Help Wanted. Future Challenges Reader Volume 3

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Bertelsmann Stiftung (ed.)

Help Wanted Future Challenges Reader Volume 3

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FutureChallenges



Help Wanted

Future Challenges Reader Volume 3

Contents Foreword

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Help Wanted

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Generation Screwed: Why There Are No Jobs for Young People

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Prospects of Democracy for Egypt’s Youth Bulge

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From “You’re Free to Leave” to “When Are You Returning?”

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Reform and Backlash: What Europe Can Learn from Latin America

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Brazil: Jobs in Hiding

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Designing Our Very Own American Dream

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India’s Great Hope Is Its Culture of Innovation

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Future Challenges Team

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Foreword

Foreword

Future Challenges is a project of the Bertelsmann Stiftung in Gütersloh, Germany and the Bertelsmann Foundation in Washington, DC, with the support of the Rockefeller Foundation. We are a global network of young authors, activists, academics and observers who work to illustrate how complex our modern world really is. Creating a sustainable future for as many of the world’s inhabitants as possible is an admirable goal, but this goal will slip ever farther out of reach if we do not learn to embrace the complexity of the challenges ahead. We must ask ourselves not simply: What is the best way to ensure our safety? Instead, we must begin to ask: What is the best way to ensure our safety while managing changing population trends, providing high-quality education to as many people as possible, and ensuring that the benefits of economic globalization reach deep into our societies? We must demand that our political leadership takes the same approach. If we attempt to tackle our most difficult challenges alone, independent of one another, any solution that we devise will be unsustainable, sabotaged in the long term by unintended consequences that spill over from other issue areas. On the other hand, if we learn to think about our greatest challenges as part of a connected web of issues, all of which have meaningful impact on one another, we may begin to identify solutions that are robust and long-lasting. This third Future Challenges Reader covers the topic of unemployment, a plague sickening many of the world’s largest economies. The subject requires us to think about demographic change (Who should be working? For how long?), education (How do we train a workforce that will endure?) and globalization (is the new “world economy” good or bad for employment, and in which contexts?). It is no easy subject. Our network of authors responds to our central question with ideas, perspectives and stories from France (Craig Willy), Egypt (Sara Elkamel), Hungary (Anikó Mészáros), the United States (Samuel George), Brazil (Julia Averbuck), Costa Rica (Juliana Rincon) and India (Ajinkya Pawar). We hope you will enjoy this and the other volumes in the Future Challenges Reader series. To get involved with the program or to give feedback on what’s written here, please visit our website (futurechallenges.org) or contact us directly. Enjoy!

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Help Wanted

Help Wanted

The competition for jobs on the global stage grows ever more difficult. Young populations are growing in many places, while older people are living longer almost everywhere. Labor is also more mobile within countries, within regions and worldwide. It might appear that it is more and more difficult for a young person to find work that pays the bills, to say nothing of work that is fulfilling. What does this stiff global and intergenerational competition for work mean for stability in the years ahead? While a few islands of low unemployment still exist worldwide, many of the world’s most significant economies have been brutalized by rates of unemployment unseen in decades. Our authors from 65 countries across the Future Challenges network contributed their perspectives, ideas and stories on this topic; we have selected the best of the best to print here. More are available at futurechallenges.org. This question was developed by the Future Challenges staff and bloggers working in conjunction.

No Hiring Photo by flickr user Truthout.org http://www.flickr.com/photos/ truthout/6798077728/ CC BY-NC-SA 2.0

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Generation Screwed: Why There Are No Jobs for Young People

Generation Screwed: Why There Are No Jobs for Young People Thursday, 15 November 2012

Craig James Willy

Contact Information: Twitter: @craigjwilly Craig J. Willy is an EU affairs writer and communications professional. A former journalist at EurActiv, he is currently working on online communication and social media analytics projects for the European Commission and private organizations. He maintains a blog on EU affairs at craigwilly.info.

Young people in the “wealthy” countries of the world are increasingly coming of age only to find there is no decent work for them. The decline of the media industry and the business practices of innovative IT giants like Apple showcase how globalization and new technologies, while likely increasing overall wealth, are also leading to a generation of financially dependent “adulescent” youth, for whom achieving a secure working- or middle-class existence is an increasingly unreachable dream. All across the otherwise privileged countries of the “developed world,” young people are facing a dispiriting paradox: while they are the most educated generation to have ever come on the marketplace, they are also the generation with among the worst prospects in terms of finding decent employment or even any employment at all. For the first time in generations, it has become increasingly normal for parents to believe their children will be worse off than they are. In the European Union, the irresponsibility and bankruptcy of political leaders is captured in one simple statistic: 22.8% of young people are unemployed. In the United States of America, the figure is only somewhat better at 15.5%. These figures mask the fact that large numbers of “not unemployed” young people are actually in a semi-perpetual limbo of education and poorly paid, “inadequate” jobs. This state of affairs is leading to strange and confusing situations for both young adults and their parents. Perhaps the most obvious problem is that young adults, being unable to find decent work, are also unable to achieve the financial independence that is the basis of adulthood, and so they must still rely on their parents and float through an awkward “adulescence.” In the English-speaking countries, there has been a steady increase in twenty-four- to thirty-fouryear-olds who, after a bout away from home to work or study, end up returning to their parents’ homes, a phenomenon known as the “Boomerang Generation.” In France, a similar development has been termed the “Tanguy Phenomenon,” named after a 2001 film about a lame twenty-eight-

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Generation Screwed: Why There Are No Jobs for Young People

2011 10 06 - 1237 - Washington DC - Occupy DC Photo by flickr user thisisbossi http://www.flickr.com/photos/ thisisbossi/6219725962/ CC BY-NC-SA 2.0

year-old who still lives with his parents. The Japanese, with brutal candor, term the twenty- and thirty-somethings still living with their parents “parasite singles.” The phenomenon has different pathologies specific to each country. In the United States, in addition to poor job prospects, young people are saddled with student loans, which are continuing to drive Americans’ massive indebtedness. They now amount to a staggering average of $24,300 per person ($902 billion total). In Europe, the incoherence of the euro zone means youth unemployment diverges wildly by region, from “only” 8% in Germany and about 10% in the Netherlands and Austria to 35% in Italy, Ireland and Portugal and 54-56% in Spain and Greece (which is to say, in some European countries, it is reaching levels that normally lead to political revolutions). If anything, the European figures especially understate matters because they don’t count people who choose to use their joblessness “productively” by seeking yet more education and training. Though the specific dysfunctions and tensions appear different in each country, the causes are fundamentally the same everywhere, which is why no developed country has really been able to address the problem. The causes can be summarized as the problems posed by technological unemployment and rootless corporations in the context of economic globalization.

