SOME LESSIONS FOR DEVELOPING ECONOMIES
P
ROF
N
ARAIN
S
INHA
D EPARTMENT OF E CONOMICS
U NIVERSITY OF BOTSWANA
G
ABORONE
(BOTSWANA)
The work on this paper has been greatly influenced by the research initiated by Y K Ng and his colleagues and was conceived during my stay at Ethiopian Economic Association, Addis Ababa Author is grateful to
Dr Berhanu Nega, Director, EEA/EEPRI for providing opportunity to visit EEA/EEPRI, Addis Ababa.The paper has been revised in Botswana. Usual disclaimers apply.
2

SOME LESSIONS FOR DEVELOPING ECONOMIES
N
ARAIN
S
INHA
Singapore has an income level 82.4 times that of India in per capita, and even in terms of purchasing power parity, Singapore is 16.4 time higher than that in
India . However, the happiness scores of both countries are exactly the same.
Despite the fact every economic agent be an individual or government optimization, it is observed that economic growth may be welfare reducing. It may happen in the presence of substantial relative-income effects and environmental disruption effects. In spite of each and all agents optimizing and every government also maximizing the welfare of individuals by the choice of income-tax rate and the ratio devoted to the abatement of environmental disruption the welfare of the society does not increase and the people are willing to migrate to other nations. In the present paper I have tried to show that why welfare-reducing growth occurs and set out some propositions to explain the phenomenon of reverse migration takes place. Ng et al. (2001) have argued that it may be avoided if environmental disruption may be directed and taxed at low costs and/or government spending on public goods is not environmentally disruptive. In India, the private sector has taken a lead in the sense that townships are built out side the metros with all amenities for attracting the people from the developed world. The conclusion of this paper suggests that capability and happiness are closely related, but has no relation ship with income. If a person has capability, his migration to a lower income society may enhance his happiness and at the same time spur the development process in the destination economy. Instead of targeting their policies towards higher economic growth, the developing economies with stable political and economic environment such as India in Asia, Sub-Saharan countries in Africa, and Brazil in Latin America should direct their efforts to create a happy society by providing
(HHH) environment so that people with better capability from the developed economies are attracted and accelerate the development process.
economic growth, happiness, relative income, environment, capability and welfare
3

SOME LESSIONS FOR DEVELOPNG ECONOMIES
It is a common observation that, despite the increase in per capita real incomes of many countries welfare or happiness of the people has not increased significantly. An increase in growth may interst the economists, policy makers or the stock market players, but may mean nothing to a common man. India may be lagging behind in terms of economic indicators or human development indicators, but Indians have been found happier than people in even the G-
8 countries. According to a recent report by the UK based
New Economic Foundation
, India has been ranked 62 in terms of Happy Planet Index (HPI) with ranking higher than entire North
America, Europe and Australia. In the list of countries ranked in terms of GDP, India is the second after China in terms of HPI
1
. This observation that HPI for China is higher than that for
India has however been contradicted by another survey by Guardian and reported in Times of
India
,
in which 64% of the roughly 10,000 Chinese polled never wanted to be born as Chinese; where as 90% people in five Indian metros opted to be born as Indians in a hypothetical next birth according to a survey conducted by Times of India (TOI)
2
. As a result migration of people takes place not only from lower income to higher income societies but also other way round. A number of scholars have discussed the problem of the happiness, including in relation to the relative-income effect (e.g., Easterlin 1974, Ng and Wang 1993). This paper attempts to show
1 Economic Times, October 3,2006
2 Times of India, October 3,2006(New Delhi, India edition)
4

