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HKU EFSI Digest – Issue II February the 1st, 2013

This Month in the HKU EFSI DIGEST! Why Strengthening China’s Private and Service Sector is Crucial- Petra Schmidt Punishing My Children the Arthashastra WayGauri Noolkar The Introspection of Hong Kong as Asia’s International City- Business, Economic and Public Policy Research Centre, Hong Kong, Shue Yan University: Lee, Shu-kam Ng, Cho-yiu

Editor’s Note Dear All, Welcome to 2013! As the first month of the year draws to a close, we see China’s shares putting up their best performance bringing sunshine on the Hong Kong market, Gap plans to open its stores in India by next year, Toyota turns out to be the top selling automaker of 2012, and the Euro is smiling after a long time. As the world readies for another bout of unforeseeable surprises in its dynamic economies, our lives at HKU are taking a turn too. The new semester has started, and before we know it, we will be submerged in assignments and studies. Some of us will start looking for jobs, some will plan to study further, but for all of us, the next 4 months are going to be definitive. We at EFSI realize this. Economics might not have been everybody’s academic past, but it is very much our academic present, and will loom over our future. I say academic, because study Economics or not, it is very much a part of your daily life. Buying groceries and shares, both need Economics.

The most fundamental characteristics of Economics are its universality and its deep assimilation into the lives of all human beings across race, culture, religion and geography. It also embraces other social disciplines, and touches certain purely scientific ones: Economics is truly inclusive. It is this unique characteristic of our subject which we at EFSI wish to spread amongst all our fellow students. We are keen to do a lot of interesting things, and we want you to be included. Join us in our Chatterbox discussions, express your opinions and suggest what you would like to talk about. It’s a great platform to discuss your favourite issues in the comfort of your friends, and to learn and appreciate how others think. Write to us about an economic phenomenon that interests you, a short story, a personal view, a historical account, a fully researched report, or your opinions on something you read somewhere, even in the EFSI digest: just anything related to economics. Share your study tips, an economic fact that amazed you, a joke that made you laugh or simply, an economic question you found an answer to. Write to us and we will publish it on our brand new blog. Let not language be a problem; we have editors to help you with English, and of course, you can also submit articles in Cantonese/Mandarin. The idea is to participate, contribute, get credit, and learn. And of course, do share with us any other activity you have on mind. Let’s do this together! Gauri Noolkar Editor, VP (Publications) EFSI Digest (Jan-13) Suggestions, questions, contributions? Write to us! Gauri Noolkar: Leslie Tay: HKUEFSI Club:

HKU EFSI Digest – Issue II February the 1st, 2013

Why Strengthening China’s Private and Service Sector is Crucial By Petra Schmidt

Today China1 is the world’s second largest economy, after the USA, when measured by ‘purchasing power parity’.2 Both countries are responsible for the current global imbalances in the world economy. The USA has the world’s biggest trade deficit whereas China has the biggest trade surplus. The level of China’s future integration into the world economy is influenced by current economic policies, the 11th and 12th five-year plans (FYP) and current problems. China will need to switch to consumption-driven growth and sustainable economic growth as these are key determinants in ensuring China’s continued economic growth and integration into the world economy. With regard to this, it is not only crucial for China to reform its industrial sectors but it is also of utmost importance that China strengthens its private and service sector. One major prerequisite to achieve sustainable economic growth is a strong private and service sector. However, at the moment three obstacles exist. Firstly, China still has a hybrid system of command and market economy3, indicated by considerable state influence favouring state-owned enterprises (SOEs) over private ones and overregulation of certain areas, such as the food industry. Secondly, China’s economic growth heavily depends on its net exports which are mainly manufactured goods

