Narayan Ramchandran, Director, Morgan Stanley, Addresses IIM Indore Students

Narayan Ramchandran, Director, Morgan Stanley, Addresses IIM Indore Students

He also spoke about the development of economics through Ricardo's "Theory of Comparative Advantage" (explaining why China is the manufacturer for the world and India is the service industry for the world) and Malthus' "The World will Run Out of

Food" Theory explaining the gap between the polynomial expansion of the population and the arithmetic expansion of food. Towards the end economics was becoming increasingly inaccessible through John Nash and others.

He spoke about the direction of the world economy where eventually the US would have a positive savings rate and the Chinese currency would re-adjust. Therefore, our next 10 or 20 years would be defined by exactly those phenomena taking place in the world. He explained how Japan was a trailer to the current movie. China and India would be following the same pattern. India had started its reforms 15 years after China. So what would happen was that India would go through the high growth phase and then would have to adapt to the slowing of economy. This would be helped by policy. China is exactly there as we speak. The problem with the Chinese currency would be a mistake on the part of the country. The fact that the currency is cheaper would imply that there would be a set-up of a Chinese shoe factory, but not a Chinese logistics factory. As a result, when the currency is adjusted, it would not be sensible to have a shoe factory but much more sensible to have a logistics factory.

Concluded.

Contributed by -
Gaurav Gupta,
Media & Public Relations Committee,
IIM Indore.

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