Authoritarian leaders are seen as far more trustworthy than politicians in more openly democratic countries across the emerging world, according to data compiled by the World Economic Forum.
Leaders in Singapore, the Gulf states and Rwanda are rated as having the highest ethical standards in the emerging markets, closely followed by their Chinese and central Asian counterparts.
In contrast, politicians in democracies such as Brazil, Paraguay, Nigeria, Mexico and Romania are seen as exhibiting the lowest ethical standards.
“It does look counterintuitive,” says Thierry Geiger, head of analytics and quantitative research at the WEF, which has polled local and expatriate business communities in 138 countries on the issue since 2007 as part of its annual Global Competitiveness Report.
One of the biggest losers in the WEF’s “trust in politicians” ranking over this period has been Tunisia, widely regarded as the sole success story of the 2011 Arab uprisings. Its politicians were ranked as the 15th most trustworthy in the world in 2010, before the overthrow of President Zein al-Abidine Ben Ali. Under democratic rule, the country has fallen to 63rd.
Other countries that saw sharp falls in the ranking include the democracies of South Africa, Barbados, South Korea, Iceland, Cyprus and Spain.
Overall, among the 20 emerging market countries rated as having the most trustworthy politicians in the 2016 survey, 13 are rated as “not free” by Freedom House, a US government-funded non-governmental organisation, with three classed as partly free and just four classed as free.
Among the 20 emerging markets whose politicians are seen as having the lowest ethical standards, not one is classed by Freedom House as not free, with six free and 14 partly free.
That is from Steve Johnson at the FT.
That is my latest Bloomberg column, here is the introductory section:
The richest Americans are much less likely to have inherited their wealth than their counterparts in many supposedly more egalitarian countries. They’re not remarkably rich in degrees from elite universities. Rich Democrats have more social connections than rich Republicans.
These are some surprising insights from a new study of the very wealthy by Jonathan Wai of Duke University and David Lincoln of Wealth-X, based on data on 18,245 individuals with a net worth of $30 million or more.
The study portrays high-net-worth individuals as a more idiosyncratic and diverse group than reductionist cliches about “the 1 percent” might suggest.
Looking globally, extreme wealth is most closely connected to elite education in South Korea, Chile, and South Africa, and least so in Ukraine and Qatar. The U.S. is near the bottom of the top third of the country rankings for the tightness of this connection. Germany is close to the bottom, reflecting how German paths to riches run through forms of manufacturing and medium-sized business that are not so closely tied to elite higher education.
For all the talk of Sweden and Austria as relatively egalitarian societies, they are also the countries where the greatest proportion of high-net-worth individuals inherited their wealth: 43.8 percent and 49.6 percent, respectively. In the U.S., inherited wealth accounts for only 12.6 percent of the very wealthy individuals in the study’s sample.
There is much more at the link.
1. Remember Walter Block’s “Murderer’s Park”? South African markets in everything.
3. “Harper made the startling claim that we might see “an all-intersex podium in the 800 in Rio and I wouldn’t be surprised to see as many as five intersex women in the eight-person final.”” Link here.
America, China, Hong Kong, Russia, Ukraine, Austria, Hungary, Poland, Slovakia, Turkey, Syria, Libya, Iraq, Yemen, Kosovo, Afghanistan, Philippines, Venezuela, Nigeria, South Africa, Malaysia, and Brazil, though the latter may be in flux. Tunisia and Iran are problematic, but arguably hard to call. Saudi may be headed toward collapse, but I don’t think you can say they are less free just yet. Ethiopia is losing more political freedom, though still making very real economic progress.
Mexico and Colombia, if only by consolidating previous gains, and still there is a chance of a turnaround in Argentina at some point. Latvia? Where else? You could make a (modest) case for India and some of the smaller African countries.
Japan, South Korea, Canada, and much of Western Europe though many of these cases appear fragile to me.
Overall this is not a thrilling ledger. I haven’t listed most of the smaller countries, but in the longer run they often follow the lead of their larger neighbors.
File under Not Good.
There are so, so many environmental lawsuits, often brought by non-profits backed by philanthropists. These institutions, among other things, target polluting corporations and bring lawsuits against them for purposes of constructing a deterrent against yet more pollution. The Sierra Club and Greenpeace would be two examples, and of course a big chunk of the funds comes from the relatively wealthy. How is this for one example of many?:
On 7 October, Greenpeace filed a lawsuit in Superior Court for the District of Columbia against Dow Chemical, Sasol North America (owned by the South African State Oil Company), two public relations firms – Dezenhall Resources and Ketchum – and four individuals.