and heavy industrial products. China runs a huge trade surplus at present which poses a problem as it might lead to protectionist measures by countries excessively importing Chinese goods in order to protect their local manufacturers. Thirdly, SOEs dominate certain sectors, especially heavy industry, again discriminating against the private sector. This, for example, holds true for the industries like aluminium, steel, cement etc. which receive a big share of investment and enable companies to overproduce certain commodities for export. Due to the focus on heavy industries, manufacturing, SOEs and market regulation, there is a big catch-up potential for the currently underdeveloped private and service sector.4 As the World Bank points out, “[...] that a vibrant private sector is key for raising productivity and for China’s further development and growth”5. To overcome the above obstacles, various measures and reforms are under way or are foreseeable. Firstly, a reduced role of the Chinese state in the economy will support a development towards a full market economy. A starting point was set in 2001 when “[t]he authors of the 12th FYP admitted […] that all goals spelt out in the plan pointed towards a more mature market economy and a more clearly defined, significantly reduced role of the state in the economy.’6. This will help to reduce trade barriers and market regulations as well as to shift the focus from the heavy to the service industry. It will enable the economy to open up a substantial number of sectors to private companies and 4


The term ‘China’ in my analysis refers to the Peoples Republic of China, but excludes Hong Kong and Macau as they were guaranteed their independent economic system for 50 years after their handover. 2 Susan L. Shirk, China: Fragile Superpower (Oxford; New York: Oxford University Press, 2007), p. 16 3 Huang Yasheng, “Web of Interests and Patterns of Behaviour of Chinese Local economic Bureaucracies and Enterprises during Reform”, The China Quarterly (1990),123: p.431-432

Richard Wong, “Will China’s Economy Slowdown?”, 4.2.2011, available at [28.3.2011] 5 World Bank, “China Quarterly Update: November 2010” (November 2010) available at ources/318949-1268688634523/cqu_Nov_2010.pdf [28.3.2011], p. 17 6 Sarah Wang, “What does China’s new five-year plan address?” BBC online, 3.3.2011, available at [28.3.2011]

HKU EFSI Digest – Issue II February the 1st, 2013 hence, help to abolish or at least reduce the monopolies of SOEs. Secondly, China’s manufacturing sector at this moment is still considerably more open than its service sector. The WTO membership requires China to evenly open up all sectors of its economy. This requirement affects the service sector where the reduced trade and entry barriers will increase the competition and consequently improve the efficiency of companies leading to sustainable economic growth. Additionally, it helps to achieve the goal of a consumption-driven sustainable economy, as most services will be consumed locally. Thirdly, during the 1980s the emergence of township-village enterprises (TVEs), specialising in light industry, lead to a strong economic growth.7 A shift back to TVEs will have several advantages. As they are labour-intensive unlike the capital-intensive heavy industry, they will create employment. Furthermore, they will encourage the economic growth in rural areas as they do not require a high start-up capital. However, as Richard Wong observes “Catching up means essentially further reforms to improve the functioning of competitive markets, remove trade and regulatory barriers, remove monopolies, and strengthen the soft infrastructure that supports free competitive markets. These will be not easy because of the political resistance from entrenches special interests’8. Historic evidence of the past 30 years suggests that the necessary reforms, such as the tax system reform in 1994, eventually will take place although there might exist a certain degree of political resistance, such as from the conservative fraction of the CCP. On crossing the hurdle, these changes will influence China’s integration into the world economy because they will lead to a more consumption-driven growth

resulting from a more accurate balance between the heavy industry and the service and light industry. The resulting reduction of the trade surplus will reduce frictions between China and other countries like the USA in the global economy. Hence, one can see why China’s integration into the world economy goes hand in hand with a strong private and service sector and the pursuance of a sustainable economic growth path. The importance is acknowledged in the key objectives of the 11th and 12th FYP. This is closely linked to consumption-driven growth and can lead to more major gains, like reduced income inequality and less pollution. The boost of the private sector by shifting away the emphasis from heavy industry will increase the domestic consumption of domestic products and services and reduce China’s reliance on net exports for its economic growth. If China masters this and other challenges, it will set itself on the path to achieve sustainable economic growth and enhance its global status, both economically and politically. However, it has to be pointed out that the political leadership of China has a decisive influence on the process and its outcome. Political resistance, changing objective in the 13th FYP and deteriorating central-local relationships can delay, hinder, stop or even reverse achievements in crucial areas. It is important that China recognises the double-edged sharpness of this sword and handles it carefully.


