Are China and India converging?

[fly2012]

Trying to test creating a new thread. And this is an article backed up with data. It is interesting that nations are just like a regular person, one constantly gets better on things that he is experienced with, but reluctant on improving skills he is not good at.

(Please don't turn my first thread into peeing contest. )
===============================================


Mention China and India to economists and their first thought will be rapid growth. Their second thought might be how differently the two economies are achieving this: China through manufacturing, India through services. This column asks whether that stereotype may be changing.



Both China and India have attracted global attention for rapid growth, but their growth patterns are very different (Rajan 2006, Pack 2008, Bosworth and Maertens 2010). China took the conventional route of manufacturing-led growth and is recognised as a global leader in manufactured exports. India followed the unconventional route of service-led growth and has acquired a global reputation for service exports. Are their growth patterns converging? Is China catching up in services? Is India catching up in manufacturing? Or has hysteresis kept their growth patterns different?

Full article by Ejaz Ghani:
Are China and India converging? | vox - Research-based policy analysis and commentary from leading economists

 

[Dalai Lama]

Ejaz Ghani, an Indian national, is currently Economic Advisor at The World Bank. He has worked on Africa, East Asia, and India/South Asia. He has written on poverty, growth, trade, fiscal policy, debt management, conflict, decentralization, entrepreneurship, employment, and agriculture. He has been a consultant at ILO, UNCTAD, and UNICEF. He has edited several books including Reshaping Tomorrow--Is South Asia Ready for the Big Leap? Oxford University Press 2011; The Poor Half Billion in South Asia, Oxford University Press 2010; The Service Revolution in South Asia, Oxford University Press 2010; Accelerating Growth and Job Creation in South Asia (with S. Ahmed) 2009, Promoting Economic Cooperation in South Asia (with S. Ahmed and S. Kelegama), 2009; and Growth and Regional Integration (with S. Ahmed) Macmillan 2007.
He has taught economics at Delhi University (India) and Oxford University (U.K.). He is an Inlaks Scholar, and obtained an M. Phil. & D. Phil in Economics from Oxford University. He did his schooling in Bihar at St. Michael's High school Patna; undergraduate degree at St. Stephens College; and Masters degree at Jawaharlal Nehru University.

Expect this to be the main discussion in this thread.

 

[Abhishek_]

interesting read. thanks for sharing

 

[below_freezing]

The problem is this: Indian services cannot boost its feeble manufacturing sector much, so it would be like strapping a rocket to a pig.

But Chinese services boost the already strong manufacturing sector even stronger with things like controls software and CAD programs, which India cannot make on its own but China can. China is like the shark that just got a rocket booster. Flying sharks are badass while flying pigs aren't.

 

[Kazhugu]

The problem is this: Indian services cannot boost its feeble manufacturing sector much, so it would be like strapping a rocket to a pig.

But Chinese services boost the already strong manufacturing sector even stronger with things like controls software and CAD programs, which India cannot make on its own but China can. China is like the shark that just got a rocket booster. Flying sharks are badass while flying pigs aren't.

spare the communist nonsense....

you people got a 15 year headstart in your reforms...and only an ignoramus will think that indian manufacturing sector is as bad as you think...

India ranked second in global manufacturing competence - Economic Times

India among world's top 10 manufacturing nations: UNIDO - Economic Times

btw flying pigs can atleast survive..while a shark attempting to fly will be dead meat in 5 minutes unable to breathe...

 

[Chinese-Dragon]

spare the communist nonsense....

you people got a 15 year headstart in your reforms...and only an ignoramus will think that indian manufacturing sector is as bad as you think...

LOL, these same urban legends again. Here is some actual data:

1990 - China GDP : India GDP - 1 : 1
2000 - China GDP : India GDP - 2 : 1
2010 - China GDP : India GDP - 4 : 1

As you can see, we did not have a headstart at all, our GDP was exactly the same as India's in 1990.

Our reforms did start earlier, however they were not applied nation-wide until 1990, and in fact the economy shrunk several years after the reforms were carried out. To all extents and purposes, we started at the same place.

 

[Kazhugu]

LOL, these same urban legends again. Here is some actual data:

1990 - China GDP : India GDP - 1 : 1
2000 - China GDP : India GDP - 2 : 1
2010 - China GDP : India GDP - 4 : 1

As you can see, we did not have a headstart at all, our GDP was exactly the same as India's in 1990.