On top of that, it is easy enough to be an anonymous donor to these groups, and to stay anonymous. That said, I have heard tales — apocryphal perhaps — of donors who gave to environmental causes because they too earlier in their lives had suffered under the adverse effects of pollution. In back room whispers they are sometimes called “vengeance donors,” and it is suggested that because of the vengeance donors soon enough all companies will go out of business or at the very least be at the mercy of the whims of the wealthy.
Now, to be sure, many of these environmental lawsuits are excessive, or unfair, or would fail both a rights and cost-benefit test and we should condemn them, as indeed you see happening with equal frequency on the Left and on the Right. Many companies have gone out of business because of environmental lawsuits or the threat thereof, or perhaps the companies never got started in the first place because they couldn’t afford large enough legal departments. I can safely say that just about everyone sees the problem here.
But we shouldn’t condemn the good lawsuits, right? Right? Or is this whole philanthropic lawsuits business simply out of control and needs to be stopped altogether?
And oh, that Greenpeace lawsuit I linked to above? It actually wasn’t about environmental pollution at all, at least not directly. It was because Greenpeace felt it was under secretive and privacy-intruding surveillance. You should have seen my Twitter feed light up when the vengeance donors let on their role in that one.
“You’re a Hispanic and you’re in here trimming the trees and everything, and a guy walks up and hands you a hundred dollars,” Mr. Senecal [the butler] said. “And they love him, not for that, they just love him.”
That is the report issued by Trump’s butler, who just loves him. There is this:
Mr. Senecal knows how to stroke his ego and lift his spirits, like the time years ago he received an urgent warning from Mr. Trump’s soon-to-land plane that the mogul was in a sour mood. Mr. Senecal quickly hired a bugler to play “Hail to the Chief” as Mr. Trump stepped out of his limousine to enter Mar-a-Lago [the home].
More recently, Mar-a-Lago has set off controversy in the Republican primary, as Mr. Trump has been criticized by rivals for hiring employees from abroad to staff the club rather than relying on the local work force.
“There are a lot of Romanians, there’s a lot of South Africans, we have one Irishman,” Mr. Senecal said of the staff, before echoing Mr. Trump’s defense that locals shunned the short-term seasonal work. But he also added of the foreigners: “They’re so good. They are so professional. These local people,” he trailed off, making a disapproving face.
The Jason Horowitz NYT article is interesting throughout.
South Africa’s high court has upheld a decision to legalize domestic sales of rhinoceros horn, a controversial plan that some hope will reduce poaching by creating a legal source of supply, but limited to South Africa, for the endangered animal’s parts.
…John Hume, a rancher in South Africa with more than 1,100 rhinos, made the application with another farmer to overturn the ban. He said he can only afford to keep his farm going if the local horn trade is legalized.
Right now, there are only 29,000 rhinos left on the planet, most of which are in South Africa. It’s an incredible drop from the 500,000 that roamed Earth at the start of the 1900s, and sadly, the majority have been killed as a result of poaching, which increased 9,000 percent (yes, you read that right) between 2007 and 2014.
That means more than 1,000 rhinos are now killed illegally each year for their horns. Most of these end up in Asia, where they can reach up to US$100,000 per kilogram on the black market. Those prices are driven by the fact that many countries see rhino horn as a status symbol, and in Vietnam it’s believed (with no evidence whatsoever) to cure cancer.
Farmers claim they can harvest rhino horn without killing the animals, critics claim that rhinos will be in danger as long as the Asian demand continues, and in essence legalization cannot make supply sufficiently elastic, sufficiently quickly, to solve the problem.
1. Robert Trivers, Wild Life: Adventures of an Evolutionary Biologist. A wild memoir, full of tales of bipolar, murders in Jamaica, study at Harvard, marijuana, knee symmetry as a key variable in sprinting success, and the Black Panthers. It has sentences like “Best way to put it, nobody fucked with Ernst Mayr.” From one of the leading evolutionary biologists, recommended if you are up for the offbeat and the exotic and not obsessed with coherence. Burial instructions are included.
