Treasury Secretary Tim Geithner was in India this week, paying call on the major emerging market democracy and subtly encouraging the country to broaden its economic relationship with the U.S. by allowing more investment from abroad and opening its markets. He's secured an agreement to open up U.S. investment in the transportation infrastructure. How much potential is there?The world's second-most-populous nation, with 1.2 billion people, desperately needs better roads to support its thriving economy, India's leaders say, especially as it emerges as a economic power on the world stage. Nearly 40 percent of India's world-class agricultural products, such as mangoes and tomatoes, spoil because of delays getting them to market, according to Indian economists.
Whoa. Imagine what will happen when that much productivity isn't wasted. The U.S. relationship with India has taken a backseat to our relationship with China, and it's been affected by the need to keep Pakistan cooperating with our Afghanistan strategy, but improving relations with India could have major economic implications for us.
Currently, India isn't even one of our top five trading partners, despite being the fourth-largest economy in the world if you measure GDP with Purchasing Power Parity (it is 12th otherwise). While the debate over how to properly structure trading agreements for truly mutual gains still rages, it's clear that going forward we have to look at international economic growth as a non-zero sum game. Growth in India can benefit people here in the U.S., especially if we can revitalize our manufacturing industry.
-- Tim Fernholz
