Comparative Economics Studies of China and India: Why Indian Industrialization of India Has Been Slowed?

Topics: Economics, Gross domestic product, People's Republic of China Pages: 14 (5150 words) Published: September 18, 2011
In 1950, China and India was the two developing countries with largest resources in term of land and labor. At that time, they both had the comparable economic structures and degree of development. However, with the difference mainly in political systems, in which China is Socialist Communist government, while India adopt parliamentary democracy, and specific countries’ development policy, it leads to the difference in the rate of growth in industrialization in particular countries. The dissimilarities in political system account for the rate of decision making process. It is the particular reason China had its development policy change in 1978, which undertake export-oriented policy creating special economic zones (SEZs), result in being one of the fastest growing countries in the past 30 years, while In the case of India, before 1991, the economic growth is considerably low, referring as “Hindu rate of growth”, reflects slow growth in industrialization. After 1991, India had its economic reform policies, Industrialization begin to grow once more, especially with the support of SEZ Act in 2005. It is still questioned whether India could follow China in growth of industrialization due to poor quality of infrastructure and protesting in land acquisition. Introduction

The development policy of China and India had it starting point since India’s independency in 1947 and China’s liberation in 1950. These two countries had merely identical initial position in term of economic structures. GDP per capita of China and India, using prices at 1960, were estimated to be 65 US dollar and 62 US dollar respectively. Also, total labor working in industry was 11 percent in India, while it was only 7 percent in China. Moreover, 9 percent of total output was generated in Large-scale manufacturing and utilities, similar to 6% in India. Likewise, Both China and India economies characterized by mass rural poverty under feudal mode of protection in the country side. However, the gap of industrialization between two countries began to widen during 1970s. As in 1980, there was a substantial disparity in percentage share of GDP, only 21.9 percent in India, compare to 48.5% in China (Saith, 2008.) Why was the gap broadened due to similar economic structures? This paper focuses on the reason behind the different rate of industrialization that leads to discrepancy in economic growth. The first section analyzes about the distinction of Chinese and India’s political system, autocratic socialist versus parliamentary democracy, and how it affect the decision making process of two countries. Next section examines various policies of each country, including Import substitution policy of India during 1950-1990, China reform in 1979 with special economic zones (SEZs) and SEZ Act of India in 2005 and the success or failure of those policies. The third Section discusses the policy of land acquisition of China and India that contribute to industrial district. Section four reviews quality of infrastructure of two countries that affect the industrialization accordingly. The Final section concludes the paper. Political Systems

There is a distinct political system between China and India. China or PRC is considered as a single-socialist party, in which general secretary of communist party is the president of PRC. This gives total power to communist party to rule over country, although there are minorities of eight other political parties. Furthermore, having economic reform in1978, it gave provincial leader powers to allocate resources in their province. Local economic performances among states evolved into the essential criterion to evaluate lower-level officials. These economic performances included GDP growth, to steel produced, the miles of road constructed (Li & Zhou, 2004.) It created competition among state official to compete for promotion in to higher level, which increase efficiency in each states. Li and Zhou (2004) used data from...
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