Here’s Why India Is About to Become the World’s Most Important Economy
China’s days as the globe’s most exciting economy are numbered.
That’s because while China’s workforce has already begun to shrink, in part as a result of the country’s one-child policy, its neighbor to the West, India, is growing its workforce at a breakneck pace.
According to Ernst and Young, the Indian workforce will grow to 900 million strong by 2020. To put that in perspective, the American workforce, which is the third largest in the world, comes in at just under 160 million people.
Because economic growth results from the combination of capital goods, like factories and computer systems, with labor, a growing labor force can be a huge boon for an economy. At the same time, the Indian government must also train its workforce effectively and build the necessary infrastructure to help its economy flourish. According to CNNMoney:
Currently only 2% of India’s workers have received formal skills training, according to Ernst & Young. That compares with 68% in the U.K., 75% in Germany and 96% in South Korea.
It’s a problem spread across industries. The Royal Institution of Chartered Surveyors estimates that in 2010, India needed nearly 4 million civil engineers, but only 509,000 professionals had the right skills for the jobs. By 2020, India will have only 778,000 civil engineers for 4.6 million slots.
There is a similar gap among architects. India will have only 17% of the 427,000 professionals it needs in 2020.
If India can successfully transform its human resources into productive workers, you can expect it to quickly replace China as the economy that both inspires fear and respect among American economy watchers.