The Dutch Disease

In economics, the Dutch disease is the apparent causal relationship between the increase in the economic development of a specific sector and a decline in other sectors. The mechanism is that as revenues increase in the growing sector, the given nation's currency becomes stronger compared to currencies of other nations. This results in the nation's other exports becoming more expensive for other countries to buy, and imports becoming cheaper, making those sectors less competitive.

The Dutch Disease is a recent term a came across while scrolling through the internet. It is a situation where when one good is substituted for the other,resulting in reduced value of the former. The same principle can be true if the  two goods are produced by different countries it will result in a reduced value of the country whose goods are no longer consumed. 

In a recent example, The fall of Indian rupee is a case of The Dutch Disease . The fall of rupee actually provides a platform for India to export more and more goods than ever before.The elasticity of Indian exports to rupee is high, as most of the exported goods can be substituted by exports from other countries. This explains why India's exports have underperformed despite strong global growth over the last couple of years. 

Donald Trump's Europe Tour-July 2018

Donald Trump has never been the best President when it comes to foreign relations. First he slams Theresa May for Brexit, then holds her hand and says the countries share a "special" bond. For the past few weeks he has been blaming many US allies like Germany and India for signing big budget deals with Russia. Yesterday at Helsinki, he forgot all of his opinions on Putin and Russia. On the emerging trade war between China and US , Trump keeps claiming he will tax every good from China. But, the unspoken truth is that US will be the country harmed the most by this trade war, as China's imports from US are lesser than  one-fourth the amount of goods US imports from China. Trump is underestimating China. Also, China is a manufacturing hub for the world's biggest American brands. If Trump strains relations with China, it will effect numerous American companies. If the trade war continues, China may devalue it's currency. This will make the prices of Chinese goods in American market back to normal, cancelling out the tax impact.

Charu Veluthoor
On 20th July 2018

This is a part of a letter I wrote to the Letters to the Editor section of "The Economist"

Women and Cooperatives

This Article talks about how a cooperative changed the life of rural women from India. A model which should be replicated in rural localities around the world .

"Bindu"- A Lady of Will and Determination

Living in world’s most diverse locations has given me a valuable insight into the lives of different people. Starting from my early childhood in well developed US to an interior village in India, I have had opportunities to view how contrasting the lives of people from both of these places were. On one side in the US, even not having a car is close to poverty whereas in my village in India, many people don’t even recognise the value of education and have poor access to health and sanitation. Our domestic helper Bindu was one such person. Struggling to meet ends meet ,this lady in her late 30’s was married at 18,and also a mother to a differently abled child. Her days were spent on taking her son to the government and charitable trust hospitals. Her son couldn’t attend school, as they couldn’t afford to take him to the special school far away. But Bindu, never left hope. Her beautiful smile and her never fading optimism stayed. And as the proverb “God helps those who help themselves”, she was recently helped by a few political party workers, who helped her get in touch with other such women and together they have formed a cooperative. Now this group of rural women have started doing a variety of jobs from making handicrafts to digging wells. I wouldn’t say they are now well off, but a change has been initiated. Today Bindu’s son goes to special school run by University students in our village. Today, she is the president of the co-operatives workers, and has also built a house with electricity and a toilet with the help of government aid. I would say her financial stability has drastically increased over the past one year.  But, Bindu is just one among millions. 

I studied high school in one of India’s metropolitan cities and was quite impressed at the visible development when I first arrived, especially after living for 7years in a village. But this was far from the truth, and the same is true for most metropolitan cities in developing countries. Everytime I passed by an impressive luxurious apartment, I could find a small dusty slum with hundreds of people crammed into a small area. In such cities, the rich keep growing richer and the poor keep growing poorer. The separation between these sections of the society are so wide. These pathetic surroundings were worse off than my village. These people have no basic amenities for survival. They eat out the garbage dumps, drink water from roadside taps, sleep on the same pavement which later becomes their toilet.The government should initiate a similiar change among these people.