I wrote when I was in India a post called Indian Economics where I tried to put in prospective the amount of money that Indian make versus the US. I thought a followup might be in order discussing what we have found in Thailand.
Going back to the same list of GDP per capita, we find that Thailand currently is at $9,193 versus India at $3,802 and the US at $43,223. So, for the purposes of this article I will say that the average Thai makes 1/5 as much as the average American and twice as much as the average Indian. I have not done as much word of mouth research to validate these assumptions, but I do believe that they are more of less true.
With these facts in mind I will say that I am very surprised how much closer the standard of living feels in Thailand to the US then it does to India. When you walk around a Thai city or town, things do not seem that different from home. Most streets are well kept and have a mixture of little shops and restaurants as well as fast food and 7-Eleven chain outlets. Streets are well kept and usually have good sidewalks. People mostly dress in normal, clean western cloths. When you are in the outskirts of a city you see a lot of giant new Tesco superstores (similar looking from the outside to a Wall-Mart, except bigger) and fancy new gas stations.
The most drastic differences I notice off hand are in transportation and street food/shopping. The mix of vehicles here is very heavy with small motorbikes. There are plenty of private cars, but there are also swarms of these little bikes everywhere, being driven by young men, grandmothers, Thai schoolgirls, etc. Also, there are a lot more regular buses and many converted pickup truck buses, or Songthaews. As for street shopping, food carts are everywhere, selling cheap Thai food staples. Also, a lot of shopping for clothes and other goods is done in large areas of small stalls that are present in any large town or city.
The end result is that it seems like Thai life is not that different from the US, but just with a lot of components being done in a cheaper way. A Thai mother still goes out to the store, but it is usually on a motorbike and often to a rustic vegetable market. Thais eat out a lot, but they only spend 20 Baht (75 cents) at a soup stand rather then $10 at Chilies. Thai teens still spend a lot of time shopping, but rather then for name brand goods at a mall, it is for counterfeit goods at a outdoor market, and they ride in a Songthaew to get there. Long haul transportation is usually done by nice tour bus, rather then private car. From what I have seen on the outside, Thais usually live in much smaller houses, but they are usually well kept.
The thing that also makes life seem similar is how a lot of the Thai ways of doing things are a lot cheaper, but are actually on the surface as good as the US version. When we stopped on our 10 hour bus ride at a rest stop to eat it was a brand new open air market place with nice tables and chairs and a array of little counters with the usual soup and curry mix. My soup and Diet Coke cost be 40 Baht (a little over a dollar) but I would take it over a McDonald's value meal any day of the week. A ride in a Songthaew is certainly not a safe as a real city bus, but with the fresh air blowing through your hair, it is not any less comfortable. A 120 Baht (4 dollar) counterfeit Abercrombie and Fitch T-Shirt is no different from its $30 version, it might even be made in the same factory.
Nisha had an interesting observation on another aspect of this big leap from India. When you read the paper here the social problems are not that different from the US. This morning she read about a protest by people in wheelchairs because Bangkok was not installing enough ramps in the sidewalk, so that they can cross the street easily. This is in contrast from India where it is not that uncommon to see someone walking down the sidewalk on their hands. The Thai story reads like something you might see in the US, but having a disabled person walking down the street on their hands is not even something we would think of as a problem in the US.
Showing posts with label Economics. Show all posts
Showing posts with label Economics. Show all posts
Sunday, November 25, 2007
Sunday, October 14, 2007
Indian Economics
One thing that has interested me in India is trying to figure out the amount of money that people make and spend compared to the US. I find this to be a topic of some interest, since in the software business companies are constantly trying to leverage India. However, I do not feel like many people actually have an idea of what the savings actually are. The following is all information that I have gleaned from different conversations since I have arrived. It is therefore probably not accurate, but may at least be interesting.
If we look at it first from a purely statistical standpoint, the GDP per capita of the US is 43,444 dollars per person and for India it is 3,737 dollars per person. So by this reference the average US person should make about 11 times more then the average Indian. For the purposes of this article I am going to think of it as around 10.
In terms of how much money people make, my impression is as follows (everyone talks in terms of per month here, so I will go along). I think a service worker, like a guy who works in a mid range hotel cleaning and serving etc. makes around 4000 rupees a month, or 100 dollars. This figure I got from a rural area, so it may very well be higher in a city. I have also been told that 20,000 - 40,000 rupees a month (500 - 1000 dollars) is what someone with a good white collar job makes. Supposedly this is enough to get you a decent place to live and a cheap car or motorbike in Chennai. I have also been told that making 1 lakh per month, aka 100,000 rupees (2,500 dollars) is what it takes to be making a lot of money. I would assume this means that you have a nice house or flat in a new development and a nice car. I would assume most likely a servant as well. These numbers do make sense more or less. Someone who makes 25,000 dollars a month in the US is very upper middle class/upper class. The 40,000 seems a little high since that would be 10,000 dollars a month in the US. That is definitely a little more like upper middle class. As for the hotel worker, that would only be 1,000 dollars a month in the US, which is low since I am pretty sure people in that strata make around 20,000 a year. This is not surprising though since there are a large supply of such workers in India and limited demand.