Technological Unemployment: The Case of Media As technology develops, human labor becomes increasingly worthless because machines replace it. So first the tractor made the farmer obsolete; then rising automation (and competition

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Generation Screwed: Why There Are No Jobs for Young People

from the former “Third World”) made the industrial worker obsolete; now, finally, the computer has made many paper-pushing office-dwellers (corporate and government bureaucrats) obsolete. Of course we never need zero farmers, zero workers or zero bureaucrats, but with each innovation, we need far, far fewer, until the number needed is much less than the number of job seekers. The most obvious manifestation of this has been the ongoing collapse of the media industry and, in particular, newspapers. The point isn’t just that paper is gone (Newsweek, after having been taken over by the Daily Beast website some time ago, recently announced it will ditch its paper version), but that journalists and news companies are disappearing. There simply isn’t a business model – in the face of unpaid “competition” for news from Twitter, blogs and Google searches – to pay for the traditional media structure. There has been a massive decline in newspaper revenue in recent years, and it seems not a week goes by without some major publication announcing massive layoffs (128 staff, or one-third of the workforce, at El País; 46 layoffs at L’Équipe, to name a few). So a newspaper and website like the Guardian, though the fifth-most-visited website in the world, still cannot turn a profit and has consistently operated at a loss of around £30-50 million over the past few years, or negative £100,000 every day. Of course, there are a few websites that beat the Guardian in terms of viewership and are actually profitable. One is the Huffington Post, whose business model revolves around publishing huge amounts of content by unpaid “reporters,” interns and bloggers. The other is the Daily Mail, which provides readers with a steady stream of cheap-to-publish and photo-laden celebrity gossip; wardrobe malfunctions; crypto-racist, middle-class scare stories; and “freak show” stories worthy of Rotten.com (which features obesity, graphic health conditions and trauma). There are some publications that are growing and even thriving today – such as The Economist and Bloomberg – which tend to cater to business elites and financial investors. Others, such as, again, the Huffington Post and CNN, boost their profits by blurring the line between independent news and paid-for advertising. The internet has made traditional media outlets “inefficient” as they, through capitalism’s normal process of “creative destruction,” are gradually being purged from the economy. It is certain that computers and the internet will lead to similar effects on other industries. Some sectors, such as television, music and film, look like obvious candidates for such “streamlining” in the face of YouTube and online piracy. In other sectors, the effect will be slower or even absent: bureaucrats working for competition-free corporate oligopolies and government agencies will, though having less and less work to do, be able to keep their employment.

Globalization and the New “Rootless” Firm In the media world, many firms continue to exist only by cutting corners, not paying people, catering to the economic elite, or by simply publishing garbage. In many ways, we’ve seen this kind of logic extended to corporations in general. Leading “Western” firms stay in business by: 1. Employing no Westerners (with the possible exception of a few underpaid service workers who have no rights). 2. Not paying taxes.

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Generation Screwed: Why There Are No Jobs for Young People

Possible Coworking Space Photo by Patrick Tanguay http://www.flickr.com/photos/ patrick/566135904/ CC BY-NC-SA 2.0

Perhaps the most striking example of this is Apple Inc., which also happens to be the most valuable firm in the world today as of this writing, its stocks and assets being worth over $550 billion. Apple today employs 43,000 people in the United States as well as 20,000 overseas employees and 700,000 overseas contractors. That is, only about 6% of the people that Apple employs are in the United States. And even those employees, at least those below middle management, typically face low wages and weak job security. Compare this with the situation of General Motors in 1955 – that year’s most valuable firm – which employed almost 500,000 people in the United States and only about 80,000 people overseas. Contractors employed outside the United States work in infamously bad conditions – notably, the workers of the iPad-producing Foxconn, which notoriously began addressing the issue of worker suicide by setting up nets around its factories. In terms of taxes, it has been estimated that Apple paid $3.3 billion in taxes worldwide on profits of $34.2 billion last year, or less than 10%, through tricks such as opening a profit-processing office in Nevada, which, unlike California, has a 0% corporate tax rate. This may in fact understate matters: in 2012, it was estimated that Apple paid less than 2% in corporate taxes on its considerable profits outside the United States. Megacorporations in every sector, from Exxon to Walmart, are, like Apple, using armies of lawyers, accountants and lobbyists to maximize profits through tax havens and loopholes; employing underpaid staff in countries with weak labor rights; and, if they absolutely have to employ Westerners, providing the lowest paid and most “flexible” work possible. In some cases, the legal technicalities really get pushed to the absurd, as when Apple successfully patented the iPad’s “rounded rectangle” shape.