why economic growth may be welfare reducing even under optimizing environment if each and all individuals including the governments who always attempt to maximize the welfare of individuals so that their chances of getting re-elected increase particularly in the years of voting
3
. Even by the choice of income-tax rate and devoted to the abatement of environmental disruption Ng at el. have shown that “this outcome may be avoided if environmental disruption may be directly taxed at low costs (which may not be feasible) and/or government spending may have to be used more in areas of low disruption and high benefits such as education, research, and environmental protection”.
Happiness of a happy individual is not in the eye of beholder but it is one’s own perception.
Notwithstanding the difficulties in the measurement of utility, happiness is also difficult to measure and compare objectively. However, conceptually, it is cardinally measurable (Ng
1997). A practical method has been developed and used to measure happiness cardinally with interpersonally comparability (Ng 1996). However, the existing measures of happiness have more problems with their comparability aspects; nonetheless they are not completely useless
(See, Veenhoven 1984 and 1993). Even GDP cannot be regarded as an accurate and perfect measure of welfare (Samuelson and Nordhaus, 2002).This paper seeks to justify the observation of relationship between happiness, migration and income level. Further it argues that movement of people from high income society to low income society increases the happiness of the migrants and at the same time spur the development process of the recipient or destination
5

country.
Three types of evidence are available in the literature on Happiness: First, studies by psychologists and sociologists showing that, across nations, the happiness levels of people increase with the income level, though not very significantly. For example, Cummins (1998) using regional and cultural factors has classified the countries into six categories. Arranged according to levels of happiness, and employment theses countries are given below in Table 1.
Strangely the Southern and Western European countries (e.g., France, Italy, and Spain) score significantly lower than the African countries. Interesting, in the last group Singapore has an income (per capita) level 82.4 times that of India, and even in terms of purchasing power parity, 16.4 times higher than India. However, the happiness scores of both countries are exactly the same, both significantly higher than that of Japan. In the present paper an attempt has been made to answer this question. The happiness level of people increases with the income level, both across nations and also regions within a country, though not very significantly; thereby motivating them to migrate from one place to other.
Table 1: Happiness and Unemployment across the Economies
Group of Countries
Northern European countries
English-speaking (the USA, UK, Australia, & Ireland)
countries
Central and South-American countries
(including Brazil)
Middle East, the Central European, Southern & Eastern
European (Greece, Russia, Turkey &
Yugoslavia),Indian Subcontinent and Africa
Southern and Western European
(France, Italy, and Spain) countries
East Asia (including Japan and Singapore)
Source: Cummins (1998)
Happiness Level
(higher to lower)
A
U- Rate
(in %)
4.5-5.6
B 5-6
C N.A.
D N.A.
F 5.1
The statistically significant positive relationship between happiness and income across the nations has been observed, though some important economies like Japan and France are far
6

off the regression line. It has been argued that it may be due mainly to the inter-group difference between the high-income and high-happiness; advanced and free countries; and the others. On the contrary, Schyns (1998) has shown that no positive relationship as such exists between income and happiness within either of these two groups of economies.
Secondly, inter-temporally the relationship between happiness and income level within the same country (at least for the advanced countries where such data are available) is even less encouraging in terms of the positive relationship. For example, during the period 1940 to 1994, the real per capita income of the U.S. increased by more than one and a half times, but the percentage of people who regard themselves as very happy fluctuated around 30%, without showing any upward trend. Another measure of average happiness fluctuated around
72%. Over the similar period, the income level in Japan increased by a much larger margin, but its average happiness measure fluctuated around 59%, also without an upward trend
(See, Diener and Suh 1997, Myers 1996, Oswald 1997, Frank 1997, Veenhoven 1993). In
Japan, most visible perpetrators include the young people with different values represent a threat to the safe society then have grown to expect (
Economist
, Oct 25, 2003).
Finally, there are factors that affect or at least correlate with happiness much more significantly than the income, including marital status (being married or single, Myers
1996), employment status (being employed or not
4
Wilkinson and Winkelmann, 1998), having a religious belief and practicing the meditation or Yoga, etc. Rate of crimes, higher incidence of suicides, rate of divorce, corruption, etc. are some of other variables, which
4 The unemployment rate and happiness are correlated as is evident from the Table 1.
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may be thought of having high correlation with happiness. Japan’s national policy agency recorded 2.85 million crime 60% increases from a decade earlier. For those who do not trust the more subjective measures of happiness and opt to use more objective indicators of the quality of life, the picture is however not much different.
Analyzing a panel data set of 95 quality-of-life indicators (covering education, health, transport, inequality, pollution, democracy, political stability, etc.) covering 1960-
1990, some remarkable results were obtained and presented below: i) Virtually all of these indicators show quality of life across nations to be positively associated with per capita income. When country effects are removed using either fixed effects or an estimator in first differences, the effects of economic growth on the quality of life are uneven and often nonexistent. “For the fixed effects estimator applied to 95 indicators, the coefficient of income was significant at the 5% level for 40 indicators. This is not so bad, except that only 23 of this 40-show improvement in the quality of life associated with rising income. Several indicators have shown significant deterioration
in quality of life” (Easterly 1997). ii) Most of the exogenous time shifts (69 out of 95 indicators) improve the quality of life; and the time shifts are more important than growth effects in the majority (62% of the 79 available indicators) of indicators. Even for the only 22 out of the 95 indicators with a significantly positive relationship with income under fixed effects, time improved in 10 cases; out of these in 22 cases more than the income did.
The surprising results are not due solely to the worsening income distribution
8

