Arvind's Newsletter -Weekend edition

1.Gautam Adani, has overtaken Mukesh Ambani on the Bloomberg Billionaire's Index (BBI), to become India's and Asia's richest man. 

While Adani has seen his worth climb into the top 12 on the world rankings, Ambani is just one rung below at 13. Both have moved up spots since last year. Earlier in December 2023, the billionaire had climbed to the 15th spot, reaching within close distance of Ambani who was then at 14.

With a net worth of $97.6 billion, the Adani Group founder is now the world's 12th richest person and the richest Indian and Asian on the list. He has gained $7.67 billion from the last list position and amassed $13.3 billion year-to-date (YTD). Earlier last year, Adani saw his net worth slide many spots amid the Hindenberg allegations.

2.India’s labor force is shifting from cities back to farms despite efforts to encourage factory job growth, reports Shan Li in Wall Street Journal.

The sudden lockdown in 2020 sent workers streaming from cities back to villages in rural India, an exodus that many thought would be an easy-to-reverse blip on India’s journey to becoming an industrialised nation.

Instead, the ranks of India’s farmworkers have swelled by some 60 million over the past four years, a shift fueled in part by a food-welfare program that feeds hundreds of millions of people. Even last year, when much of the country had put the pandemic behind them, India’s farms added 13 million workers, and Prime Minister Narendra Modi said the food program would remain for another five years.

Meanwhile, jobs in manufacturing nationwide haven’t budged, and factories say they are struggling to hire.

Instead of seeing the masses move onto factory floors—a shift that helped raise the standard of living for millions of Chinese—India appears to be deindustrialising prematurely.

That puts India at risk of missing out on the benefits of a huge labor force, while much of its population struggles with chronic unemployment or underemployment. It also means that the world—which benefited when China’s economy grew, fueling demand for commodities and providing consumers with cheap goods—might not be able to count on India to be as powerful an engine of global economic growth. Read on

3.Fast fashion is only going to get faster in 2024

According to the latest edition of the State of Fashion, an annual publication from the industry outlet Business of Fashion and the management consultancy McKinsey and Company, the fashion industry’s fastest growing sector is, well, just that. Too fast, and getting faster.

Chinese brand Shein and its rival Temu, the so-called third generation of fast fashion, are putting their elders—the likes of H&M and Zara—to shame. In 2022, those brands were introducing dozens of new styles every day, compared to Shein’s hundreds. And now, Shein is putting out a staggering 2,000 to 10,000 new products per day, for prices averaging $14, and Temu’s are even cheaper.

At that scale, the exploitation of just about everyone involved gets ugly, as fast as the fashion rolls out.

4.Pharmaceutical giant Eli Lilly launched a direct-to-consumer website yesterday, allowing its customers to receive third-party prescriptions for its drugs, including its newly approved weight loss injectable Zepbound (similar to Novo Nordisk’s Wegovy/Ozempic). Users can be connected to a telehealth service via the site to quickly receive prescriptions before placing an order. 

 Roughly 70% of Americans are obese or overweight, a condition known to increase health risks. The market marks the next step in the rising use of GLP-1 agonists like Zepbound, which mimic a gut hormone stifling hunger and increasing insulin production. Studies have shown an average weight reduction of 15%, among a myriad of other health benefits.

High demand for the treatments has strained supply chains and upended industries, and forcing food manufacturers to anticipate generational changes in eating habits. Pharmaceutical companies Pfizer and Amgen are expected to seek approval for their own versions this year in a market analysts expect to grow to $100B by 2035.

However, another report mentioned that Semaglutide, the active ingredient in the injectable diabetes drug Ozempic and its weight-loss sister prescription Wegovy, seems to have yet another unfortunate side effect: putting back on the weight, and then some, when patients stop taking it.

5.OpenAI will launch its GPT “app store” next week with a view to monetise its offering. Users will be able to make and sell artificial intelligence agents, powered by the GPT-4 large language model behind ChatGPT: The store was supposed to launch in November but OpenAI’s schedule was disrupted by the firing and rehiring of CEO Sam Altman.

