Economic Power Shifts

Topics: Economics, Economic growth, Macroeconomics Pages: 10 (2457 words) Published: January 15, 2013
Economic Power Shifts East

GDP of a country and GDP growth rate are two important metric based on which economic prowess of a country can be measured. While east is behind west in terms of gross GDP numbers, reverse is true for GDP growth rate. The center of economic power has shifted from the West to the East. World is witnessing a change in economic structure and is going through a transition .Following data shows 12 fastest growing economies. CountryGDP Growth2012 GDP Forecast

Niger15.40%$7.38 billion
Iraq10.57% $128.094 billion
Liberia10.50%$1.32 billion
Angola10.50%$1.32 billion
China9.52% $7,209.42 billion
Haiti8.80%$9.21 billion
Timor Leste8.63%$0.807 billion
Ethiopia 8.02%$32.3 billion
India7.82%$1,858.9 billion
Mozambique7.80%$12.9 billion
Afghanistan7.47% $19.1 billion
Zambia7.38%$21.8 billion
Source: Economy Watch
Above table shows countries having highest GDP growth rate. Many of these countries are showing exceptional growth rate because of the base effect, but this reflects that politico- economic conditions in these countries are now favorable to growth and will attract investments. From the above data , it is quite apparent that China and India are amongst the two largest emerging economic powers of world. Which country will occupy the leadership position in coming decades will also redefine - two very different political ideology. While, India is a vibrant democracy China is a one party system. China’s success is rooted in a social scientific concept of state capitalism which has helped it to grow at an amazing pace while India’s diversity and complex political system has led it to grow but at a slower pace than China. Growth Stories Of China & India

Like India, Chinese growth story also started with economic reforms and liberalization. In spite of being a communist while India being a mixed economy China liberalized its economy almost 13 years before India and opened its doors to the world. Chinese leaders implemented reforms in gradual manner. India was literally pushed towards adopting liberalization to avoid a sovereign default. Current Situation.

In times when the west is gripped with a slowdown and a threat of a double dip recession looms large, slowing economic growth in China and India can put the global recovery in jeopardy and a rare scenario where whole world will go into recession at same time may surface. A SWOT analysis of these two economies will help us understand economic prospects of these countries. SWOT Analysis India:

Demography Advantage:. We are youngest country in world thus enabling more production and consumption capacity this will keep our economic wheel turning and insulate us from foreign socks to a great extent. Rapidly growing middle class society is also an important feature of Indian Economy which is said to be agent of change as it has just enough income to allocate resources efficiently. Service based to knowledge based economy

India has proved its mettle in producing technologically superior product. Take for example Google drive is conceptualized and designed by Google’s research facility at Hyderabad . Indian expertise in IT, pharma and heavy engineering has also been accepted globally. Cars like Tata Indica (first indigenous car ) are popular across the world. Legal and Regulatory Environment

RBI has been recognized worldwide for managing a large and complex Indian economy skillfully in times of recession. Its conservative approach has helped India to emerge good in a financial crunch. Also a strong and reliable legal framework encourages foreign investment. Developed Financial System

India has a developed financial system which facilitates India INC to raise much needed capital in India and abroad. Individual Ingenuity
Good educational system which provide large pool of skilled workers. India is largest producer of engineers, doctors, professionals and certification holder

References: Economy watch:
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