(there is some evidence that the share of the poor gets better with growth).
Rather, the quality of life in any country depends less on its own economic growth or income level and more on the scientific, technological, sociological structure of the society and above all other breakthroughs at the world level.
Somebody has aptly said “in this world most people are unhappy not because of their own unhappiness, but because of the happiness of others”. According to the
Buddhist philosophy, what a person possesses does not determine his happiness, but it is his knowledge (or capability), living skills, and his value system that matter most.
Measuring happiness is very difficult task. In most of earlier studies happiness has been regarded as a concept similar to utility, satisfaction, and welfare. Economic analysis of happiness is thus built around the concept of individual utility. In its ordinal perspective, it may be derived from revealed preferences. An individual is happier when he gets what he wants most and moves higher on his preference schedule. Sen (1982) gives a pertinent example of inadequacy of revealed preference approach through the dilemma of the Buridan’s ass who dies of hunger because it could not decide which haystack to consume, as it was indifferent between the two haystacks, but it may have happened because the ass came from a deprived state.
Although, utilities inferred from revealed preference may not always maximize the utility
(or happiness) of an individual, as has been illustrated by Luce and Raiffa (1952) rather it
9

may even reduce the utility.
5
Following Ng et al. (2001), some important factors affecting the welfare of a person are included in the analysis proposed below. First, among the traditional variables focussed most closely by economists, are personal consumption c
(in real terms, as also true for all variables discussed in this paper) and leisure x
. Secondly, the amount of public goods provision g is considered, for apart from personal consumption, one benefits from the provision of law and order, and other public goods and facilities.
Thirdly, consumption or income r in relation to the society is another variable. Much before
Duesenberry (1949), the importance of relative income was made well known by Rae (1834) and Veblen (1899). Currently, it is believed that mostly people in higher income societies in developed economies (which constitute a fast expanding set) are believed to be happier being well fed and accommodated. Then why the people from the higher income societies tend to migrate to the lower income societies? The increasing importance of relative-income effects relative to the absolute or intrinsic consumption effect needs hardly any supporting argument. Fourthly, for its own interest and as an extreme manifestation, it may be noted that even mortality may be more a function of relative than absolute income (Wilkinson,
1997). Finally; environmental quality E is also included, for greater pollution, congestion, deforestation, and other forms of environmental disruption regarded as the by products of economic development.
Needless to say, there are other factors such as the possible existence of ignorance,
5 Prisoner’s dilemma provides an example of how rational choices of individuals reduce utility of people involved.
10

imperfect foresight, and other possible divergences (non-affective altruism and irrationality) between preference (represented by a utility function), and happiness (represented by a personal welfare function) affecting the happiness in the larger context. Following the arguments on the existence and implications of these divergences discussed in Ng (1999), the utility or welfare function of an individual may be considered as
U = U(c, x, r, g, E); (1)
Such that the corresponding marginal utilities are positive that is
U s
, U x
, U r
, U g
, U
E
> 0
Where r
represents the relative income (i.e., y
Y
), with y is the income of the individual concerned and Y is the average income of the relevant society, and the subscripts denoting partial differentiations, e.g. U s
=
∂
U
∂ c
. If equation (1) is maximized subject to c = (1-t)y (2) y = (1-x)w (3) taking g, E, t, w as given; where t is the proportional (assumed for simplicity) income tax, and w is the exogenously given earning ability, and the time constraint is normalized to be unity. Assuming an interior solution (treating both starvation and exhaustion as unacceptable), the first-order solution is
U x
= (1-t) wU c
+ (w/Y) U r
(4)
In order to consider the effect of individual productivity in the above model an increase in one’s own earning rate w is considered. Thus, differentiating equation (1) with respect to w, taking t, g and E as given (as viewed by the individual), we have
11