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Generation Screwed: Why There Are No Jobs for Young People

Jobless Youth Photo by flickr user London Permaculture http://www.flickr.com/photos/ naturewise/5600768089/ CC BY-NC-SA

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Generation Screwed: Why There Are No Jobs for Young People

It’s quite normal for corporations to do all they can to make the most money possible; that’s what they’re designed to do. But for the rest of us, in the age of globalization and the internet, it’s a problem if you aspire to a decent working- or middle-class lifestyle. It’s a simple fact: if you put underpaying, nonunion, environmentally unsustainable Chinese (or Vietnamese or Turkish or Mexican) companies and their workers in direct competition with Western companies and workers, shackled by things like environmental standards and decent wages, the Westerners will simply lose. As a result, the big corporate giants and oligopolies that were providing ever more well-paying and secure working- and middle-class jobs in the 1950s, 60s and 70s, have been slowly going out of business or are no longer providing such jobs. Western workers have, in some countries, reacted to this by voting for leaders who maintain worker protection, subsidize certain industries, ensure high wages for certain sectors, and the like. While partially effective at ensuring “good jobs” exist, this tends to raise the cost of work and thus results in higher unemployment for those outside the system (typically youth, minorities and seniors). The alternative, notably instituted in the United States, United Kingdom and Germany, is no more attractive: to maintain employment by pushing down wages and removing job security. So while in these countries, employment tends to be somewhat higher than average, so are poverty and already unprecedentedly high levels of economic inequality. This trend is ineluctable and, in fact, was already identified by the Anglo-German scholar-politician Ralf Dahrendorf in a 1999 article entitled “It’s work, Jim – but not as we know it”: In all OECD [developed] countries, there has been a significant decline in the number of people in typical employment relationships: full-time permanent jobs (or, more precisely, full-time dependent employment without built-in time limits). The most thorough study of this change is that by a recent German commission. It concludes that “in countries where the employment rate has changed little, about a quarter to a third of typical employment relationships have been replaced by atypical ones since the 1970s”.

What Solutions? The case of Apple shows as much as anything how bankrupt Western politicians’ strategies for promoting growth and jobs have been. The alpha and the omega remains “innovation,” beloved by both US and EU leaders. But as the example of Apple shows, one can be the cuttingedge technological firm and only marginally benefit your country. In what sense is Apple an “American” firm if 94% of its workforce is non-American and it barely pays any taxes to the US government? Other Western strategies since the 1980s and 1990s – notably, liberalization of financial markets, economic integration (such as the euro common currency) and ever more education – have shown their inability to ensure lasting growth or the maintenance of healthy middle classes. Often these actions are useless. Young people (and governments) get into huge amounts of debt, and spend ever-longer portions of their lives in a weird post-adolescent financial dependence, for the sake of education, that centerpiece of the liberal project. (Who can forget Tony Blair’s famous three priorities: “Education! Edu-

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Generation Screwed: Why There Are No Jobs for Young People

YEPP: Chairmen’s Conference Lisboa 2012 Photo by PSD - Partido Social Democrata http://www.flickr.com/photos/ ppdpsd/7203043316/ CC BY-NC-SA

cation! Education!”) Yet the usefulness of sitting around in classes in terms of social and economic progress is, after a certain point, highly doubtful. Germany, by any measure the most successful major developed economy today, has among the lowest proportions of university graduates at 29%, almost a full quarter less than the OECD average. Often, as in the case of finance and the euro, the crisis has shown that liberal strategies of economic integration were actually destructive. Are there any solutions to youth unemployment? Does the new generation of job seekers really need to reconcile themselves to being worse off than their parents? There is advice one can give to individuals: 1. Join the privileged by finding employment with a good corporate or government bureaucracy (e.g., become a senior corporate manager or civil servant). 2. Find a personal niche of rich people (or corporations) to market your skills to. 3. If you’re blessed with unique genius and fortune, become the next Mark Zuckerberg. Of course none of these can be real solutions for an entire country, as opposed to an individual. I personally still remember with an ironic smile some good advice we were given at a university career seminar: “Stand out from the crowd!” This was helpfully illustrated with a picture of a man walking on stilts above a crowd of people. Obviously, by definition, not everyone can stand out. It’s a purely selfish strategy for the problem of unemployment; it cannot solve the problem we face, but it’s the strategy that is often promoted by families (which is rational) and by leaders (which is irresponsible).

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Generation Screwed: Why There Are No Jobs for Young People

Collectively, perhaps there are policies we could pursue that would maintain standards of living in developed countries. First, there needs to be effective coordination among countries to crack down on tax havens and ensure that corporate giants, the ultra-wealthy and financial firms pay a fair amount of taxes and reverse the trend since the 1980s towards ever more inequality. Second, we need to make sure that competitors abroad don’t have unfair advantages if their profits are based primarily on exploitative labor conditions and carbon emissions (i.e., if those countries don’t have comparable social and environmental standards). Technological innovations and free trade, after all, do not in themselves impoverish – on the contrary. And the new “wealth” they do create can be put to good use if put towards public ends (we might, for example, change our tax codes and budgets to incentivize job creation in areas such as urban renovation, energy efficiency or renewable energies). Indeed, globalization and new technologies have allowed new exchanges among countries, limitless access to information and unprecedented opportunities for aspiring artists and amateur journalists to share their work without corporate or public patronage. But our socioeconomic models also need to adapt. Actually putting international tax, environmental and social cooperation into practice is another thing altogether. For now, those unfortunate enough to enter the labor market today should not be afraid to ask for help from friends and family, not waste money, avoid debt where possible, and keep looking. Perhaps most importantly, the social stigma of and incomprehension at not finding a job, where it persists, needs to go away. For the individual, the psychological is typically as important, if not more so, than the material, because in addition to being poor and dependent, one needn’t make young people feel ashamed because of an economic crisis that, after all, their elders are ultimately responsible for. We shouldn’t forget that even in such a situation, it is perfectly possible, in a stable and developed country in particular, to be happy, which is after all the point. “Note: The employment situation for young people has worsened considerably for young people in Western countries, and particularly in Europe, since the original publication of this article. According to the most recent statistics, by January 2013 youth unemployment had risen to 16.8% in the U.S. and 24.2% the eurozone as a whole, including 55.5.% in Spain and 59.4% in Greece (Greek figure for November 2012).

