One of the oft-cited causes of the financial crisis are the huge macroeconomic imbalances that developed between the United States and a number of emerging markets, particularly China. Neil Gregory, a senior adviser at the World Bank and author of New Industries from New Places, offers China and India some advice on coping with the crisis that should also help deal with these imbalances. From an interview with Neil on China and India's IT markets in India's Financial Express:
How has the financial crisis affected the Chinese and Indian market?
Both countries are oriented towards the exports market. Export of IT has taken a hit, so exports are not going to recover quickly. The challenge is to direct these industries to serve the domestic market. There is a fairly low penetration of computerisation in the Indian domestic market. So there is a lot of potential for the Indian companies to serve the domestic market. The same goes for China, where the companies should focus more on the development of domestic market. There has to be some reorientation in terms of exports.
For extra credit, you can watch a short clip of Neil on his recent visit to India on Youtube.
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