China versus India

Editor, Bruce P. Corrie, PhD

Will China outgrow India or vice versa? Two recent surveys on this question by The Economist (www.economist.com) and Businessweek (www.businessweek.com) attempt to give us some answers.

Factors that are in China’s favor include:

• higher levels of foreign direct investment
• a broader and sustained economic development trajectory over the past years
• massive increase in economic development infrastructure, for example it has ten times the amount of expressways than India (according to the Economist)
• land reforms resulted in more equitable development as well as spurred entrepreneurship
• a higher level of human capital, for example 85 percent female literacy rates compared to 45 percent in India (according to the Economist).

Factors that favor India:

• slow but steady progress in economic reforms opening up the economy
• democracy provides shock absorbers to social and political tensions around economic reform
• has capitalized on areas of comparative advantage such as in the areas of software and call centers
• legal standards, reasonably good quality data, English and educated and high skilled workforce

India is not going to be on par with China for a long time given its political structure (democracy), lower quality of human capital of the masses and poorer communication and other economic development infrastructures.

Both countries can implode from within given their internal unrest tied to economic reforms and poverty alleviation.

Both countries are increasingly faced with a competitive/collaborative nexus with each other given their needs for energy and other resources and opportunities for mutual gain in production.

Some make the case that measuring the two countries in terms of GDP growth rates begs the question as India has made great strides in civic participation.