2. R.W. Johnson, How Long Will South Africa Survive?: The Looming Crisis. A stunning yet deeply pessimistic book about why the country is doing so badly. The rot seeps more badly than I had realized. The corruption, collapse of the legal system, and dismantling of the use of the government public to spend on public goods all are out of control and getting worse. Recommended. A bit idiosyncratic, but conceptual and original throughout.
3. C.L.R. James, Beyond a Boundary. Many people consider this the best book on cricket ever written. I cannot judge that, but it is a stellar sports book, colonialism book, and most of all a Caribbean Bildungsroman (Trinidad), definitely recommended to anyone with interests in those areas. Beautifully written, I read this one to prepare for Kareem.
4. Timur Vermes, Look Who’s Back. I don’t usually read books with “the Hitler gimmick,” but this recently translated German novel caught my eye in a London bookstore. Imagine that Hitler comes back (an unexplained plot twist), no one believes it is “the real Hitler,” and he is given his own TV show as a kind of crank celebrity imitator. It’s an interesting meditation on the commercial trivialization of evil, and how the modern world can process virtually any kind of message. Relevant for American politics today, I even laughed at some parts and I don’t usually find novels funny.
5. Amiri Baraka, SOS Poems 1961-2013. Is he actually one of America’s better poets? Imagine a mix of Walt Whitman, Ezra Pound, and the Black Panthers. Truly original and full of energy, here is his NYT obituary.
6. James Baldwin, Collected Essays. My favorite Baldwin, not the novels. The biggest surprise in here is his film criticism, most of all the short essay on Bergman, or on Porgy and Bess. Here is an Atlantic piece appreciating Baldwin as a movie critic. Or how about this sentence?: “He [Langston Hughes] is not the first American Negro to find the war between his social and artistic responsibilities all but irreconcilable.”
The paper is by David Hugh-Jones, and this is from the research summary:
The study examined whether people from different countries were more or less honest and how this related to a country’s economic development. More than 1500 participants from 15 countries took part in an online survey involving two incentivised experiments, designed to measure honest behaviour.
Firstly, they were asked to flip a coin and state whether it landed on ‘heads’ or ‘tails’. They knew if they reported that it landed on heads, they would be rewarded with $3 or $5. If the proportion reporting heads was more than 50 per cent in a given country, this indicated that people were being dishonest…
The countries studied – Brazil, China, Greece, Japan, Russia, Switzerland, Turkey, the United States, Argentina, Denmark, the United Kingdom, India, Portugal, South Africa, and South Korea – were chosen to provide a mix of regions, levels of development and levels of social trust.
The study’s author Dr David Hugh-Jones, of UEA’s School of Economics, found evidence for dishonesty in all the countries, but that levels varied significantly across them. For example, estimated dishonesty in the coin flip ranged from 3.4 per cent in the UK to 70 per cent in China. In the quiz, respondents in Japan were the most honest, followed by the UK, while those in Turkey were the least truthful. Participants were also asked to predict the average honesty of those from other countries by guessing how many respondents out of 100 from a particular country would report heads in the coin flip test. However, participants’ beliefs about other countries’ honesty did not reflect reality.
This is interesting:
“Differences in honesty were found between countries, but this did not necessarily correspond to what people expected,” he said. “Beliefs about honesty seem to be driven by psychological features, such as self-projection. Surprisingly, people were more pessimistic about the honesty of people in their own country than of people in other countries.
And consider this from Hugh Jones:
“I suggest that the relationship between honesty and economic growth has been weaker over the past 60 years and there is little evidence for a link between current growth and honesty,” said Dr Hugh-Jones. “One explanation is that when institutions and technology are underdeveloped, honesty is important as a substitute for formal contract enforcement. Countries that develop cultures putting a high value on honesty are able to reap economic gains. Later, this economic growth itself improves institutions and technology, making contracts easier to monitor and enforce, so that a culture of honesty is no longer necessary for further growth.”
The research paper is here, and for the pointers I thank Charles Klingman and Samir Varma.
Jones, by the way, makes it clear there are a variety of kinds of honesty, and inferences from any single test should be limited. For Japan in particular the measured level of honesty depends critically on which test is applied. The real lesson of the study may simply be that most groups are dishonest, and people are not even honest with themselves about their views of the dishonesty of others. Honesty depends a good deal on context too. On some of these questions, see some skeptical comments from Kevin Drum.
If you are looking for simple correlations: “…at individual level, there is no evidence that religious adherence is associated with honesty.” How about having a Ph.d.?
