From New York to Mumbai

by Dave

Views –

In a recent opinion piece in the Financial Times, Raghuram Rajan concedes as much when he says that clear limits to the specialization of the developed world in non-traded goods such as financial services are now seen. He adds that as the US reduces its current account deficit, shifts in specialization would take place. He is hinting that the developed world with vastly depreciated currencies in the next year or two might find its competitive advantage restored in manufacturing, while the emerging world might have to depend less on export of manufacture to the developed world. Protectionism and trade retaliation could be counted upon to chip in, too. Therefore, the developing world might have to specialize in the production of non-traded goods.

Which developing countries are better poised to do that? India comes up on top of the list. Enabled by technology, it has already made its mark in trading seemingly non-tradable services. Indians dominate the world of finance in the West. They are in key positions and hence their knowledge and experience count for something. Hence, now is the time to start planning for takeover by Mumbai of the mantle of the headquarters of world of finance from New York/London. Far-fetched? Yes, it is, right now.