Thursday, March 21, 2013

Book Review #2: The Elephant and the Dragon

The Elephant and the Dragon:
Book Review #2
By: Amy McDougall


Robyn Meredith, author of New York Times bestseller The Elephant and the Dragon, outlines the rise of two of today’s major world players, India and China, highlighting the international implications of their rise along with important changes that need to occur if India and China are going to continue in their rise.  The two animals in the title are indicative of the different processes China and India have gone through in their rise.

The Dragon: From its Maoist start, when 40 million people starved to death in between 1959 and 1962 (Page 19), China has had record amounts of growth in the past 50 years with its GDP currently growing at approximately 9.6% each year (Page 37). This rapid growth is largely attributed by Meredith to be a product of China’s communist spin on Capitalism.  If a mountain needs to be moved, the Chinese government will find a way to make it happen. As a result, China has taken the lead as the most rapidly modernizing nation in the world, moving with the speed and fire of a Chinese dragon.  

The Elephant: India on the other hand, although not as impressive in terms of numerical growth as China, has been lumbering not too far behind China. According to Mr. Das, “[India] will never have speed, but it will always have stamina,” (Page 56).  Gandhi and Nehru’s ideals of self-sufficiency and simplicity were deeply engrained into the Indian memory, but after serious financial reforms, India’s educated and English-speaking population drove India into the 21st Century not too far behind China. According to Mr. Nath of the Indian Commerce Industry, “China is winning the sprint, and we are going to win the marathon” (Page 57).

The Relevance of The Elephant and the Dragon

There has been much fearful hubbub surrounding the topic of China and India’s rise (especially China’s).  With populations that dwarf that of the United States, it is easy to see why the rise of two Eastern nations would cause the West to be cautious. Although both China and India emulate some aspects of Western ideals such as liberalism, capitalism, and in India’s case, democracy, the deeply rooted Eastern cultures that both of these countries emulate are often dichotomous with Western ideals, and as they rise, they are going to be less inclined to succumb to American or Western hegemony.  China already has permanent member status with the UN Security Council and has used its position of power to protect its interests, such as veto-ing economic sanctions on Iran (a main source of Chinese oil) (Page 165). India is in the process of being considered for permanent member status, and although it aligns more heavily with the United States, particularly in Eastern affairs, it is less inclined to bandwagon with the West. On top of that, China’s human rights abuses and the persistence of communistic ideology and India’s growing rich-poor gap along with persisting caste system are major causes of concern for international norms. China’s growing military and the persistence of nuclear power in both nations amplify fears from the West.
This book thus is relevant because it highlights a shift in international power and politics that the rest of the world needs to be prepared for. Both India and China are a force to be reckoned with and it would be naive to not embrace and capitalize upon this new source of opportunity. It also emphasizes a growing trend in international business and so for MBA students it is crucial to understand how the world is now doing business differently in order to succeed in our own personal business careers. 

Where Meredith Excels:

The first area I believe Meredith excels in is in her ability to tie in the history and culture of India and China and explain how these cultural and historical differences will either impede or encourage India and China’s growth.  China, with its history of strong authoritarian leaders has been able to make big strides in economic development because decisions can be made quickly and the people don’t have to be in support of any proposed change.  Meredith though displays also how this might be a potential downfall for China in the future.  Her particular portrayal of the Tiananmen Square incident is a pertinent picture of China that is important to recognize (Page25-27).  She does a good job portraying that there might be a glass ceiling on China’s development if they are unable or unwilling to make political and sociological changes amongst their people. 

Incidentally Meredith claims that this is India’s strategic edge.  Although India has not been as rapid in its growth and development, it has the political foundation that is conducive to long lasting change.  For India however, Meredith does not downplay the persisting caste system that has perpetrated a large rich/poor gap in India that must be reconciled if further growth is in order, or else this prevailing caste system may impose a glass ceiling upon India’s development.  

Meredith also demonstrates that these cultural differences are not the only factors that have indicated China or India’s development.  China indeed made some strategic policy initiatives that India failed to institute from the start, including China’s primary initial objectives such as infrastructure projects, a strong educational foundation, and a focus on rural incomes (Page 156). I think that Meredith is correct in attributing these three factors as the primary underlying triggers of change that resulted in a much faster rise in China than India.   

Meredith also excels in her ability to take India and China as case studies for an even larger argument of how the world of business and industry is rapidly changing.  Her chapter on the Disassembly Line was particularly relevant for MBA students.  Henry Ford revolutionized manufacturing and industry through his assembly line.  Bringing talented and well-paid workers together to see the development of a product all the way through was one of the biggest turning points in economic history.  Today however, the disbursement of different steps to different countries where people of different cultures put together a conglomeration of different products is the next big turning point in economic history.  Our perceptions of modern business have been transformed by this chapter and Meredith highlights the growing internationalization of trade and what those implications are even on American businesses. Today business has become a sort of black hole, where no one can really comprehend the depth and complexity and reach of a business cycle. This web of interconnectedness is getting even more difficult to navigate, making it more complicated to compete in this age of globalization.

Where Meredith Falls Short:

The main flaw of The Elephant and the Dragon is the fact that it is a little bit outdated.  Published in 2008, almost all of its major themes are still relevant but there have been a few significant events that have happened in the past few years that would be extremely additive to Meredith’s work. Issues such as China’s role in the South China Sea, along with the 2008 and 2011 food crises, the financial crisis, and the democratic revolution spurred by the Arab Spring all have lasting implications on the roles of China and India. 

Meredith also primarily had an economic focus to her book. She discussed politics in the domestic context, but failed to demonstrate how China and India’s economic power was going to transfer over into international political power.  For example, how can China and India take on new diplomatic roles with North Korea or Iran? Or will India and China partner with other developing countries to assist with their rise? Or will the size and power of China and India make them exempt from many international norms, similarly to how the U.S. plays be an entirely different set of rules than  the rest of the world?

Finally, Meredith’s book is an accurate portrayal of the growing competition between China and India; however she does not propose how these two models of growth and development will serve as benchmarks for other developing countries.  Will developing countries be more prone to take on the Chinese model or the Indian model?  Which process is more sustainable, or are these two models of development only going to be successful in India and China because of the cultural foundations that these countries had before them?

My Recommendations and Closing Thoughts:

Overall I think that Meredith’s book The Elephant and the Dragon, was an important book for MBA’s to read, particularly before travelling to India.  It is important to understand the role India and China will play in the context of international business. Today, almost all business is international and it would be naive for Americans to fall behind in this competitive world because they are unaware of the cultural difference between the world’s economic power-houses. I personally think that both India and China are noteworthy examples of development, but I agree with Robyn Meredith.  There are several key factors that both India and China must focus on or they are going to max out in their development. Already, Brazil, Russia, Mexico, South Korea, Turkey, Indonesia, and South Africa are following closely on India and China’s heels and so the competition is only become more intense in the next few decades.  China and India will soon find that it isn’t enough to rely on macro-economic development as their sole measure of progress.  Meredith’s note of the younger generations and her reference to Thomas Friedman’s “Demographic Dividend” will indeed be a crucial determiner of 21st century power.  This up-in-coming generation who are already growing up in a world vastly different from their parents, are going to set the stage for economic, sociological, political, religious, and cultural change.