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India-China 2, Crouching Tiger, Lumbering Elephant

India-China 2, Crouching Tiger, Lumbering Elephant -...

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Crouching Tiger, Lumbering Elephant: A China-India Comparison by Pranab Bardhan University of California at Berkeley Many decades back when I was a student in Calcutta one of the politically challenging questions for us was the analysis of China-India comparison in terms of the pace and pattern of development. More than fifty years back these two largest countries of the world, now containing between them nearly two-fifths of the world population, launched on distinctly different paths of social, political, and economic development, even though they were faced with similarly massive problems of poverty, disease, and illiteracy. Those paths have taken some twists and turns over the decades, and at the beginning of the new century China seems, on all accounts, to be crouching to leap to a leading position in the world economy, while India lags far behind. When I was young we were frequently told that the Chinese were better socialists than us, and now we are told that they are better capitalists. It is partly the contention of this paper that these two aspects are not as contradictory as they sound, and that the political complexities behind Indiaís lagging performance may also give us some clues about the long-run uncertainties in Chinaís future. The facts 1 about relative economic performance in the two countries are simple enough, notwithstanding the many deficiencies and comparability problems in the data in both countries (to our knowledge, there have been fewer reliability tests and
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2 internal consistency checks carried out on the Chinese data, compared to the Indian). Over the last three decades official data suggest that the average annual rate of growth of per capita income was about 7 per cent in China 2 and 2.5 per cent in India. Productivity per hectare in agriculture (say, in rice) has been much higher in China for centuries, but the relative progress in manufacturing in recent decades has been phenomenal. In the early fifties the total GDP in manufacturing in India was slightly below that in China , in the late nineties it was less than a quarter of that in China. In 1999 the manufacturing share of GDP was 38 per cent in China, while it was 16 per cent in India. Indian labour productivity in manufacturing was about 71 per cent of that in China in 1952; in 1995 it was 37 percent 3 . Compared to India, total electricity use per capita is twice as high in China and teledensity (the number of telephones per thousand people) is several times higher. In 1999 the share of world trade (exports plus imports) in goods was 3.3 per cent for China, 0.7 per cent for India; in services the corresponding percentages were 2.1 and 1.2. The total amount (in dollars) of foreign direct investment in China was 18 times that in India in 1999. In the same year gross domestic saving as a proportion of GDP was exactly twice as high in China as that in India.
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