. The focus of entrepreneurial energy will shift from achieving volume sales to fulfill a specific requirement. Governance will become more transparent and will be willing to accept changes necessary for growth and development. More autonomy will become the basis of all issues.

The future will see Entrepreneurship as the key driver of economic development Technological obsolescence will become order of the day and there will be more space for leisure. New businesses will be credited with providing variety of new jobs in the economy. New and small business will also develop more than their share of product and service innovation. At one end we will see the technological upheavals in quick succession and on the other end there will be social value systems and cultural issues undergoing slow but dynamic transformations.

Conclusions
There are ample opportunities in small businesses in India and such opportunities will transform India in the coming future. For such transformation to happen there needs to be support both at the governmental and societal level. For the government it is important to realize that the goal of small business owners will be to remain self-employed. Such people may not need financial assistance but they will need marketing and legal assistance in order to sustain themselves. Practical and cost effective programs need to be developed to address their needs because self-employed people will represent an important segment in economic revitalization. Entrepreneurship development is the key factor to fight against unemployment, poverty and to prepare ourselves for globalization in oder to achieve overall Indian economic progress.

Saturday, February 25, 2006

LAND ZONING FOR SUSTAINABLE DEVELOPMENT IN BANGLADESH;A CONCEPTUAL FRAMEWORK



INTRODUCTION:

Land is the basic attribute on which the whole life and economy system is built and hence is of vital importance. Bangladesh has long been proud of the richness and diversity of its soils and water resources, and its ability to convert these resources into food, fiber, fishes, and other products. The nation can no longer assume as it could in the past that land would heal and renew itself indefinitely. Human number and activities are catching up with its ability to recover. It may, however, be argued that with careful management the nation's land resources can be able to sustain her people in great number.

Population of Bangladesh is already very large-about 108 million on the night of March 11, 1991 (BBS, 1991). The number has doubled since 1961-62 (50.8 million in 1961) and is projected to double around 2020. About 80 per cent of the total population is rural, of which the majority survife within "a biomass-based subsistence economy". The major portion of the rural population is poor, living in condition unworthy of human dignity. The fundamental cause of poverty in Bangladesh arises out of scarcity of biomass resources to meet basic elemental needs (Agarwal and Narain, 1990).

In the above context, it is believed that an appropriate land use zoning is necessary for sustainable development in Bangladesh. Sustainable development implies utilization or exploration of renewable resources in such ma way so that present use or exploration does not disturb the future land productivity. This paper highlights the problems and issues related to the scarcity of land in Bangladesh and provides a conceptual basis for future land use zoning in the country.

LAND USE TYPES

The extent of land area of the country is about 14.79 million hectares, of which some 13.70 million hectares is land and the rest is inland water bodies (Rashid, 1989). Of the total area 12 percent is hilly or mountainous, 8 percent consists of oxidized terraced up land soils and 80 per cent is alluvial plains. Twenty five percent of the alluvial plains is normally inundated during wet monsoon, and another 25 per cent is liable to flooding once in every five years (WRI/USAID, 1990).

Six categories of land types, in relation to depths to which they are normally inundated, are recognized (UNDP and FAO, 1988). Rashid, in categorising land types, mentions - high land comprising almost 29.9 per cent is normally not inundated. Medium Highland, 32.6 per cent of the total land area is normally shallowly inundated by as much as 90 cm of water for short periods. Medium lowland is normally inundated by a depth ranging from 90 to 180 cm accounting 12.6 per cent. Lowland consists of 7.9 per cent, is inundated to depths between 180 to 300 cm, and Very Lowland of 1.4 per cent is inundated deeper than 300 cm. Besides, settlements and water bodies comprises 15.5 per cent of the total land areas (Rashid, 1989).

The study of Rashid (1989) presents and elaborate description of agricultural land use in Bangladesh. It shows about 60 per cent of the total area is presently cropped, less than 3 per cent is current fallow, and nearly 2 per cent is cultivable waste. Forest land area accounts for about 13.5 per cent and over 22 per cent is not available for cultivation.

Of the total cultivated area 46 per cent of land was cropped once, 47 per cent twice, and 7 per cent was cropped three times a year (1984-85). The figurs are indicative of the fact that Bangladesh has a Gross Cultivated Area (GCA) over 60 per cent more than the Net cultivated Area (NCA). Irrigated area has increased many folds in the past twenty years without any significant increase in GCA; in most areas the second of roce has replaced a crop of one of the pulses or oilseeds. And if the trend continues it could lead to adverse nutritional effect. The current fallow is only found in upland areas of the Barind and Madhpur Tracts, and in the eastern hilly areas. Settlement encroachment has increased fairly rapidly in the past two decades; much good agricultural land has been converted to urban, industrial and commercial use (Bhuiya, 1989). Rashid (1991) argues in this context that urbanization may accelerate and is likely to act negatively on horticulture, field crops and even forests.

About 2 million hectares of land is known to be under forest, and of which only 57 per cent is with tree cover. Half of the forest land is in the Hill Tracts where the Unclassed State Forests have very few trees. Much of the Sal forests in Madhupur Tracts are lost to encroacher and illegal fillings (Rashid, 1989). The only remaining substantial forests are now in the Sundarbans, Kassalong and in Teknaf areas. Besides deforestation and its ill effects, the drying up of wet lands for rice cultivation is also causing degradation by reducing soil moisture, fish catch and biodiversity.