Our reforms did start earlier, however they were not applied nation-wide until 1990, and in fact the economy shrunk several years after the reforms were carried out. To all extents and purposes, we started at the same place.

oh shoot.....the reforms dont give results as soon as they are implemented...it will take a time before they start yielding results...once the results start coming the learning curve and the competency has an exponential growth...you guys are into that exponential growth interval and we just about to enter into that.......understand that..

btw no one is competing with china here...i was just clearing the misconception that india does not have a good manufacturing base...infact competecy wise we are the second best and by gross output in the top 10...

again get that into your head...it was not a head on comparison but a post to say that our manufacture is not that primitive as the ignoramus wants to believe...

 

[fly2012]

Expect this to be the main discussion in this thread.

Even from the article itself it is easy to tell it is from some scholar instead of a sensational journalist.

 

[indushek]

An article uncovering the "truth about collapsing Indian economy" will get more replies, where our in house economists will freely handout predictions about how eventually India will collapse under its own weight.

On topic, there are still more steps to be taken for development of manufacturing in India. However i wouldn't like the manufacturing to be export oriented, better be for internal consumption.

 

[Aramsogo]

spare the communist nonsense....

you people got a 15 year headstart in your reforms...and only an ignoramus will think that indian manufacturing sector is as bad as you think...

This 15 year headstart is only a myth Indians like to say to make themselves feel better. Truth is India may even have a 1 to 2 year head start on China. 1978 to 1991 was just undoing communism. 1992 was when real economic reforms started. So unless India was communist before 1990 and living in communes, then the two countries started at around the same time. Even the US State Dept History of China backs this up.

China

 

[Jade]

Even from the article itself it is easy to tell it is from some scholar instead of a sensational journalist.

Yes, it is natural that they will converge - China improving in services and India improving in manufacturing - and the cross sectional data between 1986 to 2006 just confirms that; however, IMO, India has more difficult path ahead than China. I mean it is easier to jump from manufacturing to services, but harder the other way round.

 

[Kazhugu]

This 15 year headstart is only a myth Indians like to say to make themselves feel better. Truth is India may even have a 1 to 2 year head start on China. 1978 to 1991 was just undoing communism. 1992 was when real economic reforms started. So unless India was communist before 1990 and living in communes, then the two countries started at around the same time. Even the US State Dept History of China backs this up.

and this is where you expose your ignorance once again.....we also did not start our reforms truly well in 1991...again to borrow your word..we had to first undo the socialist,licence raj and coupled to that we had to face internal security problems in kashmir and noth east which you people did not have...our reforms well and truly started probably in 2000 or 2001...and even then it was started under sanctions imposed due to the nuclear tests of 1998...so no we did not start on an even keel...

 

[Chinese-Dragon]

People keep forgetting the main thing. Even though we had the same GDP in 1990... China is far ahead, because we have been able to sustain double-digit growth for over three whole decades.

Whereas India has failed to sustain double-digit growth at all in the first place.

The longer you wait, the larger the gap gets. Since 10% of 7.3 trillion, is a hell of a lot more than 10% of 1.8 trillion.

 

[ChinaToday]

This 15 year headstart is only a myth Indians like to say to make themselves feel better. Truth is India may even have a 1 to 2 year head start on China. 1978 to 1991 was just undoing communism. 1992 was when real economic reforms started. So unless India was communist before 1990 and living in communes, then the two countries started at around the same time. Even the US State Dept History of China backs this up.

China

This 15 years head start is a lot of bs is it like my friend did better than me in the exams and i said yeah that is because you studied during the weekend and i went out for a date...pathetic excuse.

 

[Aramsogo]

and this is where you expose your ignorance once again.....we also did not start our reforms truly well in 1991...again to borrow your word..we had to first undo the socialist,licence raj and coupled to that we had to face internal security problems in kashmir and noth east which you people did not have...our reforms well and truly started probably in 2000 or 2001...and even then it was started under sanctions imposed due to the nuclear tests of 1998...so no we did not start on an even keel...

Well, if you really want to play this type of excuse based timeline, China was doing massive (I mean MASSIVE) layoffs of state workers in 1998. This was when China broke the Iron rice bowl contract. Probably the biggest layoffs in human history. So again, you can say China and India started at around same time.