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Prospects of Democracy for Egypt’s Youth Bulge

Prospects of Democracy for Egypt’s Youth Bulge Thursday, 22 November 2012

Sara Elkamel

Contact Information: Sara.Farag@gmail.com Sara Elkamel is a Cairo-based journalist who has contributed to Egyptian papers including Daily News Egypt, Egypt Independent, and foreign publications such as The Guardian, GlobalPost, & FutureChallenges. She currently writes for Ahram Online and is pursuing a Master’s in Journalism at the American University in Cairo.

Nahla Zeitouna, Programme Analyst at the UNDP Democratic Governance unit in Cairo, likes to compare democracy to playing music. “Musicians must practice for the piece of music to be played in harmony, and it’s the same for democracy,” she says. Zeitoun, who believes that democracy is a way of life that should be adopted by citizens as a prerequisite for development, shared valuable insights with Future Challenges on the current youth bulge manifesting in Egyptian society, the marginalization of women and how democracy can help change the fortunes of the youthful population. FC: How does the youth bulge affect the prospects of democracy in Egypt? Nahla Zeitoun: Egypt’s youth bulge is very significant. We have around twenty million youth between the ages of eighteen and twenty-nine; this constitutes around one quarter of the population. The youth are looking for social and political inclusion, but they are also looking for decent jobs and better livelihoods. As such, the dividends of democracy should mean better inclusion and participation for these youth in their social and political spheres as well as freedom in the marketplace, whereby they find decent jobs in an environment that offers equal opportunities FC: Does the youth bulge create a threat of staggering unemployment or an opportunity for development in Egypt? Nahla Zeitoun: A youth bulge is always an opportunity if harnessed well and provided the right set of directions and effective governance structures. If an effective national youth strategy is put in place guaranteeing an upgrade of technical and vocational skills among the youth and if effective policies and incentives are put in place, the youth bulge will be the best thing for Egypt. I like to always think in a positive way. Youth’s energy, innovation and talent can only bring the best for Egypt if it is targeted in the right direction.

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Prospects of Democracy for Egypt’s Youth Bulge

Demonstrators on Army Truck in Tahrir Square, Cairo Photo by Ramy Raoof http://www.flickr.com/photos/ ramyraoof/5397614267/ CC BY 2.0

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Prospects of Democracy for Egypt’s Youth Bulge

Parkour Egypt Photo by Nasser Nouri http://www.flickr.com/photos/ nassernouri/3989176048/ CC BY-NC-SA 2.0

FC: Aside from the evident economic and financial costs associated with unemployment, what are some of the social effects of youth exclusion in Egypt? Nahla Zeitoun: Youth exclusion leads to a higher crime rate and more religious fundamentalism because the youth do not find avenues for recreation and discussion except in mosques or churches. Civil society organizations and volunteering are areas where the youth can engage and contribute, even if they are unemployed. Social inclusion of youth is very important for political stability. Youth exclusion also leads to “waithood,” a period during which they simply wait for their lives to begin. They wait in long periods of unemployment, living with parents and unable to pursue marriage or home ownership. FC: How does the youth bulge affect women, and where do they stand in the fierce competition for jobs? Nahla Zeitoun: Women, and girls in particular, are among the groups directly affected by deprivation in education, work and enjoyment of the natural rights enshrined in international treaties and hopefully also captured in the coming new constitution. In Egypt, social conditioning (by the family, the legal system and the market) creates the roles to be played by both boys and girls in their society and defines their interaction in public and private spheres. The Survey on Young People in Egypt indicates a considerable discrepancy between young men and women with regard to education, labor market participation and participation in political life.

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Prospects of Democracy for Egypt’s Youth Bulge

Egypt: students explore media and civic issues Photo by Internews Network http://www.flickr.com/photos/ internews/6884249846/ CC BY-NC-SA 2.0

There exists a number of negative practices and factors that impede the advancement of a woman’s role as an individual and citizen with rights and duties in the community, including the prevalence of sexual harassment in public places and at work; violence against women; and female genital mutilation, still at a rate of 80%. Egypt is rated number 120 among 128 countries in a gender gap measurement. Women’s participation in the labor market is among the lowest in the world; for example, young women (aged 18 to 29) represent 18.5% of the Egyptian workforce, compared to more than 50% of men. Also according to the survey, only 1% of girls spend their time volunteering, compared to 3% of men. FC: For the youth bulge to manifest in growth and development, what are the policies and environmental conditions required? Nahla Zeitoun: We need a better match between labor market needs and the output of the education system. We need to regard vocational training with a higher degree of respect. We need to focus on teaching soft skills, languages and ICT literacy in school. We need to focus on girls’ education and women’s employment since they constitute half of the population and Egypt has one of the lowest women’s employment rates. We need a cultural transformation that inspires innovation, mutual respect and work ethic, among other things.

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From “You’re Free to Leave” to “When Are You Returning?

From “You’re Free to Leave” to “When Are You Returning?” Wednesday, 28 November 2012

Anikó Mészáros

Contact Information: aniko.mszrs@gmail.com Anikó is a recent graduate of International Relations from Hungary. Her main fields of interest are international cooperation, security studies, the Nordic countries and most of all Central Europe. She has been working with FutureChallenges since October 2010.

A few years ago, in 2006, the then-prime minister of Hungary, Ferenc Gyurcsány, made a memorable statement, which was later understood as incitement for Hungarians to leave the country if they didn’t like it there. A look at the statistics today reveals that quite a few people have followed his advice. Where is this all leading? Hungary is a prime example of a brain drain, where well-educated people with no opportunities in their home country move abroad for a better life, while the government loses not only skilled workers but also the money it spent on educating them. In 2006, former Prime Minister Gyurcsány said, “You may leave, you can leave us here.” The “you” here originally referred to employers who, in response to the planned tax hike, wanted to move headquarters to neighboring Slovakia. Later, the phrase took on a general meaning: if you don’t like it in Hungary, don’t complain, just get out! And this is exactly what is happening. With the present freedom of movement for workers in the European Union, it is now easier than ever to leave the country and start a new and better life abroad.

