Porter's competitive advantage theory for India

Thanks to Manoj for this wonderful article -

http://in.rediff.com/money/2004/dec/29inter.htm

Guess it says it all - India is celebrating a partial success way too soon. Couple of NASDAQ listings and a boom in IT & ITES is not a sustainable strategy for competitiveness of a country. Kudos to IT certainly, but IT alone does not make a country. Newer arenas are opening up. There is a great role that government can play here and that depends on the mindset. Let me not discuss on the mind set on corruption - a topic that has no end, really.

What repeatedly hits me is productivity that Porter is talking about. In a recent talk at Wharton, Vivek Paul, Vice Chairman of Wipro too mentioned productivity as one of the four primary issues that need to be fixed for India.

Refer http://economics.about.com/od/economicsglossary/g/productivity.htm on what productivity is. In terms of labour, to me, it is the monetary value generated/person hour.

What does it mean to when GDP grows and productivity drops - meaning labour productivity drops? I'm not an economist, no way. But, this sort of indicates that there is considerable automation/ exchange rate differences. I'm more inclined to attribute some exchange rate differences to this. So, if productivity is low, an investor is taking some more "risk" (sort of), and that is why, probably, Vivek Paul argues that expected ROCE (Return on Capital Employed) is higher when productivity is low. This is really getting too interesting. Expect more posts on productivity.