PROBLEMS & ISSUES RELATED TO LAND USE:

Land is a scarce and limited resource in Bangladesh. Every million hectare of land to day supports some 8 million people and by the end of the century the figure may reach 10 million. The nations land is not going to increase. In the face of her teeming population the limited land resource will come under increading pressure for basic survival needs - crops, fishes, live stocks, fibres and forest products all of which are land based. Further, basic shifts in nations demographic characteristics including that of pattern of human settlement and growth are aggravating the land resource problems. The gradual and irreversible conversion of agricultural land to non-farm uses are on the increase.

The conversion of prime farmland to urban, industries and other non-farm uses visibly appear even to a casual observer (Bhuiya, 1989). Illegal felling of trees in last 20 years has made more than 50 per cent of the nations forest land without forest vegetal cover. Interference in the form of flood control, drainage, water diversion and pollution of watger has led to a significant reduction in fishery production. The unethical conversion of wetland habitat to agricultural fields has severally damaged the fish resources and the associated flora and fauna (Rashid, 1991).

The areas under crop cultivation varied over time,usually gradually but sometimes very shoarply. The next cropped area (NCA) is not the same as net sown area or net cultivated area. A area may be ploughed but not sown, or it may be sown but not harvested. This happens frequently for drought or flood. Although current fallow decreased from 0.627 hectare (1973-74) to 0.403 hectare (1985-86), the decrease is by no means steady. Culturable waste is recorded to have actually increased from 272,000 hectares (1973-74) to 33400 hectares (1985-86).

A great deal of engineering is going on in the name of flood control and drainage without much attention to the fact that Bangladesh is the drainage outlet for one of the largest river systems in the world. Due to the nature of land, the vast quantity of water passing through cause inundation over a large area, and which has many beneficial aspects. But, in the name of flood control a series of polders and embankments are built to cause many fold harm: agriculture may be forced into a more expensive and possibly ecologically unsustainable path; multiple cropping and crop-rotation may be a defunct system as they will be replaced by a single crop system; natural habitat is bound to be destroyed affecting bio-diversity. Besides, good agricultural land is used for engineering works or marked out for the passage of flood water (flood way) and drainage channels are closed to damage the nervous (arteria) system of the land.

The nations development process appears to have polarized in space and governed by short term advantage (economic gain) and urban primacy. This policy practice has raised a small group of very powerful people known as 'raiders' who use the land resource recklessly in order to make a fortune within a short time, and thus create severe stresses on the environment to such an extent that sustainable development or judicial use of land resource is bound to be a defunct process.

The preceding discussion leads to a summation that land resource in this part of the world is used as if it is in abundance. In fact, this critical resource is limited, and a huge population depends on it. Use of land for crops, livestock, fisheries and forestry must therefore, be protected, and misuse, overuse or underuse of land must be brought under control and scientific management. The present state of misuse, overuse or underuse of the land resource in Bangladesh has given rise to a number of issues which may be considered central to the problems of land resource development.

Bangladesh has about 9 million hectares of cultivated land, or which very little is being used to its optimum. Although some areas are affected by saling intrusion, river erosion, flood hazards, etc., a large part more than 6 million hectares do not suffer from physical limitations. (UNDP/FAO, 1988). The scope for fairly rapid improvement in the upgrading of productivity per unit area can easily be attained provided the social and economic policies give the right incentives. Similarly, rivers, haors, baors, beels, and ponds offer a large area of inland watger for pissiculture, but productivity is well below the potential.

Urbanization is necessary for economic growth, but in the process, it reduces the amount of good agricultural land. The rapid urban growth in last few decades has effectively consumed potentially triple cropped land. Extensive and wasteful way of urbanization is such in two forms.First, the growth of housing estates of one or two storied building is allowed to scatter in the countryside, and then connecting roads are built and the spaces in between are filled in with
light industrial or commercial establishments.Second, low price of agricultural lands enables speculators to buy land for future urban use and leave them undeveloped and unused for decades together (Rashid, 1989).
Waterways were the main means of communications in Bangladesh until late fifties; roads with high embankments were few, and the railway embankments were built with adequate drainage outlets and breaches were uncommon. Since then a network of national highways have been built, and the spaces in between have been subjected to the construction of more dense network of local roads indiscriminately. Road building activity has not only eaten up more land, but roads and highways have caused major obstruction to the free flows of rain and flood water. Further, in absence of free flow of water a substantial land areas suffer from the localized water logged and aggravated flooding conditions, and thus the consequent loss of agricultural productivity.

Encroachment of fertile land by industrial set up is widespread, and industrial units in almost all cases acquire or buy more land than is required. In last two decades, many individuals or groups put fencing and signboard for industrial site in the heart of good farm land but practically nothing has been done. The only reason for such acquisition has been to get industrial loan or credits. Many industries discharging much harmful effluents are built in locations which are not at all conducive to healthy environment (Rahman, 1990 and MOEF/IUCN, 1991).
Good examples for such a situation can be seen in between Dhaka city and Savar - besides the highway.Moreover, their waste discharge has already caused serious harm to fisheries and sometimes farmland too. Brickmaking has been a major source of concer. It has already engulfed good quality large farmland and will continue to areal extent. Besides destruction of top soil and tree resources, the brickfield owners excavate large pits in a haphazard manner making the land virtually useless for any further economic use (Rahman, 1990).Forest land constitutes almost 14 per cent of the land surface of which only 52 per cent is currently under tree cover.