Substituting in dU dw dc dw
= U c dc dw
+ U x
and dx dw
+ U r dr dw
(5) dr dw
from the differentiation of equations (2), (3) and r ≡ y
Y
⎞
, taking Y as given, and substituting in equation (4) (which makes the term associated with dx dw
equals zero; intuitively, as the individual starts with an optimal position with respect to the choice of leisure x, a marginal change in x has no first-order effect on utility), Ng and
Ng (2000) express the response of change in w to U in proportionate or elasticity terms, as follows σ Uw = η Uc + η Ur (6) where σ Uw ≡ dU dw w
U
⎞
is the proportionate total response of U with respect to w (‘total’ in the sense of allowing other relevant variables to change endogenously; but g, E, Y are not relevant variables here), and η Ub ≡
⎛
⎝
δ
U
δ b
⎞
⎠
⎛
⎝ b
U
⎞
⎠
for any U and b is the proportionate ‘partial’ response of U with respect to a change in b (‘partial’ in the sense of holding other variables unchanged). Assuming that the increase in utility amounts to happiness, Equation 6 indicates that the degree of importance of enrichment for an individual equals the sum of the intrinsic consumption effect and the relative-income effect. For the poor, the intrinsic consumption effect is big though the relative-income effect may be at least relatively small; for the rich, the relative-income effect is big though the intrinsic consumption effect may be small. Thus, for almost all people, making more money seems very important, explaining why most people, in rich and poor countries alike are engaging in the rat race of earning higher and higher.
For the whole society, economic growth increases the earning ability not only of one
12

person but also of most persons. Ignoring distributional changes, we consider the situation of a representative individual whose earning ability w increases at the same rate as that of the average earning ability W, i.e. we have w=W, dw=dW, x=X, Y=(1-X) W, etc. where capital letter indicates the average value of the relevant variable. A more complicated formulation in terms of a continuous distribution of individuals of different earning abilities does not change the central conclusions. Differentiating (1) with respect to W, at w=W, dw=dW, and allowing the aggregate variables Y, g, E to change correspondingly, we have dU dW
= U c dc dW
+ U x dx dW
+ U g dg dW
+ U
E dE dW
+U r dr dW
(7)
So that U r
= 0 if y and Y change by the same proportion, leaving r unchanged. If r changes due to migration, then dU dW
increases as r increases. If the determination of government spending on public goods (i.e., g) and environmental quality (i.e., E) are introduced, after simplification of Eq. 4, the response of any change in earning capability on U can be expressed as the sum of individual and relative income effect. The individual effect can in turn be decomposed into direct and indirect effects. The direct effects manifest the effect of an economy-wide increase in earning or productivity, including their effects as an intrinsic consumption effect due to the higher productivity allowing higher per capita consumption, a public-good effect as higher national income allows more spending on public goods, and an environmental disruption effect The indirect effect inter alia
captures the external effects of individual income/leisure choice. An increase in leisure reduces one’s own income and hence benefits others through the relative-income effect, but harms others through a reduction in public goods provision and may benefit or harm others through the
13