Can You Come Back? – A Personal Example I graduated from high school in 2006. Recently, our high school class held a reunion to see how we all were faring, and we put together some very surprising and alarming data: • Out of a total of 23 classmates, 18 went to university and have obtained at least a bachelor-level diploma. • All of us studied two foreign languages in high school: English and German or French, the most commonly used languages in the European Union. At least seven of us speak more than two foreign languages.

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From “You’re Free to Leave” to “When Are You Returning?

Illustration by the author

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From “You’re Free to Leave” to “When Are You Returning?

Hungary: visa and stamps Photo by Sem Paradeiro http://www.flickr.com/photos/ semparadeiro/2297430400/ CC BY-NC-SA 2.0

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From “You’re Free to Leave” to “When Are You Returning?

Moving Books Photo by Flickr User Kaptain Kobold http://www.flickr.com/photos/ kaptainkobold/5865433945/ CC BY-NC-SA 2.0

• At least seven of us have tried life abroad for a minimum of one university semester, for example in an exchange program, and more of us are planning to do so. • Currently, six of us are living abroad permanently and not planning to move home any time soon. The number of those seriously considering moving abroad fluctuates constantly. This is definitely not a representative view of Hungarian society as a whole, but only of the highly educated youth segment, which is the most mobile group in society. To give some general numbers: one in five Hungarian adults plans to find a job abroad or to move there temporarily or for good. (Figures are up by 50% since 2010.) And it’s 48% of the 18 to 29 age group, or nearly every second person. If a politician tells citizens they “are welcome to leave,” the skilled youth will be the first to react and pull up stakes. The consequences are far-reaching and well-known: an ever more aging society, lack of workers (in fields like medicine) and a shrinking economy, to mention but a few. On October 23, 2012, Prime Minister Viktor Orbán said: “This government does not suggest that its citizens leave the country. We are saying, you may return.” In an interview a few months before, he was at pains to emphasize that the problem is not when you leave, but when you don’t return. Nice sentiments, but of course not enough. We need deeds, not words, to convince us to return.

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Reform and Backlash: What Europe Can Learn from Latin America

Reform and Backlash: What Europe Can Learn from Latin America Friday, 30 November 2012

Samuel George

Contact Information: Twitter: @SamuelGeorge76 Samuel George is a project manager specializing in Latin America at the Washington, DC-based Bertelsmann Foundation.

In November, the backlash against externally imposed austerity once again boiled over. Labor unions executed coordinated strikes. University students took to the streets. Daily life came to a halt as citizens protested grinding reforms. The harsh economic restructuring was demanded by the International Monetary Fund (IMF) and backed by the regional hegemon as conditional for assistance needed to survive a sovereign debt crisis. The protests soured, leading to hundreds of arrests, a handful of deaths and sporadic rioting. This story may sound familiar. But it does not refer to the November 14, 2012, austerity protests that shook Madrid, Rome and Lisbon. Rather, these November protests occurred in 1991. And they occurred on the other side of the world, in Venezuela. Within three months of those 1991 protests, a young army officer named Hugo Chávez would stage a coup against the pro-IMF Venezuelan government. The coup failed, but the popular backlash would continue, eventually ushering Chávez to power in 1998. He has since entrenched his anti-austerity philosophy into government policy. Roughly thirty years prior to the current European sovereign debt crisis, much of Latin America trudged through its own inability to meet international debt obligations. From Mexico in the 1980s to Spain in the 2000s, the histories are eerily similar. Both regions benefited from irresponsible lending to pursue debt-led growth. In both cases, the lending financed excessive consumption as opposed to long-term, growth-oriented projects. Given the circumstantial similarities, scholars and policy makers alike have scrutinized the Latin American debt crisis for lessons relevant to Europe. However, the focus is often purely on the economics – how to structure a haircut, for example, or, perhaps, the utility of a currency devaluation. As opposition to austerity continues to mount in Europe, the political lessons of the Latin American debt crisis may prove just as salient. In the 1980s and 1990s, nearly all Latin American countries turned to the IMF for relief. To satisfy preconditions for assistance, many of these countries were forced to adopt structural reforms devised by the IMF and supported by the United States of America.

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Reform and Backlash: What Europe Can Learn from Latin America

Greeks protest austerity cuts Photo by flickr user PIAZZA del POPOLO http://www.flickr.com/photos/ piazzadelpopolo/4580914101/ CC BY 2.0

These reforms, featuring trade liberalization, privatization and labor market flexibility, reflected developed-world prescriptions for the ailments of Latin American economies. Countries throughout the region adopted these policies formed within the IMF and the United States Department of the Treasury, mostly to maintain access to official funding and international capital markets. Known collectively as the “Washington Consensus,” these neoliberal economic reforms were essentially forced upon Latin American countries. Eventually, the imported policies provoked a backlash as many citizens ultimately rejected an economic approach imposed in a moment of weakness by more powerful agents. This distaste helped sweep a series of left-leaning politicians to power at the turn of the twenty-first century. In fact, the South American countries that experimented most aggressively with Washington-oriented reforms are precisely the countries that have since drifted furthest to the left. In Venezuela, Argentina and Bolivia, once poster children for the Washington Consensus, voters have persistently preferred presidents who have promised to roll back neoliberal reforms.

A Lesson for Europe? Like Latin America, peripheral Europe initially accepted the international prescription for solving its debt crisis. Just as Washington Consensu-style leaders assumed power in Latin America in the 1990s, so too have “Brussels Consensus” leaders taken the helm throughout debt-ridden Europe.

