Too Late, Big Guy?

This article refers to an issue that Iowa Guru raised in her earlier blog. The issue of foreign retailers operating in India came to the fore shortly after we arrived, and the issue remains a hot political topic, as it's weakened the ruling parliamentary coalition.

I share this article because it points out one of the peculiarities about India and other developing countries. Sometimes a nation like India leap-frogs over technologies that evolved more slowly in the developed countries. This article notes the jump in telephone service almost directly to cell phones with a relatively limited number of land lines, even though phones have been in India for decades. We saw the cell phone phenomena in Cameroon as well. At the present, I doubt very much that a sufficient number of Indian consumers have access to internet services to make a big difference in retail practices, but that number should be increasing relatively quickly. India has an average per capita income that is very low and a huge number of people that live on or below even the local standard of poverty, but the absolute numbers in India are so great that it still encompasses a significant middle class. I could foresee middle-class Indians migrating quickly to greater use of online services and shopping, while poorer Indians would likely remain more loyal to the traditional small shopkeepers. Thus, the author's forecast that Wal-Mart and Carrefour (French equivalent) would have a hard time breaking in here may prove correct.

I do wonder how India's the small shopkeepers will survive with so many people apparently on the payroll (even if they are family members). Perhaps if small shopkeepers were driven out of business in sufficient numbers, massive unemployment could result. Right now, I see massive under employment in the sense that labor productivity has to be so low because so many persons are holding so many jobs with so few duties. The history of capitalism has been one of dislocation followed by consolidation. The dislocations almost inevitably affect the poorest and most vulnerable in society, but those changes have usually provided long-run benefits for that same group. I don't think that there is an easy answer to these questions, but watching the process unfold here in India will be a major development.