Illegal felling, hill cutting and cultivation on steep slopes are causing widespread land degradation through increased leaching and top soil erosion. Every forest plantation is also under constant threat for fuel famine in the country (Khan, 1990). Besides acute energy crisis, especially in the rural area is affecting land use. Nearly in all the homestead orchard cum wood lands, dried leaves and twings are swept up for us as fuel. In fact, cowdung, twings and leaves, even the rice and wheat stubble remaining after harvest are not allowed to decay enriching the soil's organic matter; they are used as fuels. This fuel crisis in rural areas affects land quality through reduction of organic matter as well as the homestead vegetal cover. (MOEF/IUCN, 1991).
There are other conflicting competitions among various components of land uses. Fisheries being the major source of protein for majority of the population, and also provide considerable employment, are yet to come into active consideration for development. In an attempt to produce more rice, large number of perennial, and seasonal water bodies have been destroyed through drainage, flood control and irrigation schemes. (MOEF/IUCN, 1991). These water bodies used to yield not only the fishes, but the economic value of these inland fisheries used to enhance the ecological role as breeding grounds for numerous forms of aquatic life, many of which have commercial values.
In just reverse way, an estimated 120 thousand hectare Transplanted Aman rice land have been converted to seasonal or annual shrimp culture in last 12 years. In areas where rice and shrimp are alternated seasonally the yield of rice is rapidly declining and over time these areas may become suitable for brackish water shrimp culture only. Similarly, saline intrusion, FCD-FCDI, ground water depletion are also in the process of aggravating the land resource problems.
The issue of government land acquisition is particularly vexing, because it is the Gov3ernment who is most visibly wasteful of land resource (Rashid, 1989).
Every year large areas of good farm land are being diverted from agricultural use for construction of buildings, roads and high ways, brick fields, schools, colleges and universities, hospitals and health centres. The public purposes for acquiring land is liberally interpretated and in most cases land much in excess or actual requirement of the project is allowed to be acquired by government departments and private parties to suit their convenience (Bell-Gaz, 1988). This practice is not only adversely affecting national land use, but also inflicting upon poor helpless farmers.

Finally, the growth of population is so rapid and in aggregate so large that it must have a profound effect on land resource. Due to Muslim Laws of Inheritance, the land holdings are continuously divided and subdivided at a rate faster than population (Rashid, 1989 and 1991). The decrease in holding size means that a large number of viable units are becoming non-viable. Secondly, population growth is also directly relatged to the building of new households; every year about 250 thousand new households are built on new lands. That is, a large area of agricultural land are being taken up by new settlement.

STRATEGIES FOR LAND PRODUCTIVITY AND LAND USE ZONNING:

Of the nations population the vast majority survive within the biomass based subsistence economy, that is, on products obtained from plants and animals. The biomass produced in the country has already failed to keep paqce with the population growth and their elements needs. Foodgrains, dairy products, sugar, fruits, edible oils, pulses and spices are on the list for continuous imports or smuggled / in; foodgrain alone is imported to the tune of more than 2 million tons annually.
There are also acute shortages of fishes, firewood, fodder and building materials like timber and thatch. Over the coming years, demand for all these biomasses will grow and cause severe stress on the land resource, thus on the environment. Therefore, Bangalesh has to find a strategy to optimize the use of its land resource in a way that the country can get high productivity as well as sustainability. Optimum utilization of land resource does not mean that agricultural landuse for rice production would automatically get priority, but it does mean that the minimum possible amount of arable land should be taken out of production. Use of land for crops, fisheries, livestock and forestry needs to be protected.

Quite contrary to what the need is, the overall biomass production in Bangladesh seems to be declining rapidly. The problem is that there is little mass awareness of the need for regulating land use, and therefore, there is virtually no pressure on the political and administrative apparatus to optimize their uses. This poses a major scientific, social and political challenge for Bangladesh.

Many may argue that foodgrain production in Bangladesh has increased. Undoubtedly it is so, but only on a very small fraction of land, that is, irrigated croplands. Productivity of foodgrains on the rest is still very low or even declining, and overall biomass is on rapid decline. To reverse this situation, every inch of land must produce grains, grasses and trees, because, the fundamental cause of poverty in Bangladesh arises out of the scarcity of biomass resources to meet daily basic needs like food, fodder, fishes and forest products. Economic growth and rural development programmes must focus on one major aim and that aim must be to introduce a highly productive system for growtin all forms of biomass - not a technical system that give bumper yield today but discount the future (Agarwal and Narain, 1990). If it is accepted that the growth of biomass is the vital objective of Bangladesh's planned economic programms, then it is to be remembered that the same kind of biomass can not be grown everywhere on a sustainable basis; and also high prodectivity on a suitainable basis is possible only by observing the laws of nature, not by contravening them.


Recognition of the facts would necessary mean that landmass be divided into different functional components of the basis of social and ecological dynamics of an area for specific uses. In other words, for optimum utilization land needs to be categorized into different 'zones' for specific use (e.g. agricultural land, industrial land, commercial land, forest land, etc. etc.; and again good agricultural land, medium agricultural land and poor agricultural land etc.).Land zoning is a synthesized formulation of landscape based on pattern of landuse, exist in state of management.
bio-physical make-ups indicating capability, potentialities and constraints. It provides necessary inputs in determining the optimum and multiple uses of any given tract of land in terms of sustainable productivity under the enforcement of zoning laws and regulations. Classifying or zoning lands is a mammoth task as it involves huge amounts of financial and other inputs; but definitely the output afterwards if measured in values will have positive bearings for overall land policies of the country.
Land zoning system pre-supposes the need to ensure the suitability of available land for purposive used under zoning laws and regulations strictly enacted and enforced is based on land appraisal involving existing landuse pattern, land capability and potentialities, and cultural practices. Several methods of land appraisal and thus land zoning have emerged in agricultural, engineering and geographical scienes., which the specialist readers are expected to know. Land zoning is a delineated classification of landscape in synthesized foroms drawn out of three environment:

i) the natural environment, which encompasses the bio-physical realities of the world existing outside society;

ii) the built environment, which recognises that man-made

iii) the social environment, which arises from the matrix of people and their culture (Bell-Gaz, 1988).

