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The Economist's thoughts on the Paris riots

Although the riots in Paris are far from resolved I believe the coverage of the recent events are well summarized and analyzed in this week's edition of the Economist.

Particularly the magazine's leader is a good read and I agree with the major points. "A much greater contributor than Islam to the malaise in the suburbs is the lack of jobs." See article here (non-walled article). I think this is a point very well made. The structural uemployment rate in France of almost 10% is is a problem which affects the Paris suburbs particularly hard.

"The main answer is that the French labour market is throttled by restrictions such as the 35-hour week, a high minimum wage, and tough hiring and firing rules."

As I have reported before the 35 hour working week is cutting rather than creating jobs. The Economist's special report (walled for non-subscribers) digs deeper into the analysis - 

"For all young people in France these days, proper jobs are scarce (...) The reason is what economists call an “insider-outsider” labour market: full-time permanent jobs are so protected by law that employers try not to create many, preferring instead temporary workers or interns whom they can shed more easily when times get tough."

The blogosphere has been swarming with post about the riots and on Technorati the events in France have been on the top 5 list for over a week ... I can particularly point to the Fistful of Euros which have had a good coverage of the riots.


Neweconomist on India's niche in globalization

mapofindia.jpg When economists and politicians invoke examples of how emerging economies are shaping the global arena, they are most likely to point to the Red dragon. However, we would wise also to look elsewhere for emerging economies that have an astounding impact on the global economy and thus how we live today.

In the theoretical sphere of economics (is there any other?) you have the notion of the so-called BRIC countries (Brazil, Russia, India, and China) who are believed to have enormous influence on the global economy now and even more so in the future. See this report from Goldman Sachs.

"The results are startling. If things go right, in less than 40 years, the BRICs
economies together could be larger than the G6 in US dollar terms. By 2025
they could account for over half the size of the G6. Of the current G6, only the
US and Japan may be among the six largest economies in US dollar terms in
2050. "

As reported in the London based Neweconomist blog we are focusing on India and how the country has created a niche in the global economy of providing ground for the outsourcing of currently 44% of the global market for IT services and IT-based business processes. The original source of this information is this report from Deutche bank research describing India as the "back-office of the world."

"As the world’s most important offshoring
location the subcontinent dominates the international market for the outsourcing of
IT service ...


India’s key comparative advantage is its
availability of well-trained, English-speaking and inexpensive specialists."

If you want to dig further into the offshoring capabilities of India you can read these four articles from the Economist which provide a good overview of the off-shoring and outsourcing business in India.

India aims to become the back office for the world's banks - feb 2003

India becomes a defender of free trade - feb 2004

After the call-centre, now the IT department is off to India

(...) information-technology industry is already choking on its own success; but the boom has barely begun

India must truly be a force to be reckoned with.


The mirror of Paris riots

riots-paris_1997.JPGAs the riots in Paris suburbs continue to flourish it is due time to ask the question; why? The apparent answer is the death of two teenagers last thursday; in their attempt to escape the police they crawled the fence of an electrical power station and were jolted to death.  This caused immediate riots as the police was blamed for the two boys' death.

However, as the riots continue for the seventh consecutive night the reason and scope of the conflict are bound to be more than the dreadful events cited above. The recent events in Paris thus re-capture some important questions concerning the Maghreb culture in French society and marginalised immigrants on a whole in Europe. 

"The rioting has grown into a broader challenge for the French state. It has laid bare discontent simmering in suburbs where African and Muslim immigrants and their French-born children are trapped by poverty, unemployment, discrimination, crime and poor education and housing."  - See article from CBS news, and article from Nouvelobs.

The French administration is hard lining and in particular the interior minister Nicolas Sarkozy; see article from Nouvelobs. 

I wonder whether this is the right approach ?

The riots in Paris have also fuelled an interesting discussion over at the Fistful of Euros in this post by Doug Merrill.