I also looked up recently the price of transport. A Tata Indica econobox costs around 3-4 lakhs here (7,500 to 10,000 dollars) and an Ambassador is around 5 lakhs (12,500 dollars). An imported car mid-range car like a Honda Accord, which seems incredibly sleek and luxurious in India, runs a whopping 15 lakhs (37,500 dollars). Pretty steep by US standards. I am pretty sure this has to do with import duties. On the other hand a common motorbike here, the Hero Honda Splendor, only runs you a mere 40,000 rupees (1,000 dollars). Seeing how cheap these motorbikes are compared to the cars, which are not very discounted to the US, you can see why the motorbike is dominant as the transportation of the common man.
As for consumer goods, a bottle of coke runs you 15 rupees (38 cents). It is 25 rupees (63 cents) for diet, which is particularly infuriating to me. A one liter water is 10 rupees (25 cents) and a bag of grapes costs about 20 rupees (50 cents). We pay around 120 (3 dollars) for a box of cereal and 80 (2 dollars) for a 1 liter box of irradiated milk.
If you want to eat out, a all you can eat lunch at a working man's restaurant costs around 50 rupees (1.25 dollars). Dinner at more of a mid-range kind of place usually runs around 140 a person (4 bucks) while Pizza Hut or another clean corporate kind of place is 250 (6.25 dollars). A top end 5 star hotel kind of deal will run you 750 a person (around 19 dollars).
The thing that I notice about this is that while it is true that the average Indian makes around 10 times less then in the US, the stuff that they need to buy is not that much cheaper. 1.25 for a good meal sounds cheap, but that is more then 11 dollars for lunch (by the 10 times multiplier, which would be a lot to spend in the US, even for a Indian buffet in Cambridge. The Coke is 38 cents, but if Coke was $3.80 in the US, people would certainly not drink nearly as much. Cars are especially bad because they do not cost that much less at all.
I am sure that this seems rather obvious, that the standard of living is less. I thought however that it would be nice to be a little more specific. I find it especially surprising how much less purchasing power even a professional person has, especially in the transport and mid to high end restaurant arena (60 dollars for Pizza Hut?). At these prices I can see the motorbike and homemade daal ruling India for quite some time.
If we look at it first from a purely statistical standpoint, the GDP per capita of the US is 43,444 dollars per person and for India it is 3,737 dollars per person. So by this reference the average US person should make about 11 times more then the average Indian. For the purposes of this article I am going to think of it as around 10.
In terms of how much money people make, my impression is as follows (everyone talks in terms of per month here, so I will go along). I think a service worker, like a guy who works in a mid range hotel cleaning and serving etc. makes around 4000 rupees a month, or 100 dollars. This figure I got from a rural area, so it may very well be higher in a city. I have also been told that 20,000 - 40,000 rupees a month (500 - 1000 dollars) is what someone with a good white collar job makes. Supposedly this is enough to get you a decent place to live and a cheap car or motorbike in Chennai. I have also been told that making 1 lakh per month, aka 100,000 rupees (2,500 dollars) is what it takes to be making a lot of money. I would assume this means that you have a nice house or flat in a new development and a nice car. I would assume most likely a servant as well. These numbers do make sense more or less. Someone who makes 25,000 dollars a month in the US is very upper middle class/upper class. The 40,000 seems a little high since that would be 10,000 dollars a month in the US. That is definitely a little more like upper middle class. As for the hotel worker, that would only be 1,000 dollars a month in the US, which is low since I am pretty sure people in that strata make around 20,000 a year. This is not surprising though since there are a large supply of such workers in India and limited demand.
I also looked up recently the price of transport. A Tata Indica econobox costs around 3-4 lakhs here (7,500 to 10,000 dollars) and an Ambassador is around 5 lakhs (12,500 dollars). An imported car mid-range car like a Honda Accord, which seems incredibly sleek and luxurious in India, runs a whopping 15 lakhs (37,500 dollars). Pretty steep by US standards. I am pretty sure this has to do with import duties. On the other hand a common motorbike here, the Hero Honda Splendor, only runs you a mere 40,000 rupees (1,000 dollars). Seeing how cheap these motorbikes are compared to the cars, which are not very discounted to the US, you can see why the motorbike is dominant as the transportation of the common man.
As for consumer goods, a bottle of coke runs you 15 rupees (38 cents). It is 25 rupees (63 cents) for diet, which is particularly infuriating to me. A one liter water is 10 rupees (25 cents) and a bag of grapes costs about 20 rupees (50 cents). We pay around 120 (3 dollars) for a box of cereal and 80 (2 dollars) for a 1 liter box of irradiated milk.
If you want to eat out, a all you can eat lunch at a working man's restaurant costs around 50 rupees (1.25 dollars). Dinner at more of a mid-range kind of place usually runs around 140 a person (4 bucks) while Pizza Hut or another clean corporate kind of place is 250 (6.25 dollars). A top end 5 star hotel kind of deal will run you 750 a person (around 19 dollars).
The thing that I notice about this is that while it is true that the average Indian makes around 10 times less then in the US, the stuff that they need to buy is not that much cheaper. 1.25 for a good meal sounds cheap, but that is more then 11 dollars for lunch (by the 10 times multiplier, which would be a lot to spend in the US, even for a Indian buffet in Cambridge. The Coke is 38 cents, but if Coke was $3.80 in the US, people would certainly not drink nearly as much. Cars are especially bad because they do not cost that much less at all.
I am sure that this seems rather obvious, that the standard of living is less. I thought however that it would be nice to be a little more specific. I find it especially surprising how much less purchasing power even a professional person has, especially in the transport and mid to high end restaurant arena (60 dollars for Pizza Hut?). At these prices I can see the motorbike and homemade daal ruling India for quite some time.
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