environmental effect depending on whether is negative or positive. It is perhaps not unreasonable to assume that is negative. Even if a given proportion (provided not excessively large to begin with) of tax revenue is used for abatement, an increase in production still causes more disruption to the environment.
However, as productivity W increases, the government may wish to change the tax ratios along with t and α optimally to maximize U, with W given. (While this supposition appears to ignore the contributions of the public choice literature), it actually makes Ng and Ng to conclude that even if the government is good enough to try to and succeed in maximizing U with respect to t and α , economic growth may still be welfare reducing. Differentiating U in
(1) the expression for welfare in proportionate terms, we get the direct effects and the indirect effect. While the indirect effect has the same interpretation, the direct effects (of an increase in tax rate t) consist in a public goods provision effect, an (environmental disruption) abatement effect (as a higher tax revenue finances for both public goods provision and abatement), and a (reduced) consumption effect. For this particular effect, it is easier to see its rationale in non-proportionate terms. In this form, it is clear that an increase in t reduces utility at the rate y through the consumption effect as an increase in t reduces c at the rate y. The effect of an exogenous increase in productivity on utility, while both the tax rate and the abatement ratio are being optimized before and after the increase has ambiguous sign with the first term (consumption effect) is positive (but likely to be small for rich economies), the second term (environmental disruption effect) is negative (and likely to be absolutely sizable for rich economies), the third term is positive/negative if the
14

optimal tax rate t increases/decreases with W, and the last term is of ambiguous sign.
If the negative environmental disruption effect is large absolutely and both the consumption and public goods effects are relatively small, the first three terms in equation
(7) may add up to be negative. If, in addition, leisure does not respond substantially, the last term fails to make a big difference. Here I argue that higher productivity does not imply higher per capita income. If Y is income, N is population and L is employment.
Then per capita income is given by
y=Y/N
=(Y/L) x (L/N)
So that g yn
= g
ν l
+g ln
(8)
From the above equation, it is obvious that growth in productivity does not imply growth in per capita income(y) if the unemployment (N-L) is also growing. Overall increase in productivity experienced in developed countries has resulted in greater job-cuts, which in turn lead to welfare loss at the aggregate level. For the society as a whole, an increase in productivity may not be an unmixed blessing even if the higher production finances more public goods provision and more abatement. An individual may rationally engage in the rat race for making money, but at the aggregate level it may result in net welfare loss. From the contrast between the unambiguously positive (and likely large for both poor and rich economies alike), Ng and Ng (2000) have given Proposition 1.
Proposition 1: Reasonably assuming the existence of important environmental disruption effect and relative-income effect, economic growth may decrease happiness even if the
15

provision of public goods and disruption abatement are being optimized, and even though all individuals are rationally trying to make more money eagerly.
Proposition 1 is a surprise, at least with respect to the optimal choice of the tax rate t meaning thereby that, if a higher tax rate does not discourage work significantly ( σ xt not large) the instrument of income tax (suggesting that the direct taxation of pollution may be needed) is powerless in reducing the higher environmental disruption of higher production
(through higher productivity W) except through the financing of more abatement. This implies a positive response of the growth in productivity to utility may not be happiness enhancing at the aggregate level. Then, Ng et al. (2001) argue that growth may be utilityenhancing only if it finances extra provision of public goods that provide more benefits than disruption. It may not be true, for if there are wide-spread job cuts in the economy resulting from the higher productivity, it may result loss of welfare or happiness at the aggregate level. Extending this case to many countries and considering migration I add three more propositions below which may provide better explanation to the above proposition.
Proposition 2: There is a direct relationship between utility maximization, growth of per capita income and productivity. But higher growth resulting from productivity increase may not enhance the utility, because better technology leads to higher productivity of employment with a particular skill only. Higher economic growth accompanied by widespread job cuts may not increase happiness at the aggregate level.
This may be termed as the
Higher Growth Syndrome .
Proposition 2 is a natural corollary of equation (8). If the higher productivity is not followed
16

by higher growth in skilled labour then it may result in loss in welfare of people caused by wide spread job cuts.
Proposition 3: In spite of huge difference between per capita incomes, India and
Singapore are at the same level of happiness because the happiness (like total product curve) increases with the increase in per capita income up to a certain level, after that it decreases with the income. This may be termed as the Equi-happiness proposition of
States
.
This proposition also holds for inter-temporal comparison of an economy stated above.
Proposition 3 suggests that the happiness (measured as Δ U) curve is similar to marginal product (or utility) curve, increasing up to a point and thereafter starts decreasing Thus it suggests an inverted U-curve between the level of happiness and income level ,if r remains unchanged. This explains why in the positive relationship between the income levels and happiness observed in Cummins (1998), the countries like Japan and France were far off the line, because these countries might have surpassed the level when happiness starts declining. If all economies are taken together then there is a possibility that the conclusion of no relationship as observed by Schyns (1998).
Proposition 4: If an individual with income (y
L
) migrates from lower income (Y
L
) society to higher income (Y
H
) society, his level of happiness increases or remains the same.
However its converse may not be true. In other words an individual (y h
) migrating from higher income to lower income society his level of happiness increases if his earning ability or capability remains the same.
This may be termed as
Equi-productivity
17