Land zonning thus helps in the actual formulation of land use policy eliminating or minimizing a) conflicts between resource protection and resource development; b) competitions among various components of landuse; c) misuse or overuse of land resource by interest groups or raiders; and d) environmental degradation.

CONCLUSION:

Bangladesh faces an extraordinary challenge over the next few decades in providing the survival needs to her, teeming millions. The survival needs can be met only if the nation finds a highly productive system of growing all forms of biomass, from foodgrains to grasses-trees to fishes, and all of which are land based. There is little mass awareness of the need for regulating landuse, and therefore, there is virtually no pressure on the plitical and administrative apparatus to optimize productivity.In order to optimize productivity of the nations land, land zoning is thought to be the fundamental approach to the solution of the growth and aggravating land resource problems. Bangladesh should not be slow to recognize this vital premise of land use zonning.

What Economic Liberalization and Globalization Means For the Masses?

The subject of “Economic Liberalization” and “Globalization” has attracted the attention of the people both at home and abroad. Government of India wants to make Indian economy dynamic, strong and progressive.

A layman speculates about “Economic Liberalization” a subsidy granted by the Government to big houses. Economic Liberalization means modernization, upgradation of technology, large production, development of sunrise industries like electronics and improvement in the working of public sector enterprises so that the levels of productivity may be improved. All this would become about with the cordial principle of liberalization.

Under “Economic Liberalization”, a review of the various economic controls has been made and counter productive controls are being dispensed with. The industrial licensing policy, trade policy, taxation policy or, in a broader context, the entire fiscal policy, monetary policy, agricultural policy etc. are being cast in a manner so as to subserve the goals of higher production and productivity.

These liberalization are designed to initiate measures aimed at increasing international competitiveness of Indian goods and services and hence their exports. They also encourage in flow of foreign exchange into India especially private foreign direct investment. The economic liberalization policy has provided for encouraging private foreign direct investment in setting joint ventures with Indian business houses in the field of trading houses with equity contribution
up to 51 % in these ventures.

The shift of emphasis in the Economic Liberalization is towards greater reliance on the private sector for increasing the production in future. For this purpose economic controls and regulations have been gradually relaxed and will be further relaxed with the passage of time. The liberalization policy emphasizes economics of large-scale production, modernization and competition for production in the economy.

Although the process of economic liberalization had commenced in 1973, but this process gathered momentum and it is difficult to predict the future shape of things in this regard. The direction is now more certain and the speed is faster towards economic liberalization in India. Broadly speaking, liberalization policy is a move from the public sector towards the private sector. It emphasizes production and productivity maximization goals, rather than the mere idealistic talk of socialistic pattern of society.

The true meaning of the term “globalization,” its core contents, and its impact on the economies and societies developed versus developing countries, have been a vigorously contested subject for a long time now. This debate reminds one of the stories of the elephant and the seven blind men. Each person touched a separate part of the pachyderm’s anatomy, and depending upon the contours of that part, described the complete animal, with his imagination taking over where his visual faculty left off. The message of this allegory is not that the narratives wereinherently flawed in their analytical conception. Rather, that globalization is a dynamic so complex and still unfolding that one account of it could be at significant variance with another, and yet both might be offering true but partial accounts of the overall phenomenon.
Indeed, in contemporary international discourse this term is often bandied about as a new phenomenon. In reality, globalization has long been a feature of the international system, whether it relates to transmigration of people, cross-fertilization of ideas, or even Trans-mutation of technologies. What has changed distinctively in recent decades is the pace and scope of globalization. And as its most powerful manifestation, advanced technology runs through the increasingly jigsaw of the international system as a lubricant, imparting it liquidity as well as dynamism. Thus, the distinctive aspect of contemporary globalization is the increase in its liquidity, which makes it a diabolical phenomenon, capable of tremendous progress but also considerable harm.

Further, despite the controversy, most experts agree that at its core, globalization denotes the international integration of the basic factors of production, i.e. labor, capital, technology, and entrepreneurship, and their output, i.e. goods and services. And as national economies become increasingly integrated into the global economic matrix, it blurs the traditional boundaries between local, national and Trans-national, and impinges crucially upon the latitude,jurisdiction, and sovereignty of State actors in the international system.

By comparison, the concept of “economic liberalization” is relatively simpler to comprehend, even if not easy for governments to implement and sustain over time. In essence, economic liberalization denotes an attitudinal change along with changes in the structures and processes of an economy that was hitherto “closed” to the international markets. In attitudinal terms, this means change in the role of the government from one of a “chief controller” to that of “facilitator” and an “arbiter” of competing economic groups and interests within a country. The structural and procedural derivatives of liberalization signify the entire gamut of changes that result from the deliberate policies of governments to permit a greater role for market forces in the functioning of economy.

