From Newsweek:

Companies are always trying to predict the future. These days, the field of experimental economics—which replicates market and business scenarios in the lab—is giving the crystal ball an upgrade.

Hwelett-Packard scientists, for example, have created mini-markets that allow its executives to bet on, among other things, future sales and revenue. The internal futures markets do a better job of predicting than simply polling the executives because anonymous bids bypass office politics, and cash rewards (up to $250 for the best bets) provide extra incentive. Another of its fortune-telling exercises uses Stanford students acting as HP execs, retailers and suppliers in a kind of Simbusiness test of new strategies.

Testing economic theories through experiments sounds like a no-brainer, but it wasn’t always so. Vernon Smith, a professor at George Mason University, began doing it in 1956. Over the years, he and others like Caltech professor Charles Plott crafted experiments that proved markets’ predictive power. Their work has influenced policy decisions on issues like airport-landing rights. Last year Smith was awarded the Nobel Prize.

[Via isenDavid Isenberg] BBC News writes: "More and more international patients are travelling to India to seek quality health care at a fraction of the cost back home. Typically they are admitted at one of the many upscale private hospitals that have sprung up across the country. With state-of-the-art equipment and medical practitioners trained abroad, these 'five-star' hospitals now attract a new breed of international traveller - the 'medical tourist' . . . Open-heart surgery in the UK can cost more than $20,000 and double that in the United States. In India, leading hospitals can perform that surgery for less than $5,000."

WSJ has some stories which end up showing India in a positive light vis-a-vis China.

India, the Export Launching Pad: "India is angling to become a manufacturing-outsource center for everything from cars and car components to steel and petrochemicals...India's big advantage, business executives here say, is an army of skilled engineers and designers capable of creating low-cost, high-end products not often found in manufacturing centers in China or Southeast Asia."

Indian Stocks Have an Edge Over Their Chinese Cousins: "In a survey of 61 Chinese companies trading in Hong Kong and 69 Indian companies listed in Bombay, CLSA Emerging Markets concludes Indian companies enjoyed greater daily trading volume, offered a better return on equity and should have superior earnings growth during 2004. Indian companies also generally scored higher on CLSA's corporate-governance ratings...The study, in effect, highlights the contrasting approaches of Beijing and New Delhi toward developing their economies and capital markets. Where China's export-driven manufacturing growth has generated a rising tide of foreign investment in the country, India has been slower to open up. But it has done a better job of developing world-class companies."

Surge in Lending In China Stokes Economic Worries: "there are signs that the world's fastest-growing economy may be in danger of overheating. Pessimists point to overproduction in steel and a possible asset bubble developing in property. They worry that economic growth can't be sustained at its current pace. What's more, economists estimate that of China's nearly $2 trillion in outstanding loans, between $500 billion and $750 billion aren't expected to be repaid. Those amounts are in line with Japan's bad-loan problem...For now, there is little danger that the economy or even the antiquated, state-run banking system will collapse. China's banks remain government-owned and are backed by what amounts to a sovereign pledge to keep them afloat. Indeed, the banks have been carrying a huge load of bad loans for years, and have rarely experienced runs because of the country's closed banking system and China's traditionally trusting bank customers. In recent years, Beijing has been taking steps to overhaul the banks and reduce their bad debts, including setting up some companies to take over bad loans. Still, with many Chinese banks once again handing out loans rather indiscriminately, a new set of bad loans could emerge on their books, setting back China's financial reforms. And their problems could become harder to fix as the country prepares to open its doors to foreign competition."

Recently, Financial Times too had done a 3-part series on India and China. Reuben pointed out that Bloomberg has a story on the growing Indian auto sector.