Tony Saich, Governance and Politics in China (New York: Palgrave Macmillan, 2004), p.251-252 8 Richard Wong, “Will China’s Economy Slowdown?”, 4.2.2011, available at [28.3.2011]


HKU EFSI Digest – Issue II February the 1st, 2013

Punishing My Children the Arthashastra Way By Gauri Noolkar

Er… what? I caught you reading the title again; why is a students’ economic digest dealing with parenting? And whatever happened to child psychology? Lucidly put, firstly, I have no idea (except an intuitive sense) of what child psychology is and nor do I intend to study it, and secondly, I see more economics in dealing with my children than just finding an equilibrium between their demand curve and my supply curve at a certain price (e.g. a certain grade at school). Comes the next question: why Arthashastra1? Isn’t it about governing a kingdom, controlling an economy and fighting wars more than two millennia ago? Yes it is. How can it guide me to deal with a 21st century school kid? In a lot more ways than we can imagine. So many that one could perhaps write a book on interpreting Arthashastra for parents. However, we limit ourselves to a part of parenting (punishment) in two situations. We also contextualize parents as the king and children as the subjects. The Arthashastra directs a king to react to his subjects “as a father [to] his sons”2, recommending a hierarchical yet parent-child relationship between the king and his subjects. Telling lies. No matter how angelic and well-behaved, every child tells a lie and no matter how smart the child is, every parent can figure out lying after a point. Lies are usually told for a reason; individuals deviate from truth when they sense a negative or self-harming result like resistance, rejection, physical danger etc. and children are no different. A child caught lying is a tricky person to deal with; parents usually lose their temper to such an extent that the children are more scared and

chances are, instead of being honest, they become better at lying. There are, of course, many other possible outcomes, but they are another story. We however concentrate on the point at which I have caught my children lying. Naturally, I want to know why and I find out in a way that is firm yet appeasing for if “subjects are oppressed, ill-treated, disaffected, impoverished, [they] become effeminate and disunited among themselves, they can be prevailed upon to desert their master”3. On knowing the background, I can then weigh my options. Do I punish my children? How do I optimize and sustain their trust in coming out with the truth with the constraint of a necessary reprimand? If the reason for their behaviour is ignorance, fear or guilt natural and appropriate to childhood, it means that my children are not the problem; they have problems. Arthashastra tells a king to “always protect the afflicted among his people”4 in times of calamities and it is only natural that I address the concerns of my children with love and wisdom and empower them to be more honest next time. However I also see to it that they do not go scot free and levy a token punishment just to let them feel the pinch of cleaning up after their mess. Everything comes with a price. Arthashastra also tells me to never procrastinate in these matters “for when a king makes himself inaccessible to his people […] he may be sure […] to cause thereby public disaffection and himself a prey to his enemies”5. It is important that I give priority to my children’s struggles and teach them to face the truth themselves, and it is important that I do it there and then. Poor performance of duties. Be it a low grade, consistent mismanagement of time, refusal to clear the dining table or avoidance in cleaning their own