Thus, the liberalization policy will usher in an era of faster economic growth and better management of the Indian economy in the years to come. The economic liberalization policy is within the parameters of change allowed in the economic management of the nation. It will help in improving the growth performance of the economy and will reduce poverty and unemployment in the country.

Ecologically induced Model of Development

Sustainability of agriculture can be achieved to a great extent through a fusion of operation of informal market systems and agri-producing systems, In this context the idea generated through the ecologically induced model of development of market systems may be useful (Fig….). The study of the model shows that The market systems comprise of three variable-group components, i.e. Habitat, Workplace and Market Ecology. The habitat and work place may represent agri-producing systems.
Each of the three variable groups interact with consumer and trader components of market systems. Market systems are energised by the trinity of demand, supply and functional specialisation. The accumulative dynamics of these three determinants demonstrates the consequent serviceableness of the process of marketing. The utility will be either adequate or inadequate. If the utility of the process of marketing is inadequate it will lead to re-organisation of marketing. Market reorganisation may be viewed in terms of spatio-temporal and functional aspects. On the other hand if utility is adequate then it may lead to functional specialisation, qualitative improvements of goods and services leading to the enhancement of market area regions.

The development of market systems will follow. The changing equation between adequacy or inadequacy of market utility will influence, among other things, the nature of land use in the influence area of market centres. The process of market re-organisation will call for land use changes. In case of utility factor being adequate functional specialisation will follow which in turn will demand a share of specialised items of demand in the current land use. In both the cases agri-production will be changing. It is here that the question of sustainability of agr-production systems vis-a-vis informal market systems reposes.

It may further be observed in the model that the mutual exchange between producer-trader and consumers may result in varying ratio of profit or satisfaction. In case of increasing profit the producer-trader or farmer-trader may invest more in production. This will lead to spatio-temporal integration in concerned market systems. If profit is less or not adequate then the threshold of agri-produce will also undergo a change. This model thus makes it possible to appreciate the relationship between market systems and sustainability of agriculture.

Rural Marketing: An established world trade order

Rural marketing has become an important aspect of marketing in the marketing environment today. This attraction towards the rural markets is primarily due to its colossal size of varied demands of millions and millions of people around the globe.

In fact rural markets are expanding all over the globe at such a rapid pace that they have taken over the growth in urban market. Apart from the growth rate of rural markets there are several other factors that are leading marketing managers to go rural. As the urban markets are becoming more and more complex, competitive & saturated rural markets are still a easy path way for marketing people. Rural markets are also emerging stronger and stronger because disposable income among the rural folk is increasing.

This vast untapped potential market is growing at a fast pace everywhere. Governments of various countries are forming the policies largely favoring rural development. Research programs in various areas have led to heavy production, which leads to more disposable income among the rural folk, and hence the rural markets have started bulging both in size and volume and no one would like to miss this great potential opportunity.

Differences between the Urban and rural Markets –

Through both the urban and rural market are of paramount importance but the policies made for urban markets cannot be simply extended to rural markets. Various aspirations, cultural values and needs of rural people differ from that of urban people.

One main factor still remains strong i.e.- buying in rural area are still done by the eldest male member of the family, where in, in the urban area every one – male, female, children all are free to make purchases. They have enough cash in hand to make purchases, where in rural areas male ensures that he holds cash till his last breath.

Rural purchasing decisions are influenced by social customs, traditions & beliefs. They also require collective social sanction, which is unheard in urban areas.

Marketing Mix for rural areas-
Marketing Mix elements of 4 P and Hi Tech designing of goods done for urban area may not suit the Rural Customers.

Distribution channels and retail outlets of urban market may not be successful in rural markets.
Various fares, fates religious & cultural festivals are organized in rural areas. These functions are very popular among the rural lot and can become a very good platform for distribution. Rural markets become alive at these melas and

people visit them to make several purchases
Weekly markets –
There are days fixed in rural areas for weekly markets where you can get every thing from a needle to big agricultural machines, vegetables to clothes, cosmetics to medicines. This is another potential low cost distribution channel available for marketers.

Feeder Towns –
Feeder towns generally serve a group of villages. People prefer to go to these areas, especially to the wholesale markets or the 2nd or 3rd grade market to appetize their needs. These markets of feeder towns will easily be able to cover a large section of rural population.

Promotion –
The last of 4 P promotion should also be carefully chosen. Only a small portion of the rural population (10%) has access to news paper. rest all rely on audio visual presentations. Marketers should plan accordingly to convey a correct message to the rural folk.

Other rich traditional medicines such as melas, puppet show, folk dances can also have high impact on the product campaigns.

Pakistan –
Pakistan’s rural sector accounts for more than 70% of employment and 2/3 of the rural employment are in agriculture. To improve the performance in the rural economy and efficiency of financial institutions, rural credit markets government of Pakistan ensured that more credit should be available to agricultural small holders.

The government of Pakistan restructured three cooperatives to improve rural financing. The government ensured that support should reach disadvantaged groups, a special priority was given to the women who need credit, small holders (with 10 acres or less) and rural non farm sector such as live stock, fishery, forestry, rangelands and industrial micro enterprises. Apart from rural financing Pakistan Government also formulated a strategy for expanding telecommunication network to the rural areas of Pakistan.

Apart from telephone services Pakistan government also introduced public phone (PCO) and ensured following

standards are met –
· Quality of service is good
· Telephone is in working order
· Quality of lives is satisfactory
· Dealing with public is good
· Cost of service is affordable
· Located conveniently and readily accessible places
· Pay phone cards for available prices .

