Professional Documents
Culture Documents
Overview
Introduction Emerging markets compared viz: Power sector Education system Oil and gas sector Port and shipping Agriculture Infrastructure Service industry Role of FDI Trade patterns Trade policies
Introduction
India and China emerging global players:
High economic growth rates Rapid raising share in world Large inflows of FDI Engines of demand growth in commodities Positive demographics
The first is look at China with infrastructure - where is China and where is India China and India together account for about 37.5% of world population and 6.4% of the value of world output and income at current prices and exchange rates If China opened up in 1978, India did so in 1991 i.e. 14 yrs after China therefore any comparison of India of today should be made with China as it was more than a decade ago as emerging global powers now Since the two countries have similar labor endowments and development lags due to government controls and protected nature of their economies , they can be expressed to follow similar growth paths on opening up
Much of Chinas dazzling infrastructure was been built in the late 1990s and India is gearing up to the repeat that performance in the latter part of this decade. Foreign inflows into China jumped substantially in the early 1990s and those into India have jumped in the mid -2000s.
Good education and health facilities are necessary for inclusive development. They are state subjects in India and in China also, local government has the large share of the responsibility for their provision The Chinese culture is more homogeneous and Indian culture is more diversified Indian greater expertise with market also shows in the financial sector, which is more deeper and more robust than Chinese counterpart.
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GDP-Per capita (PPP-Purchasing power parity): $6,000 (2008)country comparison to the world: $5,500 (2007) $4,900 (2006) note: data are in 2008 US dollars
GDP composition by sector: agriculture: 10.6% industry: 49.2% services: 40.2% (2008)
China
One-party authoritarian rule Economic reforms started in 1978. Average 9.5% growth rate in past two decades. Dominant in mass manufacturing, electronics and heavy industrial plants
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Areas of Specialization
Comparing India and Chinas Growth Stories Indicators Gini index (standard measure of inequality) Foreign Direct Investment Future Areas of growth India
36.8 6.8% (up from 0.3% in 2004)
China
47.0 (up 10 points from 15 yrs ago) 17.8%
IT business, services R&D, bioand continued technology, highmanufacturing value IT enabled services (legal, medical, engineering architecture), manufacturing, agro11 based industry
Comparison
India lags behind China in infrastructure. China has a weak banking and legal system. India has the advantage of the English language which has made it easier to participate in the global economy. What holds India back are bureaucratic red tape, corruption and its inability to build infrastructure fast enough. According to Peter Drucker, India has managed rural to urban transition in a relatively smooth and peaceful manner, which China is still struggling to do.
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35000
10000
5000 0 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
13
50%
0%
Indias 54% of population is engaged in Agriculture but only accounts for 17% of GDP
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15
14,240
(Kwh/year)
8,231
8,459
132
622
2,340
1,684
618
1,684
Capacity growth rate over the past 6 years Capacity addition in past 6 years (GW)
4.4%
11.8%
Germany
Canada
Japan
R ssian Federation
Brazil
France
Uni d States
China
United Kingdom
India
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303
Low penetration providing significant opportunities for future growth Over 400 million people without appropriate access to electricity
Large investment required to achieve Govt. target of per capita consumption of 1,000 KWh by 2012
Source: World Energy Outlook, 2006; Human Development Report 2007-08, Source: China Electricity Council, China 16 16 Power Year Book, Government of India, Ministry of Statistics & Programme Implementation
INFRASTRUCTURE INVESTMENTS
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Education system
Growth rate-India@17%, China@13% Primary, secondary education, vocational education trainning in china results in 99.1% literacy rate. Where as in India it is 50 to 60 %
Adult literacy
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Rates of investment
The investment rate in China (investment as a share of GDP) has fluctuated between 35 and 44 per cent over the past 25 years, compared to 20 to 26 per cent in India. Infrastructure investment from the early 1990s has averaged 19 per cent of GDP in China, compared to 2 per cent in India.
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China can afford to have such a high investment rate because it has attracted so much foreign direct investment (FDI). (FDI). But FDI has accounted for only 3-5 per cent of GDP in China 3since 1990, and at its peak was 8 per cent. In the period after 2000, FDI was only 6 per cent of domestic investment. investment. Where as India is only 4%. Recent inflows of capital have not added to the domestic investment rate at all, macro economically speaking, but have led to the further accumulation of international reserves, now increasing by more than $120 billion per year.
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Structural change
China: classic pattern, moving from primary to manufacturing sector, which has doubled its share of workforce and tripled its share of output. India: Move has been mainly from agriculture to services in share of output, with no substantial increase in manufacturing, and the structure of employment has not changed much. Share of the primary sector in GDP fell from 60 per cent to 25 per cent in four decades, but share in employment still more than 60 per cent.
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Trade patterns
China: Rapid export growth involving aggressive increases on world market shares, based on relocative capital attracted by cheap labour and heavily subsidized infrastructure. India: Lower rate of export growth, with cheap labour due to low absolute wages rather than public provision and poor infrastructure development. So exports have not yet become engine of growth, except in services.
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Trade policies
China: export employment was net addition to domestic employment, since until 2002 China had undertaken much less trade liberalization than most other developing countries. India: increases in export employment were outweighed by employment losses especially in small enterprises because of import competition.
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Poverty reduction
China: Officially 4 per cent of the population now lives under the poverty line, unofficially around 12 per cent. (Reflects earlier asset redistribution and basic need provision in China under communism, plus larger mass market and role of agricultural prices.)
India: poverty ratio much higher and persistent, between 26 per cent and 34 per cent depending upon how one interprets the NSS data.
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