proposition.
Proposition 4 holds because y
L
=rY
L
and y
H
=rY
H
, then happiness level remains the same. If an individual migrates from India to Ethiopia or from the US to India, his happiness increases because y
H
/Y
L
>y
H
/Y
H
=y
L
/Y
L.
Thus it implies that the relationship between happiness and income level is U-shaped if r changes due to inter-country migration when capability of an individual remains same.
Thus, migration of people from higher income society to lower income society has always increased the happiness of the migrant s at the same time it spur the development process in the recipient economies. Example may be cited from the movements of people from the
Asian countries particularly India, Pakistan, Bangladesh etc. to the Gulf countries.
Similarly, the migration of the Asian people to Kenya and Uganda; and that of Chinese to
Malaysia, Thailand, Singapore, etc. are some illustrations of happiness and development.
Economic analysis of happiness is new area of research, earlier it was the domain of philosophy and psychology. Now a day’s economists have attempted to quantify the level of happiness. Singapore has an income level 82.4 times that of India in per capita, and even in terms of purchasing power parity, Singapore is 16.4 time higher than India. However, the happiness scores of both countries are exactly the same, because after certain level of income the happiness starts falling, but significantly higher than that of Japan. There is a direct relationship between utility maximization, growth of per capita income and happiness. But higher growth resulting from productivity increase may not enhance the
18

utility or happiness, because better technology leads to higher productivity of employment with a particular skill only. Higher economic growth accompanied by widespread job cuts may not increase happiness at the aggregate level. This is the “ Higher growth Syndrome” which is a symptom of welfare reducing growth. This is being witnessed in majority of the developed economies resulting in reverse migration. If the higher productivity is not followed by higher growth in skilled labour then it may result in loss in welfare of people caused by wide-spread job cuts. In many of the African and Latin countries better technology is available but there is shortage of skilled labour and India is one of the developing countries with inelastic supply of skilled labour.
It has been established that the happiness (measured like increase in utility) curve is similar to marginal product (or utility) curve, increasing up to a point and thereafter starts decreasing. Inter country migration always affect the relative income of the migrant person.
An inverted U-curve between the level of happiness and income level prevails if the relative income (i.e.,
r
) of the migrant remains unchanged .This occurs when a person moves from a lower income society to a higher income society. It has always happened and the trend of migration has been from lower to higher income societies. The phenomenon of the inverted
U-curve explains why a mixed result has been obtained in the literature on happiness with regards to the relationship between the income levels and happiness. On the other hand, if the r changes due to the inter-country migration when capability of an individual remains the same, the relationship between happiness and income level becomes the U-shaped. Thus, migration of people from the higher income society to the lower income society has always
19

increased the value of r
and hence the happiness of the migrants increases. At the same time it accelerates the development process in the recipient economies. Example may be cited from the movements of people from the Asian countries particularly India, Pakistan,
Bangladesh etc. to the Gulf countries. Similarly, the migration of the Asian people to Kenya and Uganda; and that of Chinese to Malaysia, Thailand, Singapore, etc. are some illustrations of happiness and development. These trends increased not only the happiness of the migrating people but also accelerated the development process in the recipient country.
Now India is the receiving country.
The countries like Singapore and Hong Kong -- which were earlier attracting lot of foreign workers -- are now reaching saturation point. Although, this stagnancy factor has reduced the number of opportunities available there, it is the level of happiness which is determining the reverse trend. Similarly, this explanation attempts to answer the question as to why an individual moving from India to Ethiopia or America to India is happier. Further, it explains as to why a large number of professionals from the United States, the United
Kingdom, and the European countries are nowadays seeking jobs in India. It is a great time when the administration in developing economies should be made smooth. Moreover, not many countries offer benefits like political stability, comfort level and competence at the same time. Available trends suggest that overseas professionals from the fields of information technology, biotechnology, research and development, garment industry, hospital sector, etc. are seeking options in India. Most inquiries are for middle- and seniorlevel management positions, but people are interested in lower rank jobs too.
20