HKU EFSI Digest – Issue II February the 1st, 2013 room, getting children to understand the significance of being dutiful and responsible is a complicated task. It takes a muddle of scolding, cajoling, arguing, enticing and punishing children to get them to carry out their duties. The complications increase because now the children are the producers of a service/result I need and they are in a monopolistic position of setting the price. However, I stand to be not only the hierarchically superior consumer of their services and results, but also the supplier of raw material (life necessities) which enables them to perform in the first place. This special loop allows me to make certain decisions. Interestingly, certain guidelines on collecting tolls provided by the Arthashastra provide a remarkable framework for such situations. The Arthashastra states that “those whose merchandise has not been stamped with sealmark shall pay twice the amount of toll. For counterfeit seal they shall pay eight times the toll”6 which I can interpret as setting quality standards for the duties my children are assigned. They not only should carry them out, but they should concentrate on carrying them out well and with genuineness. An unclean room or a failed course will receive much less punishment than litter under the carpet or cheating on an exam. Arthashastra also tells me that my children are intelligent. They know that a job well done can get rewards but they are also conscious of the prospects of getting more responsibilities. Arthashastra makes me aware of the possibility of them avoiding these prospects by systematically underperforming- “under the fear of having to pay a heavy toll, the quantity or the price of merchandise is lowered,”7- and recommends a punishment equally severe to that for a dishonest step. A punishment is also prescribed for over expectations on performing a task well. When “the price of any merchandise is increased beyond its proper value, the king shall receive the enhanced amount or twice the amount of toll on

it”8 i.e. when my children perform well but demand something excessive in return, they can be penalized for the same with increased work or denial. Seemingly unfair at first, it can not only discourage them from performing, but it can also harm my image in their eyes. However, the Arthashastra reminds me that the king shall think of the subjects; “whatever pleases himself he shall not consider as good, but whatever pleases his subjects he shall consider as good”9 where by pleasing the subjects it means their wellbeing in the long run. Also, it is only wise to make children aware of the reality outside our homes and schools: not every good action gets credit and accolades, instead, it can even be rewarded with pain and dishonour. As the Gita says, “you have a right to perform your prescribed duty, but you are not entitled to the fruits of action. Never consider yourself the cause of the results of your activities, and never be attached to not doing your duty.”10


Punishment according to Arthashastra. It wouldn’t be an exaggeration to say that the Arthashastra is a rule book for kings and his subjects, complete with prescription of punishments for each rule broken. However, the

HKU EFSI Digest – Issue II February the 1st, 2013 1st book of Arthashastra contains an interesting chapter which speaks on the concept of punishment. The original argument supports the existence of firm punishment for the development of the kingdom and in fact goes a step ahead, saying that the king is in the best position to punish and control the citizens. The counter argument holds that mere punishment is not enough as it is also the nature of punishment that matters; “for whoever imposes severe punishment becomes repulsive to the people; while he who awards mild punishment becomes contemptible. But whoever imposes punishment as deserved becomes respectable.”11 The argument further continues on the lines of thought behind the punishment. A wisely awarded penalty can cause redemption while an ill-perceived penalty can provoke a backlash and rebellion. It talks of the joint causal effects of the degree and logic of the punishment on individuals and also suggests neutrality in making such judgements; a judiciary system, “for in the absence of a magistrate the strong will swallow the weak; but under his protection, the weak resist the strong.”12 The book thus speaks of a comparative advantage for the punisher and the punished and gives a certain degree of support and power to both of them. It implies an indirect evaluation of absolute and comparative advantages13 and gives a frank inclination towards the latter. It tells me that as a parent I have the authority to instruct and punish my kids, but at the same time it is my moral obligation to provide them with a fair chance to question the logic of the punishment handed in and even appeal against it. Hang on… Where’s the Economics? So after all this, are you still left wondering where economics lies? I have come up with no theories, statistics, graphs, indices or