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Reform and Backlash: What Europe Can Learn from Latin America

Anti-austerity march February 2013 Photo by Flickr User jamieokeeffe http://www.flickr.com/photos/ jamieokeeffe/8463985595/ CC BY-NC-SA 2.0

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Reform and Backlash: What Europe Can Learn from Latin America

Protest at Night Photo by Flickr User backseatpilot http://www.flickr.com/photos/ backseatpilot/5806959202/ CC BY-NC-SA 2.0

From the Iberian Peninsula to the Aegean Sea, a new crop of European leaders has emerged prepared to implement fiscal austerity and structural reforms, just as the Euro-core and the IMF have demanded. However, if Latin America is any indicator, Europe’s persistent stagnation and high unemployment rates could prove fertile ground for a backlash against reform. In fact, throughout peripheral Europe, the notion that austerity has been foisted upon them by outside organizations such as the IMF, or countries such as Germany, has given rise to nationalistic movements that reject restructuring. In Greece, anti-austerity candidate Alexis Tsipras came within three percentage points of winning the right to form a government in Athens. In Italy, support for Mario Monti’s Brussels Consensus-style government has dropped from 54% in November 2011 to 32% in November 2012. In Spain, the austerity backlash has threatened the very integrity of the nation, as Catalonia has demanded independence rather than continue under Madrid-led reform. As Hugo Chávez’s experience illuminates, the tide may not turn immediately, but it can turn definitively. As long as Europe has paused to consider the economic lessons of the Latin American debt crisis, it would do well to consider the potential political lessons as well.

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Brazil: Jobs in Hiding

Brazil: Jobs in Hiding Tuesday, 11 December 2012

Julia Averbuck

Contact Information: julia.averbuck@gmail.com Julia Averbuck is originally from Rio de Janeiro, Brazil, where she was living just two months ago. She currently lives in New York where she is enjoying the cold and her new job at HireArt.

When I moved to the United States from Brazil in August of 2008, I was ready to become part of the long-famous phenomenon of brain drain. As I first stepped onto my college campus, I envisioned the future going smoothly: amazing grades, a wonderful finance internship on Wall Street, followed by a six-figure offer I would eagerly accept. The scenario not only lacked imagination but also a certain foresight. In my defense, if you weren’t a part of the financial world, August of 2008 didn’t yet provide a good indicator of the debacle that would ensue. In December of 2011, when I was halfway through my final year in college and starting to contemplate the possibility of having to find a full-time job, I was faced with the following truth: Brazil registered its lowest unemployment rate ever at 4.7%, while the United States’ unemployment rate persisted at 8.7%. I looked at those results with some surprise but no real concern for my future in the United States. My attendance at an Ivy League school had filled me with a much-mistaken confidence that I would land a job. A few months later, land a job I did at a New York law firm that even promised to pay me well. I wasn’t on Wall Street, but then again, that had been my decision, and I still felt like my plan had worked out pretty well. And then there was that call: “Ms. Averbuck, it has come to our attention that you would need to be sponsored for a work visa, and since we do not offer those, we will have to rescind your offer.” That was the first of a few calls of that style. Sometimes employers wouldn’t even bother to interview me due to my undesirable status, the H1-B dependent. After much rejection and disappointment, which hurt more than any heartbreak ever did, I flew home to Brazil, confident I’d conquer Latin America in a heartbeat. And so there I was: back home, with a great personal network and the news that Brazil had just registered the lowest unemployment rate for the month of August at 5.3%. My job search began casually, some words with friends, sending my résumé to a few places whose line of work I wasn’t necessarily quite sure of. I thought finding a job would be so easy, between the low unemployment rate, my language skills and my foreign diploma, that I didn’t try very hard. I waited until opportunities came my way. And then they didn’t – not how I expected them to at least. People would ask me to send my résumé and then never reply, and every cold call or e-mail I sent never even merited a reply. In the United States, I had gotten replies from 100% of my cold career e-mailing, even if I hadn’t gotten a job offer, but in Brazil the rules were different.

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Brazil: Jobs in Hiding

Classic college campus scene Photo by Flickr User anneohirsch http://www.flickr.com/photos/ acidcookie/261808430/ CC BY-NC-SA 2.0

Catching up on e-mail ‌ Photo by Ed Yourdon http://www.flickr.com/photos/ yourdon/2715583000/ CC BY-SA 2.0

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Brazil: Jobs in Hiding

Maximizing Your Job Search Photo by Daniel Johnson, Jr. http://www.flickr.com/photos/ danimal0416/3274415687/ CC BY-NC-SA 2.0

That is when something occurred to me: Brazil is missing the infrastructure for a job search. Here, finding a job almost always happens informally. A friend of a friend sends in your résumé, or maybe your parents know someone. This, of course, happens in the United States as well, but the difference is that it is not the prevalent way of searching for jobs. While new websites, Catho and Vagas, are trying to become the definitive jobs boards in Brazil, so far no one has succeeded in taking the market. To get a job, my friend, you have to have some friends. I did eventually find a job, one that I didn’t care for very much but which allowed me to more accurately take in the Brazilian system. I’m still dumbstruck by its informality and the importance of what Brazilians call the “QI” factor, or Quem Indica, meaning “who recommends.” Without a recommendation, most people don’t even stand a chance. And the interesting thing is that this permeates all levels of employment, from recent graduates looking for jobs in banks to maids looking to work in private homes. In addition to the huge frustration of having to be well-connected, what is perhaps more frustrating is the inability to browse for opportunities. In my job search, I felt that I didn’t know what was out there or who was hiring. I’d hear about different opportunities each day as I talked to more people, but as I made a decision, I felt that it was not as informed as it could have been. The result of that is that I have now switched jobs twice in six months. I finally landed at a recruiting firm, where I hope, in the near future, to change this employment landscape in Brazil. The way it is, it can’t last. With an unemployment rate nearly at the attrition level (a rate reflected simply by people switching jobs), candidates will demand to know what jobs are out there in order to make smarter decisions.

