India, China Economic Growth Essay
India, China Economic Growth
India with about 1. 2 million populations and china with about 1. 3 billon population are two big demographic and emerging countries in the world . Over a past few decade India’s combination into the economic has been accompanied by remarkable economic growth (World Bank 2011¬). India is having the 3th position on the economy in purchasing power parity (PPP) terms (The Economic Times, 2012). India’s total GDP (gross Domestic Product) growth was 5. 5% in 2012 and inflation rate is was ……… (The Economist, 2012) .
According to government of India poverty has been decline from 37. % in 2004 to 29. 8% in 2010 (world bank 2011). The major economic growth sectors include service, agriculture, textile and handicrafts and manufacturing. However, over 66% people from rural area is steel depends on agriculture (Economy watch 2010). China’s evolution from planned economy began in 1978, after economic reform China experienced rapid economic and social development. GDP growth about 10% a year has pulled more than 600 million people out of poverty and became a second largest economic country in the world is playing tremendous role on world economy .
China’s gross national income per capita of $4,940 ranked 114th in the world in 2011. How ever over 170 million people still lives below the $1. 25 a day so china is still second position on the poverty after India (World Bank, 2011). GDP (gross Domestic Product) growth was 7. 6 % in 2012 and inflation rate is was ……… (The Economist, 2012) . China and India have some key common elements like, geographically, same continent, Neighbour country, demographically, they are “giants”, long history .
Their economic growth is also similar with each other but they have a major different on political system. India is having democratic and China is having bureaucratic system. The economic growth in India and china investigated very different and competitive perspective. The historical outlook shows that two countries contributed nearly half of the world economy from 1000 to 1820. But decline started in the 19th century instead of that they managed to lead the world economy since last three decades.
Since 1980 the GDP (gross domestic product) of India and china increased at annual rate by 6% and 10 % (Enrico & Marcello, 2011). There are the lots of factors which are playing hidden role on the economic development in china and India. According to World Investment Report UNCTAD, 1994 following reasons are playing role on development in both countries Capital investment. , advanced technologies, highly skilled labour , transportation, communication and infrastructure development, low tax rate ,stable and supportive political and social institutions favourable regulatory environment.
However, China’s current growth miracle is increasing by total factor productivity (TFP), Capital accumulation etc. India’s growth miracle is in the race of development because private business is increasing rapidly. There are lots of private forms like Tata, reliance industries, Aditya Birla, Essar and many more (Goldman Sachs,2011). However, China’s and India’s economic growth history starts after economic reform in both countries. Economic Liberalization is the key component which helped both countries to develop economy.
China’s evolution of economy growth began with socio – political, economic and cultural reform in 1978 under the leadership of Mao Zedong and Deng Xiaoping, It was mainly focused on enterprises development, private business, foreign trade, state control over some prices and invests in industrial production and education to its workers . The growth has played dramatic role to social change, welfare and poverty reduction (Sudip, 2009). China’s early growth was triggered by agriculture growth which increased rate from 2. 9 per cent between 1952 and 1979 to around 6. 2 per cent after 1979. Chakrabarti, 2007).
About 80% present population hardly living through Collective forms but communal land was leased to individual household and let them to grow crops on their choice and to sell production above the state quota on the free market. It helped to increase agricultural productivity dramatically (IMF, 2012). Before economic reform GDP growth rate was 6% a year but after reform it increased by more than 9% (MFI 1997). About 1. 2 billion Chinese people’s welfare was phenomenally improved; this may be the enormous world’s economic success story (Edward 1998).
It helped to increase productivity, people sifted from agricultural work from small business in rural areas. Pre reform nearly 4 out of 5 people used to work in agriculture but after reform only 1 in 2 did. Rapid economic growth helped to rising incomes, living standards people had been able to effort luxuries items like TV, Cars etc (presber, Julian, 2011). Next step china begun to reconnecting with rest of the world in 1980, Armed with flexible powers over taxation, modernized business rules, and infrastructure development, helped to attract high amount of investments rom abroad. Saving and investment as well as foreign trade have also grown progressively in both the economies.
Government allocated and mobilized resources towards industrial sector, Infrastructure development, Government also encouraged for saving, provided cheap credit to industries etc ( Louis,2012). Domestic saving in India rose from 12. 2 per cent of GDP in 1956/57 to 24. 2 per cent in 2002/3. China’s domestic savings went from around 23 per cent of GDP in 1960 to 43 per cent in 2002. Both countries open the door and increased their shares of trade (Chakrabarti, 2007).
Subject: Economic growth,
University/College: University of Chicago
Type of paper: Thesis/Dissertation Chapter
Date: 8 October 2016
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