SM enjoys occasionally keeping tabs on diaspora members worldwide and the brothers-in-arms in the Gulf are a particularly interesting, if occasionally sad case. Lured by much greater economic opportunity but often forced to deal with 2nd class citizen status (and worse) – their tales really help show the lengths some folks will go to to eke out a few bucks for the fam.

Fewer Lights in the Future?

Now, with the global collapse of the closely intertwined construction and finance industries, the Gulf has been particularly hard hit. An interesting leading indicator of sorts is the shape of traffic at the airport –

For many expatriate workers in Dubai it was the ultimate symbol of their tax-free wealth: a luxurious car that few could have afforded on the money they earned at home.

Now, faced with crippling debts as a result of their high living and Dubai’s fading fortunes, many expatriates are abandoning their cars at the airport and fleeing home rather than risk jail for defaulting on loans.

Police have found more than 3,000 cars outside Dubai’s international airport in recent months. Most of the cars – four-wheel drives, saloons and “a few” Mercedes – had keys left in the ignition. Some had used-to-the-limit credit cards in the glove box. Others had notes of apology attached to the windscreen.

Not surprisingly, Desis are a large % of the folks fleeing–

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The “Kerala model of development” is often cited as a path for developing nations to secure strong human development indices (literacy, health, etc.) but without first adopting the “Washington Consensus” (essentially higher, per capita GDP via free markets). Today’s Economist Blog has a brief update on the model and the risk posed to it by the global economy and it reminded me of an old-ish article I never got around to blogging…

Back in September ’07, NYT described the Kerala model and its adherents this way –

TRIVANDRUM, India — This verdant swath of southern Indian coastline is a famously good place to be poor. People in the state of Kerala live nearly as long as Americans do, on a sliver of the income. They read at nearly the same rates.

With leftist governments here in the state capital spending heavily on health and schools, a generation of scholars has celebrated the “Kerala model” as a humane alternative to market-driven development, a vision of social equality in an unequal capitalist world.

…It also gained a reputation as a place hostile to business, with heavy regulation, militant unions and frequent strikes. There are fishing jobs but little industry and weak agriculture. Government is the largest employer; many people run tenuous businesses like tea shops or tiny stores.

However, if there’s one thing economists of all stripes agree on, there’s no such thing as a free lunch. They further note –

…far from escaping capitalism, they say, this celebrated corner of the developing world is painfully dependent on it.

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The Economist recently posted its newest “bright young economists to watch” list. In addition to the tremendous visibility given by a top tier pub like The Economist, past list alumni have gone one to great things –

Raj Chetty

TWENTY years ago The Economist wrote about eight young economists who were making a big splash in their discipline and beyond. One of them, Paul Krugman, recently won the Nobel prize for his models of international trade and economic geography. Ten years later we tried to repeat the trick, identifying another eight young stars, many of whom were taking their discipline far off-piste. One has since achieved even greater fame than anticipated. Steven Levitt of the University of Chicago became a household name as co-author of “Freakonomics”, a bestselling book published in 2005.

This year, 2 economists of mutinous importance made the cut.

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The NYT has an interesting story on how the US’s recession will affect the folks in the Desh most directly linked to our economy –

The DJ ain’t gettin’ as much play

BANGALORE, India — After years of being blamed for job losses in America and elsewhere, India’s high-tech companies and outsourcing firms are going through a downturn of their own. The global slowdown is forcing them to reduce hiring, freeze salaries, postpone new investments and lay off thousands of software programmers and call center operators.

Of course, as with many things in life, an economic “crisis” is often a relative thing. In the 70s & 80s, for example, the Natural and NAIRU rates (essentially the lowest possible unemployment rate w/o screwing other things up) were widely thought to be around 6%. Our recent 6.5% uptick in unemployment, by those standards, would have been seen as a blessing. And in a global context, the most recent US unemployment rate would literally be a godsend. For ex., France’s official unemployment rate – even in boom times – is way above this and the unofficial rate is probably closer to 10%.

So with that economic relativism in mind, what does a crisis look like through the eyes of Infosys? A mere 13-15% growth –

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