Bangladesh –
With almost around 90% of rural population Rural marketing in Bangladesh also faces lot of constraints such as infrastructure problems, reliability of electricity, Phone lines etc.

Bangladesh government has been trying to provide better access of information channel for the rural population .

Nepal-
With almost 92% of the rural population, Nepal social marketing distribution in conjunction in collaboration with Ministry of Health has successfully built the demand for idoized salt through the idoized salt societal marketing campaign.

Many Nepalese consumers still prefer to use the loose crystal salt. The challenge was to switch consumer preference to packaged idoized salt, which prevents iodine evaporation to ensure adequate iodine intake for health and mental development.

The group redesigned the logo and packaging and improved the visibility and availability at the retail level. They generated mass awareness through multiple media channels. A significant component of the campaign was a video van out reach program or Video on wheels, which traveled to the rural communities that have limited access to television and organize video shows, conduct retail surveys and work with STC to conduct retail surveys and work with STC to improve the availability of Idoized Salt.

Srilanka –
The marketing team of shell gas Lanka ltd. Launched a Gamata Gas ( Gas to Village ) program
Grocery Shop – The concept was to make the gas available to a location closest to the customer, which was well accepted both by the consumer and distributors.

They established 60 outlets in 7 distributor areas. They sold 5500 x 12.5 Kg and 150 x 37.5 Kg cylinders in one month.

They also established 33-grocery shop outlet in 6 distributor areas selling 2370 x 12.5 Kg new cylinder during a span of 3 weeks.
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* The district is predominantly rural area where firewood is used as a main source of energy and they were able to convert 95 houses into gas users.

Can India Overtake China?

What's the fastest route to economic development? Welcome foreign direct investment (FDI), says China, and most policy experts agree. But a comparison with long-time laggard India suggests that FDI is not the only path to prosperity. Indeed, India's homegrown entrepreneurs may give it a long-term advantage over a China hamstrung by inefficient banks and capital markets.

Walk into any Wal-Mart and you won't be surprised to see the shelves sagging with Chinese-made goods-everything from shoes and garments to toys and electronics. But the ubiquitous "Made in China" label obscures an important point: Few of these products are made by indigenous Chinese companies. In fact, you would be hard-pressed to find a single homegrown Chinese firm that operates on a global scale and markets its own products abroad.

That is because China's export-led manufacturing boom is largely a creation of foreign direct investment (FDI), which effectively serves as a substitute for domestic entrepreneurship. During the last 20 years, the Chinese economy has taken off, but few local firms have followed, leaving the country's private sector with no world-class companies to rival the big multinationals.

India has not attracted anywhere near the amount of FDI that China has. In part, this disparity reflects the confidence international investors have in China's prospects and their skepticism about India's commitment to free-market reforms. But the FDI gap is also a tale of two diasporas. China has a large and wealthy diaspora that has long been eager to help the motherland, and its money has been warmly received. By contrast, the Indian diaspora was, at least until recently, resented for its success and much less willing to invest back home. New Delhi took a dim view of Indians who had gone abroad, and of foreign investment generally, and instead provided a more nurturing environment for domestic entrepreneurs.

In the process, India has managed to spawn a number of companies that now compete internationally with the best that Europe and the United States have to offer. Moreover, many of these firms are in the most cutting-edge, knowledge-based industries-software giants Infosys and Wipro and pharmaceutical and biotechnology powerhouses Ranbaxy and Dr. Reddy's Labs, to name just a few. Last year, the Forbes 200, an annual ranking of the world's best small companies, included 13 Indian firms but just four from mainland China.

India has also developed much stronger infrastructure to support private enterprise. Its capital markets operate with greater efficiency and transparency than do China's. Its legal system, while not without substantial flaws, is considerably more advanced.

China and India are the world's next major powers. They also offer competing models of development. It has long been an article of faith that China is on the faster track, and the economic data bear this out. The "Hindu rate of growth"-a pejorative phrase referring to India's inability to match its economic growth with its population growth-may be a thing of the past, but when it comes to gross domestic product (GDP) figures and other headline numbers, India is still no match for China.

However, the statistics tell only part of the story-the macroeconomic story. At the micro level, things look quite different. There, India displays every bit as much dynamism as China. Indeed, by relying primarily on organic growth, India is making fuller use of its resources and has chosen a path that may well deliver more sustainable progress than China's FDI-driven approach. "Can India surpass China?" is no longer a silly question, and, if it turns out that India has indeed made the wiser bet, the implications-for China's future growth and for how policy experts think about economic development generally-could be enormous.

THE STIFLING STATE

The fact that India is increasingly building from the ground up while China is still pursuing a top-down approach reflects their contrasting political systems: India is a democracy, and China is not. But the different strategies are also a function of history. China's Communist Party came to power in 1949 intent on eradicating private ownership, which it quickly did. Although the country is now in its third decade of free-market reforms, it continues to struggle with the legacy of that period-witness the controversy surrounding the recent decision to officially allow capitalists to join the Communist Party.

India, on the other hand, developed a softer brand of socialism, Fabian socialism, which aimed not to destroy capitalism but merely to mitigate the social ills it caused. It was considered essential that the public sector occupy the economy's "commanding heights," to use a phrase coined by Russian revolutionary Vladimir Lenin but popularized by India's first prime minister, Jawaharlal Nehru. However, that did not prevent entrepreneurship from flourishing where the long arm of the state could not reach.

