Can countries grow richer by exporting people, not goods?
MOST OF THE oil in Kerala is pressed from coconuts. Yet the southern Indian state, famed for idyllic backwaters, fragrant cuisine and an easy-going lifestyle, owes much of its prosperity to barrels of the foul-smelling crude that comes bubbling out of the ground in the Persian Gulf and, normally, is shipped through the Strait of Hormuz. Ever since the Middle East oil boom began half a century ago Keralites have been heading there to work, first as cleaners and construction workers, then as clerks, nurses and salespeople.
An estimated 1. 7m of them live in the Gulf, equal to 5% of the state’s population and close to 11% of its workforce. Gulf oil money has transformed Kerala.
K. P. Kannan and K.
S. Hari of the Centre for Development Studies, an Indian think-tank, calculate that by the mid-2010s remittances from the region were equivalent to about a quarter of the state’s output, and more than both its value added in manufacturing and its public spending. This has lifted living standards.
Consumption per person is nearly three-quarters above the Indian average. Multidimensional poverty, an Indian measure of destitution, afflicts around one in ten Indians but is virtually absent in Kerala. Some economists argue that growing rich by industrialising and exporting industry’s products is harder nowadays than when Europe, Japan, South Korea and, most recently, China pulled it off.
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