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A Comparative Analysis of Balance of Payments of India and China

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A Comparative Analysis of Balance of Payments of India and China
China and India: a Comparison of Two Trade Integration Approaches
By Przemyslaw Kowalski Discussion Matthieu Bussière
European Central Bank

New Delhi, 7 December 2007

Note: The views expressed in this presentation are those of the author and do not necessarily reflect those of the ECB.

Main assessment of the paper
• A very nice overview of a key topic
Useful comparison China/India A valuable effort to collect relevant data

• •

Two main assets: discussion of trade policy and model simulations Main suggestion: refocus the paper on the latter
– Other suggestion: flesh out the conclusions

Three possible views on India’s development
1. Is India a new China in the making ? India = L10(China) 2. Is India simply in a lower league ? India < China 3. Is India converging towards a different model ? Lim (India) ≠ Lim (China)

India = L10(China)
Exports of goods and services relative to GDP
(%)

50 40 30 20 10 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006(e)
Sources: World Economic Outlook and ECB staff calculations.

China India (from 1990)

No. 1 challenge for future growth: education
Human capital indicators
(%, in 2004)

100 80 60 40 20 0 Adult literacy rate
Source: World Development Indicators.

China

India

Secondary school enrolment rate

Focus of the discussion on three main topics

1. Trade openness and the effect of trade policy 2. The role of services (for India, China and RoW) 3. Trade specialisation (high-tech v. low-tech) • • Not covered: (Net) trade integration …and what to conclude from that ?

Focus of the discussion on three main topics

1. Trade openness and the effect of trade policy 2. The role of services (for India, China and RoW) 3. Trade specialisation (high-tech v. low-tech) • • Not covered: (Net) trade integration …and what to conclude from that ?

Chart 3 p. 28: share in world exports
China and India, shares in world exports and world output
(Percentage of China and India's exports and output in world exports
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