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Designing Our Very Own American Dream

Designing Our Very Own American Dream Wednesday, 12 December 2012

Juliana Rincon

Contact Information: jules.rincon@gmail.com Juliana has been based in Costa Rica and Colombia and is now enjoying life in Washington, DC. When offline, she likes knitting, reading, crafting and running at a pace speed walkers would consider slow.

Growing up in Central and South America, we were raised on tales of the “American Dream”: how an immigrant could go to the United States and before long have a house, a car, a family, and enough money to send some back to his extended family in the home country. Things have now changed with the economic downturn, and not even US citizens are able to grasp the American Dream, with many of them now facing foreclosures, unemployment and bankruptcy. It may not be the land of opportunity that our parent’s generation spoke about, but for my sister, my husband and me – all recent immigrants from Costa Rica and Colombia into the United States – it really is the new home where we will make our dreams come true. We had the odds stacked in our favor: my sister and I are college educated; have varied work experience; are computer savvy; and most important for immigrating to the United States, we read, write and speak English like native speakers. My husband is a more recent college graduate but has a few years of experience under his belt specific to his field and is also bilingual, although he is more comfortable understanding written English than having conversations. Six months after arriving with our whole lives in suitcases, some of us have settled into the job market better than others. I turned the part-time consulting work I did remotely from Latin America into a full-time paid job with the same non-profit organization, while continuing to telecommute. I make a competitive salary and feel satisfied with my career path. My sister came with a job already lined up as a bilingual teacher in a Montessori School, but when that fell through, she had to scramble and, at the last minute, was able to get a position as a classroom assistant at a different Montessori School for a fraction of the pay. My husband is still working part-time in the kind of freelance jobs he had before our move. He has been unable to find full-time employment as it seems that most companies are looking for people with a lot more experience, and frankly, his English skills are challenged when Skype or phone interviews are part of the hiring process. But despite the hurdles, all three of us believe the end sum is positive because we are sure we’ll eventually find better work opportunities than we had back home. For my sister, the path looked easy, and because she had a job lined up before leaving Costa Rica, she didn’t worry too much. But when that fell through, she discovered that to qualify for many of the teaching jobs in the United States, she would need to get certified and have her studies vali-

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Designing Our Very Own American Dream

American Dream Photo by Robert Gourley http://www.flickr.com/photos/ rgourley/7897981874/ CC BY-NC 2.0

dated, a complex and time-consuming process. It looks like she won’t be teaching kids any time in the immediate future. When I asked her if she ever thought she would’ve been better off staying in Costa Rica, her answer got me thinking about how working towards a goal may be as fulfilling as reaching it: A year ago, I wanted to go back to teaching. I wanted to change my career, what I had been working on, to go back into teaching. This year, as a classroom assistant, it has been invaluable for me to be once again in the school system, becoming familiar with how things work and slowly finding my bearings and making sure that I’m standing on solid ground. I wanted to be a teacher … I am not a teacher now, as far as my job description goes, but I also have opportunities for creating and performing in the classroom that are also very fulfilling and allow me to learn, so I am closer to my dream. I have encouragement from peers and validation that I’m on the right track. Next year, I see myself on my way to getting certification or already certified and working in the public sector. In Central and South America, like the rest of the world, having a college degree or completing higher studies did not translate into better job opportunities for us. I’m a drama major, and as soon as I graduated, I realized that working in the theater would not be feasible. I went on to find employment in other areas, which gave me health insurance, a stable income and job security. I eventually cultivated my hobbies and interests into a career I enjoy, and while it has nothing to do with my degree, it gives me stability. My sister studied teaching, specifically elementary school and Montessori preschool. She worked for some time as a teacher back in Costa Rica, but the low wages paid

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Designing Our Very Own American Dream

Photo by the author

to teachers there had her working two jobs at once to pay the bills, and eventually, she moved to full-time work in the corporate world. Throughout that time, although she was not completely unhappy, she regretted not being able to work with children in a school setting. My husband studied software engineering, so he’s a programmer. Ever since graduating from college, he’s worked only in his chosen field. However, he had to turn to freelance work done remotely for clients outside Central and South America because there were no full-time jobs for him in Colombia. One of the lessons we’ve learned seems to be that when trying to make it in the American job market as an immigrant, flexibility is key. The ability to mold oneself to available employment options and not be limited by a specific degree increases your chances of finding a job, any job. I had a general direction and was flexible in what I hoped to be doing, and I succeeded in finding something that ticked the boxes on my employment wish list: non-profit sector, working remotely and a decent salary and benefits. My sister became more flexible and decided to take a lowerpaying job in her desired field as a way to become known and learn about the educational system in the United States – her payment isn’t necessarily in cash but in experience. My husband, although he is in a very sought-after field, has had a much harder time matching available jobs in his programming language with his experience level. There is not much flexibility in his specialized field of study, so he continues to search for a good match. And thus we’ve learned that being a degree-holding, educated immigrant does not necessarily make the job search any easier. Luckily, they both have family support, which has translated into financial security and will enable them to mold their realities into their dreams.

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Designing Our Very Own American Dream

One of the rare non-Apple laptops Photo by Flickr User Ed Yourdon http://www.flickr.com/photos/ yourdon/3405811164/ CC BY-SA 2.0

That brings me to the second key to making it as an immigrant: a safety net. In my sister’s words: Any person who decides to move needs to have a safety net of some kind: family or savings. In my case it was family … … The reason I work as a teacher now and can be fulfilled in it is because I have family support, which means they are able to support me financially as well as with food and board. In my husband’s case, my work has been enough to sustain us both, and as we’ve been living within our means, this has meant that he’s able to keep on job hunting for something in his chosen field instead of finding some other work just to pay bills. We have also had support through the family network as we were able to find a rental property in our chosen city, thanks to one of my brothers. My sister has been living with another brother and his family, bartering her time for room and board by helping around the house. To make extra pocket money, she does odd jobs in the neighborhood, such as sewing, mending, housesitting, and babysitting. And she’s discovered that being this kind of Jill of All Trades is helping her reach her dream: I still believe the opportunities I have for finding work or being employed, in general, in the United States are better than the ones I had in Costa Rica. Labor is paid well here … People here pay for time. Sewing, for me, has become a way to make extra income so that the money I am not earning because I am still only a classroom assistant is not a driver pushing me into