calculations, yet I believe I have stressed on a very significant concept that ideally resides at the back of an economic mind. We are endowed with resources and no matter how rich they are, they are limited. We have to exploit them sustainably, such that they fulfill our needs without suffering or causing negative externalities in the present or the future. An economist at heart would very carefully divert the productivity of resources in the desired direction, exercise significant control on them, and cause least minimum damage to them in the process of acquiring required results, all at the same time. One of the similarities I see between my children and economic resources is that they enable me to produce: produce a future. They are the continuity of my name and race. It is instinctive that I groom them towards being prosperous and in the process, teach, test, reward and punish them according to their reactions. Each of the actions and especially punishment can cause personal and psychological negative externalities which can directly affect the sustainability of my race. And yet, Arthashastra teaches me so much more. It tells me that economics is not confined to formal education. It is not just a collection of theories, formulae, calculations and statistics. It is beyond markets, currencies and taxation policies. Economics is a technique of thinking. It enables us to identify our potential and limits and explains why we live the way we live. It states that our parents, teachers, spouses, children and colleagues are all reservoirs of finite capacities and in order to get the best possible from each of them, we need to rationalize our expectations. It is the logic behind our long term and short term decisions, explicit and implicit choices and degree of self-acceptance and development. Economics could very well be the logic of living, and Arthashastra, a personification.

HKU EFSI Digest – Issue II February the 1st, 2013

The Introspection of Hong Kong as Asia’s International City Business, Economic and Public Policy Research Centre, Hong Kong Shue Yan University; Lee, Shu-kam Ng, Cho-yiu

Introduction China has experienced rapid economic growth in the last few decades. In 2010, she overtook Japan to become the world's second largest economy. Hong Kong being the international city of Asia and a special administrative region of China, the economic interactions between Hong Kong and the Mainland have become increasingly frequent. However, as a consequence of these interactions, the conflicts between the residents of both regions have intensified. Now is the apt time for government and community of Hong Kong to introspect and reflect on what it means to be an international city in Asia in order to pave the way for improved and inclusive future development and public administration. Suburban tourist shopping district relieving overcrowding problem in downtown. Instead of staying in hotels, this year, a lot of backpackers from Mainland chose to camp in Pui O Campsite in order to save travelling expenses. This caused widespread discontent and some local people even suggested prohibiting Mainland travellers from using campsites in Hong Kong. This event shows that Hong Kong suffers not only from high residential rents (due to inadequate housing supply) but also expensive hotels and guesthouses room rates. If the HK government keeps relaxing the Individual Visit Scheme (please give a reference with a brief explanation) while ignoring the supply of related facilities, Hong Kong’s public facilities will certainly be overburdened. When demand continuously increases while supply remains unchanged, it leads to an increase in the price level and hotels room rates. Eventually, high

travelling expenses will keep visitors away. Shelving the “multiple entry permit” arrangement for non-permanent Shenzhen residents is just a temporary solution which cannot tackle the problem at its roots. In fact, Hong Kong needs more land for development. Figure 1: Mainland backpackers camp in Pui O Campsite

Source: Wen Wei Po

At the same time, we should also be aware of the crowdedness of urban area. Currently, Causeway Bay and Tsim Sha Tsui are the main shopping districts in Hong Kong. As both districts are the shopping hotspots of local people and Mainland travellers, we can easily imagine the degree of overcrowding. Indeed, the government may consider establishing a tourist shopping district at suburban areas. Tung Chung, in addition to North East New Territories for example, can be a possible choice. Tung Chung is close to tourist infrastructures such as the Hong Kong International Airport and theme parks. Also, with a well-developed railway network, it can be developed as a tourist shopping and sightseeing area for short stay travellers. This can result into them spending less time cramming into downtown areas, relieving the overwhelming burden on downtown facilities. Furthermore, the urban planning of Hong Kong is inconvenient for those in the service industry. High-end residential and commercial districts are built in the downtown while service industry workers usually live away from these

HKU EFSI Digest – Issue II February the 1st, 2013 districts and bear high transportation costs. On the contrary, luxury flats in many foreign cities are located at suburban areas while workers reside near the downtown and provide workforce for the service industry in commercial districts without suffering from high transportation costs. If a tourist shopping district is established at suburban areas in Hong Kong, massive labor living nearby could then provide adequate workforce for the shopping district. This could also reduce workers’ transportation costs. Balancing cost and benefit Individual Visit Scheme of all sectors