Policy makers especially in developing economies in Asia and Africa should make use of this situation and should not be possessed over by the “
Idi Amin’s perception
”. This new phenomenon will have no negative effect on local job market, as most employers prefer overseas workers only for those positions for which expertise is not easily available locally.
If the trend continues to grow with the same pace, then India will soon become a global job hub. Due to outsourcing and job-cuts in countries like the USA and the UK, the skilled foreign workers from these countries are now exploring new opportunities. Although presently the number of such cases is not very large, the process has started. As several foreign firms are setting up their offices here in India, experienced professionals from these countries are also on the lookout for jobs and the trend is being witnessed by the top-tier recruitment firms. Similar potential prevail in African countries particularly in the Sub-
Saharan economies.
Migration of skilled always increases the productivity at the aggregate level in the destination country so long as the elasticity of substitution between migrating labour and labour in the destination country is low. In other words the migrating labour is complementary to the labour available in the destination country. The history of migration suggests that most of the developed country today have benefited from the migration in the previous ceturies.Now it is for the African and Latin American economies to follow the
21

path. Emergence of IBSA(India-Brazil-South Africa)is a positive step towards such economic cooperation among fast moving developing countries(FMDC).This kind of cooperation will enhance not only in the partner countries but in the continents they are located. For instance it will bring Latin American, Asian and African countries together.
Economic benefits from such cooperation will percolate to Cafta, SADAC, and SARC countries through the chain impact.
In the situation when the elasticity of substitution between the migrating labour and domestically available labour is not small under certain socio-political set up it is supposed to increase the competition resulting in higher productivity at the aggregate level. Thus migration is likely to increase competition in the destination economy. In Asia, India and
China are fast growing economy and both of theses countries are emerging the mostfavoured destination for the professionals. Contrary to what had been happening in the past, job market in India and China is witnessing reverse migration (i.e., migration from higher income society to lower income society) with lots of foreigners(including non-residents) now looking for jobs these countries. Until sometime back it was only expatriate Indians who were shifting to places like Bangalore, Mumbai or New Delhi. However, during the first decade of the 21 st century, overseas workers have also started showing interest in India and China, gradually the number of queries from foreign professionals is increasing.
Recruiting firms in India observe that inquiries are mainly from professionals working in the USA, the UK and African countries, but foreign workers from European countries like
Germany and Italy are also increasingly showing interest in coming to India. According to a
22