A brilliant selection. Deaton works closely with numbers, and his preferred topics are consumption, poverty, and welfare. “Understanding what economic progress really means” I would describe as his core contribution, and analyzing development from the starting point of consumption rather than income is part of his vision. That includes looking at calories, life expectancy, health, and education as part of living standards in a fundamental way. I think of this as a prize about empirics, the importance of economic development, and indirectly a prize about economic history.
Think of Deaton as an economist who looks more closely at what poor households consume to get a better sense of their living standards and possible paths for economic development. He truly, deeply understands the implications of economic growth, the benefits of modernity, and political economy. Here is a very good non-technical account of his work on measuring poverty (pdf), one of the best introductions to his thought.
He brought a good deal of methodological individualism to the field of consumption studies, most of all by using household surveys more than macroeconomic data.
I think of this as a prize for “a whole body of work” rather than for one or two key papers. David Leonhardt has a good NYT summary of some his work and its deep underlying optimism about the situation of the poor in the global economy.
Deaton was born in Scotland but has taught at Princeton for some time. Here is Deaton on Wikipedia. Here is Deaton’s home page. Here are some recent working papers, he even has published in Review of Austrian Economics, an interesting review of Bill Easterly on experts. Here are previous MR mentions of Deaton, there are many of them. Here is Deaton on Google Scholar. Here is a Russ Roberts EconTalk with Angus Deaton. I think of Deaton as someone who is relatively willing to share himself with the world, let’s hope the Prize doesn’t ruin that openness. Here is 21 minutes of Angus on YouTube, on his core ideas.
Deaton has long had a special working relationship with India and South Africa. Here are his key pieces on measuring poverty and poverty reduction in India. Here is his work on the Indian health survey. Here is his 2010 AER piece on how to measure poverty globally in a consistent manner, by the way he suggests that asking people should be part of the answer.
He also has written on gender discrimination within the family in developing nations. Some of his work has helped direct our attention to the viability of cash transfers as a way of fighting poverty.
At first, say circa 1980, he was known for his work in developing Almost Ideal Demand Systems for analyzing consumer expenditures; much of this early work was with Muellbauer. That made a big splash, but it was more of a theoretical and technical advance than what was to follow. One message was that studies based on the idea of a “representative consumer” were likely to prove misleading.
It is interesting to note the trajectory of his career, as Alex noted on Twitter. He first did theory, then filled in the numbers and did empirics, applying the theory. Eventually he took theory + empirics and used it to tackle some of the big issues of poverty and development.
Here is his long survey piece on foreign aid and growth. He favors the move away from project evaluation, is skeptical of instrumental variable methods, and believes that RCTs need to be supplemented with a better theoretical understanding of mechanisms. He knows a lot about many, many topics.
I do not know him, but he is described by many as a colorful character. Dani Rodrik has strong praise for Deaton as a teacher.
Here are short, popular essays by Angus Deaton; you can call that the “what he really thinks page.” He is critical of the Republican war against ACA and connects that topic to Downton Abbey. He argues for regional price indices for the United States. He discusses American inequality and why it is often ignored as an issue. He warns against the creeping regulation of science. And he considers why the Stern report had a greater impact in the UK than in America.
I very much liked Deaton’s recent book The Great Escape, which focuses on how modernity revolutionized standards for consumption.
This award is no surprise at all and he has been on the short list for a while. Is it a slight surprise that Deaton won this prize on his own? Many thought he would be paired with Anthony Atkinson, but I see Deaton as worthy of a stand-alone prize and Atkinson’s chance has not passed him by. In any case, Tirole was a stand-alone prize too, so maybe in that regard there has been a shift in the Swedish regime.
Last but not least here is Alex’s post on Deaton.
Sorry people, but Ukraine and Venezuela and Argentina are not eligible for this designation, any more than you can give “Most Likely to Succeed” to LeBron James. Have I mentioned lately that emerging market corporate debt doubled over the course of 2012-2014? But where exactly is the pot most likely to boil over next?
Here are a few contenders:
The currency declined nine percent last month, prompting reactions such as:
“It is incredible to see how dauntingly fast things are deteriorating,” Enestor dos Santos, an economist at BBVA, said from Madrid. “It’s been hard to nail down a projection.”
