RISCnotes
Notes on RISC framework proposed by Atanu Dey & Vinod Khosla
*Atanu Dey Background
(short attention deficit :-) bachelors in Mechanical, Masters in computers, marketing for HP in silicon valley for 6 yrs, PhD in Economics at UC Berkeley. developed RISC. came to india to implement.
stays near Pune.
*Importance of this document
moden economies are immensely complex adaptive nonlinear systems.
These are affected by billions of individual decision about employment, consumption, saving and investing, migration, entrepreneurship, govenment actions, stock markets, international events, natural disasters. All developed economies harness power of this emergent behaviour of increasing cooperation, interdependence & specialization between people to further their standard of living, by choicest & wellthought interventions in the working of free markets.
but this process of govenment intervention can go awry in other way, if the complex interdependencies are not acknowledged, and simplistic partial interventions made, undermining the essence of this emergence which is freedom to pursue selfinterest and cooperation, often despite best of motives. e.g. Central planning of India.
Economists is trained to look at the Big Picture of the economy, and understand interrelated nature, and can see possibilities of furthering the economy which may not be achievable by billion individual microoptimizations, which is when a very cautios public policy is recommended to take the economy via that path.
Atanu Dey writes the blog deeshaa.org and I have been amazed by his analysis, sense of fairness and ability to convey his insights without jargons. He has a terrific eye for practicality, and is finest of economists. Very probably what he proposes in this report, will actually WORK.
Indias huge population provides is not a bane. It means huge needs & huge productive ability which can be paired one to one. Challege is that of coordination. e.g. We never compain, huge population has made marriages difficult. Because more brides & more grooms can be paired, and can live happily ever after.
Executive Summary:
*RISC paradigm (Rural Infrastructure and Services Commons)
Need for rural developement
-600million rural population. (70% of population)
-rapid GDP growth has impacted urban economy, left out rural areas
-Rural economy has stagnated. Needs help to jumpstart of developemental ladder.
-Dual ecomony in India. per capita GDP 1000$ in cities, 200$ in India.
70% population generates 30% of GDP.
-Developmental trap:
Aims to achieve:
-sustainable economic developement.
-more efficient utilization of available resources by focussing in min viable economic size
-Start of virtuous chain of modern technology, aggregate demand to create market, improve product diversity competetiveness, productivity, increases incomes thus ability to pay for services.
mechanism for reducing product & transaction costs and improve information & knowledge.
-gradual increase in production efficiency mechanisms like information, knowledge, education, specialization, scale.
-Urbanization is inevitable as economy moves from agricultural to industrial. This achieves in situ urbanization! reduces migrations to cities. Creates demand for higher skills in villages, stemming brain drain of educated youth.
Basic Premises
-investment at Minimal Economic Size with enough scale & diversity can enable markets. (made far more efficient)
Few Key points
-Addresses 'coordination failure' of markets
-Built around existing infrastructure like Railway stations, haats, tier3/4 towns.
-Gives ACCESS to facilities by bicycle commute economy. (10km), instead of spreading resources in uneconomic sizes & exorbitant cost.
-ICT: makes markets more efficient, to satisfy local product needs with local skills.
-full participation in global economy is not requires / necessary.
-is not an attempt at social engineering through centralized planning
-nor is another internet kiosk/telecenter
-appeals to profit motive of all participants
-does not require additional government investsment, but proposes better use of money currently being spent
-todays' model of power,health, education, communication & other in every home in every village is misguided investment!!!!! Not enough reourses to do this. But enough to give ACCESS to facilities.
-does not cover microcredit & appropriate technology. They can be great enablers, but not necessery for current thesis.
-Enabled local markets are stepping stone to participate in national & global economy.
-Entrepreneurship & power of ideas are very powerfull. (comprise usually 5% of population) Enabled markets & access to resource and unleash entrepreneurial eneregy, create jobs, further enhance market. These are the real engines of growth!
-Human capital in vast supply, physical capital in low supply. To enable human capital requires physical capital. Imperative that physical capital be used efficiently.
Structure
*I level: infrastructure level.
-power, briadband, telecom, physical plant(building, water, a/c, sanitaion, security)
-reliable, standerdized, competitively priced platform
-by coordination of public/ private/ NGO/ government.
*S level: user service level
-market making, credit, financial intermediation, education, library, health, social services, govenmental services.