recent study by a management consultancy, India has emerged as the preferred destination for relocation of over 500,000 jobs in the next five years by the US financial firms. The reason behind this reverse migration is not that earlier India was considered a lowly-paid country, but it is the case of a country with higher level of happiness. Moreover, these days the salaries that are being paid here are globally competitive, hence professionals working in the UK or the USA do not mind coming to India. Also, in countries like the USA the rate of salary increase is hardly 1 per cent, whereas in India it is more than 13 per cent, offering professionals more growth than in the West with higher level of happiness. Moreover, not many countries offer benefits like political stability, comfort level and competence at the same time as are available in India. Besides, countries like Singapore and Hong Kong -- which were earlier attracting lot of foreign workers -- are now reaching saturation point.
This stagnancy factor has reduced the number of opportunities available there. The developing economies like India, should device policies that may make life of people healthier, happier and hustle-free
(HHH) so that migration of people endowed with better capability from higher income society is promoted. Some Indian States such as Haryana,
Andhra Pradesh and Karnataka have taken advantages of this phenomenon but still a lot has to be done to enhance the quotient of happiness. Other Indian States like Gujarat is on the track, but Rajasthan is yet to take the advantage. These States have to learn from the kind of urban development taking place in NOIDA and Gurgaon.
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Extending the single-economy framework proposed by Ng and Ng (2001), we have shown that in the real world when there are many countries the problems becomes complicated, as not only individuals are competing among themselves in relative standing, but the countries are also competing between themselves. Moreover, the government of each country typically only takes into account mainly the welfare of its own citizens, making the optimization at the government level not optimal globally. This obviously makes the problem of global environmental protection and the provision of global public goods like research more difficult and inadequate from the global viewpoint. Propositions of
Equiproductivity and Equi-happiness explain some of the observed facts. Singapore has an income level 82.4 times that of India in per capita, and even in terms of purchasing power parity, Singapore is 16.4 time higher than India in income. However, the happiness scores of both countries are exactly the same, because after certain level of income the happiness starts falling, but significantly higher than that of Japan. Similarly, this paper has attempted to answer the question as to why an individual moving from India to Ethiopia or America to
India is happier. This explains as to why a large number of professionals from the United
States, the United Kingdom, and African countries are nowadays seeking jobs in India. It is a great time when the administration in developing economies should be made smooth.
Moreover, not many countries offer benefits like political stability, comfort level and competence at the same time. Besides, countries like Singapore and Hong Kong -- which were earlier attracting lot of foreign workers -- are now reaching saturation point. Although, this stagnancy factor has reduced the number of opportunities available there, it is the level
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of happiness, which is determining this trend. Available trends suggest that overseas professionals from the fields of information technology, biotechnology, research and development, garment industry, hospitality sector and BPO sector are seeking options in
India. Most inquiries are for middle- and senior-level management positions, but people are interested in lower rank jobs too. This new phenomenon will have no negative effect on local job market, as most employers prefer overseas workers only for those positions for which expertise is not easily available locally. If the trend continues to grow a same pace, then India will soon become a global job hub. Due to outsourcing and job-cuts in countries like the USA and the UK, the skilled foreign workers from these countries are now exploring new opportunities. And India is fast emerging the most-favoured destination for these professionals according to World Development Report (2007). Contrary to what had been happening so far, the Indian job market is witnessing reverse migration (i.e., from higher income society to lower income society) with lots of foreigners now looking for jobs there. Although presently the number of such cases is not very large, the process has started.
As several foreign firms are setting up their offices here in India, experienced professionals from these countries are also on the lookout for jobs and the trend is being witnessed by the top-tier recruitment firms.
Until sometime back it was only expatriate Indians who were shifting to places like
Bangalore, Mumbai or New Delhi. However, for last few months, overseas workers have also started showing interest in India and every week the number of queries from foreign professionals is increasing. Recruiting firms say that inquiries are mainly from professionals
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working in the USA, the UK and African countries, but foreign workers from European countries like Germany and Italy are also increasingly showing interest. According to a recent study by a management consultancy, India has emerged as the preferred destination for relocation of over 500,000 jobs in the next five years by the US financial firms. The reason behind this reverse migration is not that earlier India was considered a lowly-paid country, but it is the case of higher level of happiness. Moreover, these days the salaries that are being paid here are globally competitive, hence professionals working in the UK or the
USA do not mind coming to India. Moreover, in countries like the USA the rate of salary increase is hardly 1 per cent, whereas in India it is about 13 per cent, offering professionals more growth than in the West with higher level of happiness. Moreover, not many countries offer benefits like political stability, comfort level and competence at the same time as are available in India. Besides, countries like Singapore and Hong Kong -- which were earlier attracting lot of foreign workers -- are now reaching saturation point. Notwithstanding this stagnancy factor, which has reduced the number of opportunities available there, it is the level of happiness, which has influenced the migration to India. Along with higher economic growth, the developing economies like India, Nepal, and Bhutan in Asia; and
Botswana and Ethiopia in Africa should device policies that may make life of people happier and hustle-free so that migration of people endowed with better capability from higher income society is promoted for the sake of faster growth. It has always helped the
US, Canada, Mauritius, South Africa, Australia and New Zealand in the past when these countries were less developed than Europe. In recent past the Chinese migration has helped
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South East Asian economies. Hardly there is any country in the world which has not been benefited from international migration at some stage of its development; the need is to take a liberal approach.
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