According to some polls, seventy percent of the population favors the impeachment of President Rousseff; political dysfunction adds to the brew and the various scandals only seem to be growing worse. Moody’s has downgraded the country to Baa3, right on the margin of junk. The economy is expected to contract 1.7 percent this year and the current account deficit is coming in higher than forecast. Financial crises are a tradition.
The country is headed for snap elections, in light of ongoing political instability, while fighting a two-front war and it has a growing current account deficit. Hmm…
That said, the economy grew at 2.4 percent last year, exports are relatively diversified, and I suspect the current dire situation will prove manageable. The Greek and Turkish ten-year yields are now about the same (which country should be happy with that comparison?). On the down side, the country is especially dependent on short-term financing, which can prove volatile.
The Russian economy shrank by 4.6 percent in the quarter ending June. Although the media has focused on the stability in Moscow and maybe St. Petersburg, the economic decline in Russian provinces has been much more serious.
Debt in Russia’s 83 regions has risen by 100 to 150 percent since 2010. Russia’s economic minister suggested that possibly 60 of those 83 regions are in crisis mode, and 20 may have already been defaulting on their debt.
The economy still hasn’t recovered from the 2008-2009 crisis, and it doesn’t seem the price of oil will be bouncing back anytime soon.
A few days ago Ivan Krastev wrote: “The Kremlin is populated not by mere survivors of the post-Soviet transition but by survivalists, people who think in terms of worst-case scenarios, who believe that the next disaster is just around the corner, who thrive on crises, who are addicted to extraordinary situations and no-rules politics.”
On the bright side, they have $541 billion in reserves. I say that’s overrated when everything else is turning sour.
The economy shrank 3.3 percent in the first half of this year, and the government responded by increasing borrowing. For further information, see Russia.
They are hanging on, and the freeing up of previously held government payments will deliver the economy a decent burst of stimulus. Still, they are one EU spat, or one coalitional collapse, away from being back in the doghouse with closed banks, Grexit, higher austerity, and plummeting exports. That said, the Not Very Serious People turned out to be the Not Very Serious Person and things are looking much better than they did a few weeks ago. Even the Finns are on board with the bailout. Staying in the euro may not be good for Greece in the longer run, but for now it means they are unlikely to win this particular tournament.
For all the current problems, I still don’t think they are next in line. Their production is crashing, but that’s not the same as a financial crisis. They don’t seem to have their debt distributed “in just that right way.” The $3.6 trillion in foreign exchange reserves — down from $4 trillion I might add — doesn’t hurt either. Still, this year China is on the list of nominees, and for the first time.
The bottom line: I’ve got to go with Russia and Belarus. Runner-up is Brazil.
Honorable mentions include Indonesia, Jamaica, and Belize (decent growth but a widening current account deficit). The dark horse pick? Colombia, with a peso down 36 percent against the dollar in the last year and a heavy dependence on oil exports. Alternatively, Malaysia. Thailand isn’t doing well, but it seems like more of a slow burn. South Africans are economically miserable, but the country does not really fit the financial crisis profile.
Here is my discussion from 2014, Ukraine ended up as the exemplar. The sad thing is that this year’s post is longer than last year’s.
Private schools for the poor are growing rapidly throughout the developing world. The Economist has a review:
Private schools enroll a much bigger share of primary-school pupils in poor countries than in rich ones: a fifth, according to data compiled from official sources, up from a tenth two decades ago (see chart 1). Since they are often unregistered, this is sure to be an underestimate. A school census in Lagos in 2010-11, for example, found four times as many private schools as in government records. UNESCO, the UN agency responsible for education, estimates that half of all spending on education in poor countries comes out of parents’ pockets (see chart 2). In rich countries the share is much lower.
Overall, there is good evidence that private school systems tend to create small but meaningful increases in achievement (e.g. here, here, here, here) and especially good evidence that they do so with large costs savings. The large costs savings suggest that with the right institutional structure, which might involve vouchers and nationally comparable testing, an entrepreneurial private sector could create very large gains. Karthik Muralidharan who has done key work on private schools and performance pay in India puts it this way:
Since private schools achieved equal or better outcomes at one-third the cost, the fundamental question that needs to be asked is “How much better could private management do if they had three times their current level of per-child spending?”