COMPETING GIANTS

Population (2002): China 1.28 billion; India 1.05 billion

Population Growth Rate percent (2002): China 0.87; India 1.51

Infant Mortality per 1,000 live births (2002): China 27; India 61

Average Annual Real GDP Growth Rate percent (1990-2000): China 9.6 : India 5.5

Foreign Direct Investment (2001): China $44.2 billion; India $3.4 billion

Population in Poverty (2002): China 10 percent; India 25 percent

Labor Force (1999): China 706 million; India 406 million

Fixed Lines and Mobile Phones per 1,000 people (2001): China 247.7; India 43.8

Size of Diaspora: China 55 million; India 20 million

Sources: CIA World Factbook 2002; The Economist Pocket World in Figures; World Development Indicators CD-ROM; Financial Times

Developments at the microeconomic level in China reflect these historical and ideological differences. China has been far bolder with external reforms but has imposed substantial legal and regulatory constraints on indigenous, private firms. In fact, only four years ago, domestic companies were finally granted the same constitutional protections that foreign businesses have enjoyed since the early 1980s. As of the late 1990s, according to the International Finance Corporation, more than two dozen industries, including some of the most important and lucrative sectors of the economy-banking, telecommunications, highways, and railroads-were still off-limits to private local companies.

These restrictions were designed not to keep Chinese entrepreneurs from competing with foreigners but to prevent private domestic businesses from challenging China's state-owned enterprises (SOEs). Some progress has been made in reforming the bloated, inefficient SOEs during the last 20 years, but Beijing is still not willing to relinquish its control over the largest ones, such as China Telecom.

Instead, the government has ferociously protected them from competition. In the 1990s, numerous Chinese entrepreneurs tried, and failed, to circumvent the restrictions placed on their activities. Some registered their firms as nominal SOEs (all the capital came from private sources, and the companies were privately managed), only to find themselves ensnared in title disputes when financially strapped government agencies sought to seize their assets. More than a few promising businesses have been destroyed this way.

This bias against homegrown firms is widely acknowledged. A report issued in 2000 by the Chinese Academy of Social Sciences concluded that, "Because of long-standing prejudices and mistaken beliefs, private and individual enterprises have a lower political status and are discriminated against in numerous policies and regulations. The legal, policy, and market environment is unfair and inconsistent."

Foreign investors have been among the biggest beneficiaries of the constraints placed on local private businesses. One indication of the large payoff they have reaped on the back of China's phenomenal growth: In 1992, the income accruing to foreign investors with equity stakes in Chinese firms was only $5.3 billion; today it totals more than $22 billion. (This money does not necessarily leave the country; it is often reinvested in China.)

THE MOGUL IS HERO

For democratic, postcolonial India, allowing foreign investors huge profits at the expense of indigenous firms is simply unfeasible. Recall, for instance, the controversy that erupted a decade ago when the Enron Corporation made a deal with the state of Maharashtra to build a $2.9 billion power plant there. The project proceeded, but only after several years of acrimonious debate over foreign investment and its role in India's development.

While China has created obstacles for its entrepreneurs, India has been making life easier for local businesses. During the last decade, New Delhi has backed away from micromanaging the economy. True, privatization is proceeding at a glacial pace, but the government has ceded its monopoly over long-distance phone service; some tariffs have been cut; bureaucracy has been trimmed a bit; and a number of industries have been opened to private investment, including investment from abroad.

As a consequence, entrepreneurship and free enterprise are flourishing. A measure of the progress: In a recent survey of leading Asian companies by the Far Eastern Economic Review (FEER), India registered a higher average score than any other country in the region, including China (the survey polled over 2,500 executives and professionals in a dozen countries; respondents were asked to rate companies on a scale of one to seven for overall leadership performance). Indeed, only two Chinese firms had scores high enough to qualify for India's top 10 list. Tellingly, all of the Indian firms were wholly private initiatives, while most of the Chinese companies had significant state involvement.

Some of the leading Indian firms are true start-ups, notably Infosys, which topped FEER's survey. Others are offshoots of old-line companies. Sundaram Motors, for instance, a leading manufacturer of automotive components and a principal supplier to General Motors, is part of the T.V. Sundaram group, a century-old south Indian business group.

Not only is entrepreneurship thriving in India; entrepreneurs there have become folk heroes. Nehru would surely be appalled at the adulation the Indian public now showers on captains of industry. For instance, Narayana Murthy, the 56-year-old founder of Infosys, is often compared to Microsoft's Bill Gates and has become a revered figure.

These success stories never would have happened if India lacked the infrastructure needed to support Murthy and other would-be moguls. But democracy, a tradition of entrepreneurship, and a decent legal system have given India the underpinnings necessary for free enterprise to flourish. Although India's courts are notoriously inefficient, they at least comprise a functioning independent judiciary. Property rights are not fully secure, but the protection of private ownership is certainly far stronger than in China. The rule of law, a legacy of British rule, generally prevails.

These traditions and institutions have proved an excellent springboard for the emergence and evolution of India's capital markets. Distortions are still commonplace, but the stock and bond markets generally allow firms with solid prospects and reputations to obtain the capital they need to grow. In a World Bank study published last year, only 52 percent of the Indian firms surveyed reported problems obtaining capital, versus 80 percent of the Chinese companies polled. As a result, the Indian firms relied much less on internally generated finances: Only 27 percent of their funding came through operating profits, versus 57 percent for the Chinese firms.

