Colossus with Feet of Clay

There is an article in the newspapers the other day about the two current economic giants: China and India. Much has been said and written about the rise of these two countries, who have become the poster boys of globalization, with their amazing success being attributed to their leveling barriers to trade and joining the world with open arms.

But it is the title of a new book by Berkeley economist Pranab Bardhan that caught my eye: ‘Awakening Giants: Feet of Clay: Assessing the Economic Rise of China and India’. In an earlier blog entry, I wrote about how certain passages in Paper 2 make references, or allusions, to some event, character or imagery. Knowing these references will certainly aid and deepen your understanding of the passage.

In this instance, the reference to ‘feet of clay’ is drawn from the Bible, where the prophet Daniel interpreted King Nebuchadnezzar’s dream in which he saw a giant statue with a golden head, silver arms and chest, brass thighs and torso and iron legs. Only the feet of the statue were not made of metal, but were instead made of clay. Daniel told the king that the clay feet symbolized the vulnerability of the statue and also his empire. Today, the phrase ‘feet of clay’ is used to describe a vulnerable flaw or weakness in a person or organization that otherwise seems strong and powerful.

So back to the book. How is this phrase used in this context? In the book, the author highlights the fact that behind the glowing numbers of economic growth, there are certain structural weaknesses that both China and India have to manage or run the risk of going off the rails. In China’s case, the absence of transparent and accountable processes becomes glaringly obvious as the Chinese economy becomes more complex and social relations become more convoluted. As for India, political fragmentation brought about by populist politics, clogged courts and corrupt police and administration may render it ill-prepared to meet the challenges of the future. These giants will definitely need to manage these before their feet become clay ones.

How you can use this blog entry:

Paper 1 (Counter-points to raise regarding the economic growth of China and India)

Paper 2 (Understanding language: Allusions)

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~ by irwin on May 14, 2010.

One Response to “Colossus with Feet of Clay”

  1. A comment by Fred T extracted from the original GP blog:

    Hi Irwin, your latest entry reminded me of an article that Paul Krugman wrote in Foreign Affairs in late 1994, entitled “The Myth of Asia’s Miracle” (See http://web.mit.edu/krugman/www/myth.html). In it, Krugman explained why the East Asian Miracle was really a myth because the impressive economic growth was really a result of more inputs (in terms of factors of production – labour / capital) being injected into the economies, rather than productivity gains or improvements in efficiency. To borrow an analogy from economics, it’s like the difference between moving the firm (or the whole economy) towards the production possibility boundary, and pushing the boundary outwards.

    While it ran counter to conventional wisdom at the time (I remember that some Singapore officials had even given a robust defence of Singapore’s economic growth as Krugman had compared Singapore’s economy with that of Stalinist USSR. The officials claimed that Krugman had not really taken Singapore’s Total Factor Productivity growth into consideration), it provided much food for thought. The Asian Financial Crisis in the late 1990s as well as recent calls by our leaders to improve our productivity have led some commentators to recall Krugman’s article once more.

    If anything, thinking about Krugman’s arguments and more recent developments in Asian economies since the late 1990s should lead us to pay more attention to what are the long-run and sustainable competitive advantages that we have. We should continually ask how much value we are really adding to the global economic value chain and how we can do better.

    An interesting NY Times article I read talked about the value chain involved in the production of the Apple iPod (see http://people.ischool.berkeley.edu/~hal/people/hal/NYTimes/2007-06-28.html). Even though our iPods are marked “Made in China” or “Assembled in China”, China accounts for very little of the value-add of the iPod. In fact, out of the US$299 of the iPod (at that time), the largest value-add is attributable to Apple for the conception and design of the iPod. The assembly work in China, by comparison, accounted for only US$4 worth of value added.

    Again, the reality is a bit more complex. The Toshiba hard drive that runs the iPod could have been partially made in China or the Philippines so some of the value-add attributed to Japan might be more correctly attributed to others. Nevertheless, it does tell us that even as some commentators herald the rise of new giants like China and India, the real economic value-add that these countries provide to the global economic value chain might not be that great.

    True economic value probably lies in new ideas and innovation. While no one doubts China and India’s tremendous potential, they still have to contend with serious internal challenges. Given the lack of freedoms, endemic corruption and institutional inefficiencies, it remains to be seen whether China and India can rival the West in new ideas and innovation.

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