The Economist notes that another promising development is national chains which can scale and more quickly adopt best practices:
…Bridge International Academies, which runs around 400 primary schools in Kenya and Uganda, and plans to open more in Nigeria and India, is the biggest, with backers including Facebook’s chief executive, Mark Zuckerberg, and Bill Gates. Omega Schools has 38 institutions in Ghana. (Pearson, which owns 50% of The Economist, has stakes in both Bridge and Omega.) Low-cost chains with a dozen schools or fewer have recently been established in India, Nigeria, the Philippines and South Africa.
Bridge’s cost-cutting strategies include using standardised buildings made of unfinished wooden beams, corrugated steel and iron mesh, and scripted lessons that teachers recite from hand-held computers linked to a central system. That saves on teacher training and monitoring.
The Economist is somewhat skeptical of scripted lessons, known as Direct Instruction in the education world, but in fact no other teaching method has as strong a record of proven success in randomized experiments (see also here and here).
Need I also point out that online education can bring some of the best teachers in the world to everyone, everywhere at low cost? An article in Technology Review titled India loves MOOCs points out that students from India are a large fraction of online students (fyi, we are also finding many Indian students at Marginal Revolution University)
Throughout India, online education is gaining favor as a career accelerator, particularly in technical fields. Indian enrollments account for about 8 percent of worldwide activity in Coursera and 12 percent in edX, the two leading providers of massive open online courses, or MOOCs. Only the United States’ share is clearly higher; China’s is roughly comparable.
Education is changing very rapidly and its the developing world which is leading the way.
More than 99.9 percent of all wild gnus, also called wildebeest, from the Afrikaans for “wild beast,” have dark coats. But this three-year-old golden bull and his many offspring are not an accident. They have been bred specially for their unusual coloring, which is coveted by big game hunters.
These flaxen creatures are the latest craze in South Africa’s $1 billion ultra-high-end big-game hunting industry. Well-heeled marksmen pay nearly $50,000 to take a shot at a golden gnu — more than 100 times what they pay to shoot a common gnu. Breeders are also engineering white lions with pale blue eyes, black impalas, white kudus, and coffee-colored springboks, all of which are exceedingly rare in the wild.
“We breed them because they’re different,” says Barry York, who owns a 2,500-acre ranch about 135 miles east of Johannesburg. There, he expertly mates big game for optimal — read: unusual — results. “There’ll always be a premium paid for highly-adapted, unique, rare animals.”
…No one disputes that there’s money to be made in rare big game. Africa Hunt Lodge, a U.S.-based tour operator, advertises “hunt packages” to international clients traveling to South Africa that include killing a golden gnu for $49,500, a black impala for $45,000, and a white lion for $30,000.
There is more here, and for the pointer I thank Kaushal Desai.
This Neill Blomkamp (“District 9”) movie has received only lukewarm reviews, but while highly imperfect it is more interesting than most critics seem to realize. The initial premise is that in a few years’ time South Africa resorts to AI-driven, robot policemen. I see the film as revolving around three key questions:
1. What will a robot be like, if he grows up under rather brutal conditions? This is first and foremost a movie about education, and it could have been written by John Gray. Don’t assume that people (robots) have an irrevocable tendency to support liberal values, at least not when the chips are down and they have been beaten up. The gang motive is both popular and enduring.
2. Can a society dependent on robots for law enforcement become/remain a liberal society? Or will the “arms race” between the law and the criminals result in brutality and a loss of liberty?
3. How robust is a robot society to the eventual possibility of human error and depravity?
Along the way there are references to Asimov, “Silent Running,” Blade Runner, Verhoeven of course, and other android sources. I can’t endorse every angle of the ending, or every character decision, but still I didn’t consider leaving this one.
Victor Mallet writes:
Amid gloom over global economic growth and uncertain prospects for emerging markets, India is beginning to stand out as uniquely well-placed to gather the windfall benefits of an international slowdown.
Unlike Brazil, Russia or South Africa, India reaps immediate advantages for its terms of trade and its domestic budget from the fall in commodity prices triggered by renewed concerns about the world economy.
And unlike China, India will not suffer much from any decline in global demand for manufactured goods because its export sector is relatively small.
Commodities – mostly oil – account for more than half of India’s imports but only 9 per cent of its exports, mainly food. The current account deficit falls by about $1bn a year for every $1 decline in the price of a barrel of oil, and the reduced cost of fuel subsidies is also easing the burden on the budget.
Another benefit of weaker commodity prices is falling inflation, long the bane of the Indian economy.