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Designing Our Very Own American Dream

finding a different full-time job just to make ends meet. I have invested very little time in promoting my sewing skills, but by word of mouth, it has gone out. If I wanted to focus on sewing, I could make it work. Someone who has drive and is passionate about what they want to do can achieve it here. The logistics for making it happen are easier and more readily available than in Latin America. Whether it is freelancing, creating art, creating things, or offering a service, there are more opportunities to do it here and to have clients and grow a business. If you are flexible and have a safety net, the third key is to continue dreaming, because despite the hardships and curveballs life may throw, there is always a way to get ahead. So, perhaps instead of having the American Dream be a journey with a set destination, we’ll make it a pilgrimage where every step is the goal.

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India’s Great Hope Is Its Culture of Innovation

India’s Great Hope Is Its Culture of Innovation Friday, 28 December 2012

Ajinkya Pawar

Contact Information: ajinkyapawar@gmail.com Ajinkya is in the business of ideas, currently working in Publicis’ India headquarters. As a strategy planner, he gets to develop creative solutions informed by an understanding of the changing world around him. He wants to continue learning new things, meeting new people and creating new ideas.

Apparently, India has seventy-five million unemployed young people. To put this in perspective, this figure is equal to the whole population of Iran. Yes, the Indian economy is growing rapidly (even if it has slowed down a bit at the moment). Yes, the Indian service industry is perhaps the most competitive in the world. Yes, Indian consumers are amongst the world’s most confident. Yes, the total Indian workforce is more than 440 million people and growing. Yet all these facts in isolation do not do justice to the reality of India. Like almost anything else in India, the question of employment is a complex one. Firstly, growth in India is largely “jobless growth” (which is to say that generation of new jobs has decreased over time). This means that while a few sectors are growing exponentially, large parts of the country are facing tough times finding livelihoods and making ends meet as inflation breaks people’s backs. Policy pundits often remind us about the “demographic dividend” that India stands to earn because of its large pool of young people. But is India really ready to employ this massive workforce, or will it allow the frustrations felt by its young people (due to lack of access to opportunities) snowball into social unrest in the coming decades? Let me begin with a simple premise: nearly half the country’s citizens are under 25 years of age. So how do you imagine these people are spending their time today? Yes, many of them are indeed in schools and colleges. But then there are about 12.6 million kids aged between 5 and 14 who have to work to survive, many of them in life-threatening conditions – like the 70,000 children who work illegally in the coal mines of Meghalaya, a state in northeast India. Even among the ones who do go to school (about a quarter), many find that their teachers simply don’t turn up for the class. Teacher absenteeism is particularly widespread in state schools in marginalized rural areas. And even among the rest, the quality of teaching is often below par. This is evident from the mad rush for the limited number of seats available in “good” schools and colleges, which creates surreal situations such as the one last year where the cutoff for admission to a college in Delhi was set at 100%. You can imagine how the ridiculous, competitive atmosphere can easily drain the life out of a poor school kid in urban India.

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India’s Great Hope Is Its Culture of Innovation

No entry to Indian Economy??? Photo by Prem Anandh P http://www.flickr.com/photos/ anandham/415797628/ CC BY-NC-SA 2.0

New Delhi Youth / India (2012) Photo by Stephan Rebernik http://www.flickr.com/photos/ stephanrebernik/7589102268/ CC BY-NC 2.0

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India’s Great Hope Is Its Culture of Innovation

Calcutta Coffee House - 5 Photo by Flickr User lecercle http://www.flickr.com/photos/ lecercle/481267425/ CC BY-NC-SA 2.0

So there is this one hyper-competitive India of urban cities where kids go to coaching classes, have tight schedules and heavy backpacks. And there is the other India of rural and marginalized communities where the kids often have to skip school to lend a hand in ensuring the family’s mere survival. How do you think the future will pan out for these two extremes? But never mind the future, what about the present? Most of the opportunities in India are narrowly concentrated in the service economy where knowledge of English and specialized skills are required. Traditional trades, knowledge and occupations are becoming increasingly marginalized. And alarmingly, many pundits and trade analysts seem to prefer rural to urban migration. That can’t be a sustainable model for growth over the long term. Both Indias have to prosper together. Opportunities must be created for the “other” India too. At present, according to McKinsey, 53% of employers in India are unable to fill entry-level jobs because they can’t find people with the right skills. So we have millions of people who are unemployed, on the one hand, and millions of job vacancies that go unfulfilled, on the other, because the government has lacked the foresight to match these two situations with the right education and access infrastructure. All is not lost, though. India has prospered over the years, not because of any planned measures or foresight by the government, but by the entrepreneurial and smart working spirit of Indians. Education is attracting a large amount of venture capital, addressing a shortfall of around 200,000 schools in India. And education is among the hottest sectors being targeted by new, young Indian entrepreneurs. E-education alone is expected to be worth $45 billion by 2015.

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India’s Great Hope Is Its Culture of Innovation

Tarun Khanna, a Harvard Business School professor, places his bets on the “billions of entrepreneurs of India and China.” According to him, “People in these societies are running faster than their rules and laws can keep up.” And it is something that I witness on the streets every day as government authorities take down roadside street food stalls, and the very next day, the same vendors pop up and start operating at different times in different places. The innovative strand in an Indian entrepreneur’s DNA makes India one of the most dynamic and idea-rich places on earth. India’s inclusive growth will come not from those outsourcing contracts that seem to dominate the business stage, with India as a global player. It will come from the indomitable spirit of innovation shown by the entrepreneurs of heartland India.

Illustration by the author

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