Burundi comes before Canada lexicographically but Canada leads in all measures of human welfare one could care to compare the two on. I am endlessly fascinated by the contrast between different parts of the world. How on earth did humans end up occupying such widely separated ends of the spectrum of economic development?

Burundi has only 6.4 million people, compared to Canada’s 33 million. But Canada has more land: about 10 million sq kms compared to Burundi’s 0.028 million sq kms. Roughly Burundi has 100 times the population density of Canada. Note however that 35 percent of Burundi’s land is arable, while only 5 percent of Canada is arable. That means, on arable land per capita basis, Canada’s endowment is only 15 times that of Burundi. Not to mention water – Canada has nearly one million sq km covered with fresh water, compared to Burundi’s 2,000 sq km.

Perhaps, one conjectures, that the per capita availability of resources has something to do with the killing sprees that last decades in Burundi, with the Tutsi and Hutus slaughtering each other. It could be nature’s way of redressing the imbalance between people and resources. But I digress.

Canada’s GDP is around US$ 1 trillion and Burundi’s around US$ 0.74 billion. Per capita, Canadians earn about 300 times as much as Burundians. I don’t have an estimate of wealth differentials, but I would guess that Canadians are about 10,000 times wealthier than Burundians. I base this conjecture on the fact that if your income is consistently high over a long period, you end up with lots of accumulated wealth.

Burundi is tiny compared to Canada in terms of wealth and income. The only reason I started comparing them because in the CIA fact book tables, they appear close to each other. India, on the other hand, is not tiny. With nearly 200 times the population of Burundi, India’s GDP is US$ 735 billion. Still India’s GDP is lower than Canada’s even though India’s population is about 30 times Canada’s. Considering that India is about a third of the size of Canada, India’s population density is about 100 times that of Canada. However, around 55 percent of India’s land is arable (compared to only 5 percent for Canada); so per capita arable land in Canada is only 10 times that of India.

India has population/resource imbalance problems, of course, but not as acute as that of Burundi. This could explain at least in part why India is conflict free relative to Burundi. Of course, one cannot discount the pacific nature of the dominant ethic in keeping conflict at bay in India.

If you think about it, of the three countries, Canada is the “cheapest” and Burundi the “costliest” country, with India in the middle. Having lived in California (pretty place but not as cold as Canada) for many years, I often find myself recoiling with sticker shock in India. I find Indian prices totally unbelievable.

But naiveté induced shock is soon reconciled with reason, and it goes thus: of course, India is expensive. That is just another way of stating that people in India are poor. You are poor if you cannot afford stuff. Which means that the prices you face are too high for you to buy stuff. Therefore you are poor. Simple enough but misunderstood by many reasonably bright people.

I keep hearing “India is cheap” from people who are going around comparing some Indian prices while carrying US dollars in their pockets. But Indians don’t carry around dollars. They carry Indian rupees when they go to the market. To an American some stuff (and only some stuff) may be cheap in India. But then if the American is Bill Gates, everything is cheap. It is not the subjective experience of a person that I am concerned with here. I am concerned with whether the prices that a person faces in India is objectively higher than the prices a person faces in, say, Canada. Since prices one pays translate to costs one bears, it is important to measure costs to understand what it means that India is more costly than Canada.

I think I have figured out an objective measure of the cost of living. I will present that the next time.

[Continued in Part 2.]