The two biggest countries in the world by population have been rivals one the economic and political stage for a long time. The main question is why China, not India, has demonstrated the increadible economic growth. Obviously, India speaks English and has excellent math schools. For the US, it's a longer transportation leg than China. China was an ally of the Soviet Union for decades before splitting apart. No one's country is seeking international cooperation. Easy victim. India has a significant shortcoming - a British educated and leaning elite. These and many other political considerations are clear but their impact is not as straighforward for me to interpret.
The economic reason I can understand is the level of economic developement and eagerness to sell labor force in the early 1970s. Figure 1 shows that the level of GDP per capita in China was below that in India in the 1960s. Labor was cheaper in China, a good and understandable advantage for investment. The economic growth (in terms of real GDP per capita) in China has been outperforming that in India ever since around 1970. Figure 2 shows the real GDP per capita growth as normalized to their respective levels in 1970. These levels were almost equal: $1398 for China and $1384 for India. One can see that China has grown (to 2022) by a factor of 13.8 and India only by 5.6. The ratio of 2.5 is the expression of China's dominance since 1970 with an average difference in growth per year of (13.8-5.6)/52 = 0.157.
In the 21st century India demonstrates a slightly better performance. Figure 3 shows the leg after 1999. China has grown by a factor of 4.3 and India by 2.9. The yearly difference (4.3-2.9)/23 = 0.06. The rate of divergence has been decreasing since 1999, but the curves still diverge severely. China outperforms India.
India could be China if not the aforementioned political issues. It seems these political issues are still working effectively to slow down Indian economy.
 |
No comments:
Post a Comment