Corporate governance has improved dramatically, thanks in no small part to Murthy, who has made Infosys a paragon of honest accounting and an example for other firms. In a survey of 25 emerging market economies conducted in 2000 by Credit Lyonnais Securities Asia, India ranked sixth in corporate governance, China 19th. The advent of an investor class, coupled with the fact that capital providers, such as development banks, are themselves increasingly subject to market forces, has only bolstered the efficiency and credibility of India's markets. Apart from providing the regulatory framework, the Indian government has taken a back seat to the private sector.

In China, by contrast, bureaucrats remain the gatekeepers, tightly controlling capital allocation and severely restricting the ability of private companies to obtain stock market listings and access the money they need to grow. Indeed, Beijing has used the financial markets mainly as a way of keeping the soes afloat. These policies have produced enormous distortions while preventing China's markets from gaining depth and maturity. (It is widely claimed that China's stock markets have a total capitalization in excess of $400 billion, but factoring out non-tradeable shares owned by the government or by government-owned companies reduces the valuation to just around $150 billion.) Compounding the problem are poor corporate governance and the absence of an independent judiciary.

DOLLARS AND DIASPORAS

If India has so clearly surpassed China at the grass-roots level, why isn't India's superiority reflected in the numbers? Why is the gap in GDP and other benchmarks still so wide? It is worth recalling that India's economic reforms only began in earnest in 1991, more than a decade after China began liberalizing. In addition to the late start, India has had to make do with a national savings rate half that of China's and 90 percent less FDI. Moreover, India is a sprawling, messy democracy riven by ethnic and religious tensions, and it has also had a longstanding, volatile dispute with Pakistan over Kashmir. China, on the other hand, has enjoyed two decades of relative tranquility; apart from Tiananmen Square, it has been able to focus almost exclusively on economic development.

That India's annual growth rate is only around 20 percent lower than China's is, then, a remarkable achievement. And, of course, whether the data for China are accurate is an open question. The speed with which India is catching up is due to its own efficient deployment of capital and China's inefficiency, symbolized by all the money that has been frittered away on SOEs. And China's misallocation of resources is likely to become a big drag on the economy in the years ahead.

In the early 1990s, when China was registering double-digit growth rates, Beijing invested massively in the state sector. Most of the investments were not commercially viable, leaving the banking sector with a huge number of nonperforming loans-possibly totaling as much as 50 percent of bank assets. At some point, the capitalization costs of these loans will have to be absorbed, either through write-downs (which means depositors bear the cost) or recapitalization of the banks by the government, which diverts money from other, more productive uses. This could well limit China's future growth trajectory.

India's banks may not be models of financial probity, but they have not made mistakes on nearly the same scale. According to a recent study by the management consulting firm Ernst & Young, about 15 percent of banking assets in India were nonperforming as of 2001. India's economy is thus anchored on more solid footing.

The real issue, of course, isn't where China and India are today but where they will be tomorrow. The answer will be determined in large measure by how well both countries utilize their resources, and on this score, India is doing a superior job. Is it pursuing a better road to development than China? We won't know the answer for many years. However, some evidence indicates that India's ground-up approach may indeed be wiser-and the evidence, ironically, comes from within China itself.

Consider the contrasting strategies of Jiangsu and Zhejiang, two coastal provinces that were at similar levels of economic development when China's reforms began. Jiangsu has relied largely on FDI to fuel its growth. Zhejiang, by contrast, has placed heavier emphasis on indigenous entrepreneurs and organic development. During the last two decades, Zhejiang's economy has grown at an annual rate of about 1 percent faster than Jiangsu's. Twenty years ago, Zhejiang was the poorer of the two provinces; now it is unquestionably more prosperous. India may soon have the best of both worlds: It looks poised to reap significantly more FDI in the coming years than it has attracted to date. After decades of keeping the Indian diaspora at arm's length, New Delhi is now embracing it. In some circles, it used to be jokingly said that nri, an acronym applied to members of the diaspora, stood for "not required Indians." Now, the term is back to meaning just "nonresident Indian." The change in attitude was officially signaled earlier this year when the government held a conference on the diaspora that a number of prominent nris attended.

China's success in attracting FDI is partly a historical accident-it has a wealthy diaspora. During the 1990s, more than half of China's FDI came from overseas Chinese sources. The money appears to have had at least one unintended consequence: The billions of dollars that came from Hong Kong, Macao, and Taiwan may have inadvertently helped Beijing postpone politically difficult internal reforms. For instance, because foreign investors were acquiring assets from loss-making soes, the government was able to drag its feet on privatization.

Until now, the Indian diaspora has accounted for less than 10 percent of the foreign money flowing to India. With the welcome mat now laid out, direct investment from nonresident Indians is likely to increase. And while the Indian diaspora may not be able to match the Chinese diaspora as "hard" capital goes, Indians abroad have substantially more intellectual capital to contribute, which could prove even more valuable.

The Indian diaspora has famously distinguished itself in knowledge-based industries, nowhere more so than in Silicon Valley. Now, India's brightening prospects, as well as the changing attitude vis-à-vis those who have gone abroad, are luring many nonresident Indian engineers and scientists home and are enticing many expatriate business people to open their wallets. With the help of its diaspora, China has won the race to be the world's factory. With the help of its diaspora, India could become the world's technology lab.

China and India have pursued radically different development strategies. India is not outperforming China overall, but it is doing better in certain key areas. That success may enable it to catch up with and perhaps even overtake China. Should that prove to be the case, it will not only demonstrate the importance of homegrown entrepreneurship to long-term economic development; it will also show the limits of the FDI-dependent approach China is pursuing.