Further to the addition of tourist shopping districts, balancing cost and benefit from Individual Visit Scheme of all sectors could relieve conflicts in Hong Kong-Mainland relation. Although the Individual Visit Scheme could bring economic benefits to our region, it is not faultless. The question is whether the people who benefit from the Scheme are also the ones who bear the cost. The answer is obviously not. For example, in recent years, a lot of the non-permanent resident pregnant women arrived in Hong Kong to give birth to their infants, and private hospitals kept admitting these patients and making huge profits. As a result, there was a shortage of bed space for local pregnant women. The time of visiting doctors and frequency of having ultrasonic scans reduced too. Only a part of the community (e.g. the private hospitals) benefitted from the Scheme but the cost was borne by others (e.g. local pregnant women). This is one of the important causes of the conflict in Hong Kong-Mainland relations. The Hong Kong government is one of the beneficiaries under the Scheme since tax revenue increases due to increase in demand driven by Mainland visitors. Therefore, the government has the responsibility to protect the interest of the affected group.

The positioning of Asia's international city Finally, in addition to the above solutions which could be done by the government, the community should reflect on the nature of attitude it should adopt towards Mainland visitors. As an international Asian city, does Hong Kong only welcome well-educated and wealthy visitors? What degree of tolerance should it have towards the unfamiliar? Many Hong Kong locals worry about the culture of Hong Kong being dissolved into that of the Mainland. However, the culture of an international city is global and more influential; hence we can be sure that Hong Kong, in fact, has the capability to assimilate other cultures without losing its own. We understand there is a cultural difference between Hong Kong and the Mainland and we may not familiarize with the difference. Since Hong Kong developed before Mainland did, criticism easily arises when Hong Kong people, who are generally high-educated, have to cope with the habits of the Mainland people. But is it a fair comparison? Hong Kong has gone through a change in lifestyle and social etiquettes which the Mainland is now experiencing. Queue jumping, littering and speaking loudly were quite common in the old days in Hong Kong. This is perhaps why the older generation in Hong Kong has a better understanding of the behavior of Mainlanders. Nevertheless, the new generation in Hong Kong is born in a civilized society so they have never experienced the life of the old society. As a result, it is hard for them to understand the situation of the Mainland. Should we encourage the new generation to learn more about the Mainland? There are, of course, many aspects to this conflict. There are, again, beacons of hope, which lead us to believe in a harmonious future. Many Hong Kong people dislike Mainlanders rushing into the MTR for seats. Here’s a story of my friend in the MTR. He didn’t get angry with this behaviour. Surprisingly, he offered his seat to the Mainlander. The Mainlander instantly realized that his behaviour was improper and

HKU EFSI Digest – Issue II February the 1st, 2013 returned the seat to my friend. Instead of blaming the Mainlander, he responded in a polite and positive way and obtained the same response in return. This is a good interpretation of the meaning of infectiousness. When facing the impoliteness of Mainlanders, should we adopt a positive response to replace a condescending manner?

A truly civilized society such as Hong Kong, should, on one hand, develop proper policies to minimize conflicts and on the other hand, maintain its valuable culture. From the above discussion, the causes of conflicts are inadequacy of land and inappropriate land use planning (example of Pui O, Causeway Bay and Tsim Sha Tsui) and also insufficient protection for affected groups (example of doubly nonpermanent resident pregnant women). Apart from the effort of government sectors such as implementing rules and regulations, Hong Kong citizen should also figure out what attitude they are going to choose towards Mainlanders.