At the same time, Google is getting ready to announce a premium, paid version of its own chatbot, Bard. A Google developer shared a screenshot of “Bard Advanced,” powered by the tech giant’s latest LLM Gemini Ultra, expected to be available to users of Google’s paid tier Google One. After the last couple of years of excitement over progress in AI, the industry leaders are moving toward monetisation.

6.Can India, Indonesia and Saudi Arabia be the next great economies? The Economist analyses.

Politicians and policymakers all over the world share a preoccupation: how to make their countries richer. The trouble is that the route to prosperity looks ever more daunting. The global economy is changing, as new, green technologies emerge and trading relationships fragment. In countries that are already rich the state, after decades of free-market rhetoric, is back in a big way. Governments are spending hundreds of billions on handouts for industries they deem to be strategically important.

In the face of this, many developing countries’ ideas for growth are staggeringly ambitious. India and Indonesia hope to become high-income countries within 25 years. Muhammad bin Salman, Saudi Arabia’s crown prince, wants to diversify and develop its economy just as rapidly. Refreshingly, such plans are more outward-looking than many development strategies of old. But they contain pitfalls, too.

In many ways, the developing world is choosing to bank on globalisation. Indonesia wants a bigger role in green supply chains. It seeks to do everything from mining and refining nickel, even to building the electric vehicles that run on it. It then wants to export the finished products to the rest of the world. Countries in the Gulf want to become attractive homes for global business, and are opening up to flows of people, cargo and cash. Narendra Modi envisions India as a high-tech manufacturer for the world, churning out microchips and smartphones.

That is a welcome shift. Less than 50 years ago India hoped to grow by closing itself off from the global economy. It turned out to be an approach that failed miserably. Some still suggest that India’s domestic demand could carry its growth.

But serving foreign markets plays a vital role in development. It keeps firms honest, by forcing them to compete in markets that their governments do not control. It lets them reach the largest possible scale. And foreign customers can teach firms how to serve them better. In East Asia export performance was also a useful yardstick for policymakers, because it revealed which industries deserved their continued backing.

Nonetheless, today’s development strategies also hold dangers. In many countries governments are running the risk of warping the economy in the name of nurturing it. Saudi Arabia’s onslaught of industrial policy, mainly disbursed as handouts from the Public Investment Fund, exceeds the spending even of America’s Inflation Reduction Act. In order to help exporters grow, India is seeking to fence off its high-tech manufacturers behind tariffs and subsidies. Indonesia’s all-in bet on nickel leaves it perilously exposed, should other battery chemistries prevail.

The rich world’s new-found zeal for protectionism may make it tempting for poorer countries to follow suit. Yet floods of cash and shelter from foreign competition make it impossible to know whether a government’s development gambles are paying off. A bet on one technology could go wrong if others emerge.

Parts of the developing world have paid dearly to learn these lessons before. For most of the 1960s Africa’s policymakers had the same ideas as East Asia’s, and the continent grew as fast, until picking the wrong champions left it languishing between 1975 and 1985. It is the poorest region in the world today.

Picking winners is also harder than it was 60 years ago. Then the choice was over which form of manufacturing to promote. Cheap, abundant workforces gave poor countries an edge. Manufacturing was the only sector in which poor countries got better faster than rich countries.

Today, however, factories have become more capital-intensive. Though manufacturing still offers a way to boost a country’s productivity, it is less certain to become a poor country’s comparative advantage. That makes it even harder for policymakers to spot a good industry for them to place their bets. Rather than gambling with the public’s money, they would be better off keeping it off the table.

There are, after all, plenty of other worthwhile things to spend it on. The state has a vital role in providing public goods by investing in infrastructure to stitch regions together, or education to boost workers’ skills. That might still favour some industries over others. But if economies stay open, then they will at least experience the disciplines and benefits of trade.

The stakes are high. The developing world is home to over 6 bn people and some of the most fragile democracies. Getting growth wrong would keep such places poorer for longer. That would be not just a human tragedy, but also a potential source of political instability. To avert it, the developing world needs to be bold—and resist the urge to build walls around itself.