LOL! A grade school teacher was asking students what their parents did for a living. "Tim, you be first. What does your mother do all day?" Tim stood up and proudly said, "She's a doctor." "That's wonderful. How about you, Amy?" Amy shyly stood up, scuffed her feet and said, "My father is a mailman." "Thank you, Amy" said the teacher. "What does your father do, Billy?" Billy proudly stood up and announced, "Nothing. He's an economist." Source:


HKU EFSI Digest – Issue II February the 1st, 2013

References Why Strengthening China’s Private and Service Sector is Crucial By Petra Schmidt Bergsten, C. Fred; Gill, Bates; Lardy, Nicholas R.; Mitchell, Derek, China: The Balance Sheet, New York: Public Affairs, 2006 International Energy Agency, “World Energy Outlook 2010 Factsheet” (2010) available at [28.3.2011] Shirk, Susan L., China: Fragile Superpower, Oxford; New York: Oxford University Press, 2007 Wang, Sarah, “What does China’s new five-year plan address?” [28.3.2011]






Wong, Richard, “What Innovation Does china Need in the Next Five Year Plan?” (18.2.2011) available at [29.3.2011] Wong, Richard, “Will China’s Economy Slowdown?”, 4.2.2011, available at [28.3.2011] World Bank, “China Quarterly Update: November 2010” (November 2010) available [28.3.2011]



Xinhua News Agency, “China ranks 4 in scientific R&D spending: NBS”, China Daily, 2.12.2010, available at [29.3.2011] th Xinhua News Agency, “Full Text of Hu Jintao’s Report at 17 Party Congress” (24.10.2007) in Bergsten, C. Fred; Freeman, Charles; Lardy, Nicholas R.; Mitchell, Derek, China’s Rise: Challenges and Opportunities, Washington DC: Peterson Institute for International Economics: 2008 Yasheng, Huang, “Web of Interests and Patterns of Behaviour of Chinese Local economic Bureaucracies and Enterprises during Reform”, The China Quarterly (1990), volume (123) Punishing My Children the Arthashastra Way By Gauri Noolkar 1

Arthashastra is an ancient Indian text on the political governance, economic regulation, social control and military warfare. Written by Chanakya (also known as Kautilya and Vishnugupta, 350-283 BC), a scholar of politics and economics at the ancient University of Takshashila (now in Pakistan), the text served as a firm guidance to the Maurya dynasty which ruled Magadha kingdom (present day Bihar, India) and expanded it. Chanakya was also the friend-philosopher guide of Chandragupta Maurya, founder of Mauryan Empire (322-185 BC). He groomed Chandragupta and guided him in defeating the Nanda dynasty and acquiring Magadha kingdom. 2

Chapter III, "Remedies against national Calamities" in Book IV, “The Removal of Thorns”, Arthashastra.


Chapter IV, "Neutrality after Proclaiming War or after Concluding a Treaty of Peace; Marching after Proclaiming War or after Making Peace; and the March of Combined Powers,” in Book VII, “The end of the Six-fold Policy”, Arthashastra. 4

Chapter III, "Remedies against national Calamities" in Book IV, “The Removal of Thorns”, Arthashastra.


Chapter XIX, “The Duties of a King” in Book I, “Concerning Discipline”, Arthashastra.


Chapter XXI, “The Superintendent of Tolls” in Book II, “The Duties of Government Superintendents”, Arthashastra.

HKU EFSI Digest – Issue II February the 1st, 2013


Chapter XXI, “The Superintendent of Tolls” in Book II, “The Duties of Government Superintendents”, Arthashastra.


Chapter XXI, “The Superintendent of Tolls” in Book II, “The Duties of Government Superintendents”, Arthashastra.


Chapter XIX, “The Duties of a King” in Book I, “Concerning Discipline”, Arthashastra.


Sloka 47, Chapter 2, The Bhagwad Gita.


Chapter IV, "Determination of the Place of Varta and of Dandaniti" among Sciences in Book I, "Concerning Discipline", Arthashastra. 12

Chapter IV, "Determination of the Place of Varta and of Dandaniti" among Sciences in Book I, "Concerning Discipline", Arthashastra. 13

Adam Smith (1723- 1790), Scottish Classical Economist and Philosopher: Principle of Absolute Advantage; David Ricardo (1772- 1823), British Classical Economist: Law of Comparative Advantage.

Concluding Notes…


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EFSI Digest (February 1, 2013)