third eye
ELITE MEMBER
- Joined
- Aug 24, 2008
- Messages
- 18,519
- Reaction score
- 13
- Country
- Location
Posting excerpts only..
http://www.nytimes.com/2013/07/15/opinion/the-slowing-of-two-economic-giants.html?pagewanted=1&hp
KOLKATA, India THE worlds two most populous countries are slowing down. To be sure, Chinas output is expected to grow by 7.8 percent this year, and Indias by 5.6 percent far superior to 2 percent for Japan, 1.7 percent for the United States, 0.9 percent for Britain and a shrinkage (negative 0.6 percent) in the troubled euro zone, the International Monetary Fund projected last week.
But there is no sequel in sight for the 10-percent-plus growth China and India posted in 2010. The West can no longer count on their continued expansion to lift its sagging economies. For 2.5 billion people, the consequences are more dire: in India, less money to strengthen the threadbare social safety net, and in China, possible political instability. What does the slowdown mean for these two giants, and which will come out ahead?
Lets start with China, the bigger of the two economies. Talk of a global Beijing consensus state-controlled capitalism as an alternative to the Washington consensus about how poor countries should develop has largely disappeared. Chinas new leaders are focused on problems at home: battling corruption, reining in the overheated housing market, scaling back the governments outsize role in the economy, and cracking down on financial speculation.
China may be close to exhausting the possibilities of technological catch-up with the West, particularly in manufacturing. For China to move up the value chain, and become an advanced-manufacturing powerhouse like Germany, it must move beyond off-the-shelf technology and copying rival designs and reap gains from genuine innovation, which can come about only through research and development.
In India, the collusion between Indian billionaires and politicians, while rampant, is somewhat less direct and more subject to political and media scrutiny. In China, collusion between party officials and commercial interests, especially at the local level, has caused widespread popular anger against arbitrary land acquisition and toxic pollution.
The economist and philosopher Amartya Sen recently argued on this page that India has lagged behind China because it had not invested enough in education and health care, which raise living standards and labor productivity.
On the other hand, Indias experience, like Americas, shows how partisan fragmentation in a rambunctious democracy can undermine effective governance. In the last few years the headline economic stories in India have been about pervasive corruption: politicized allocation of high-value public resources (land, mineral rights, oil and gas, telecommunications), shady public-private partnerships and the galloping cost of elections financed by the illicit incomes of politicians. Indias administrative system, where promotion has little connection to performance, encourages even more malfeasance than Chinas. But India has independent judges, government auditors and a free press checks on corruption that are absent in China.
IN both giant countries there are glimmers of hope. China is making substantial advances in energy-efficient technology and improving health care and pensions. In India, voters are starting to demand good governance, and vigorous social movements against injustice caste oppression, sexual violence and environmental degradation are making a dent.
But Chinas rigid political system makes it heavily dependent on enlightened consensus among its nonelected rulers, while Indias ramshackle, pluralistic democracy has been surprisingly supple, even if its citizens havent reaped the material benefits yet. They share a fundamental problem a lack of accountability, especially at the local level that, if not addressed, will make it impossible to sustain strong economic growth and provide a social safety net. In India, democracy is weakest at the village level: electoral participation is vigorous, but local elites often capture the local government, leaving bureaucrats little autonomy (or money) to carry out substantial improvements. In China, the failure of accountability is national, and inherent in the authoritarian system.
In the short term I expect China to do better than India in improving the material condition of its people, primarily because China has more money to spend on redistribution projects and because its infrastructure and administrative capacity are somewhat better. In the medium term, I anticipate that the two countries rates of economic growth will converge in the not-too-distant future, as India reaps the benefits of having a younger population. But in the long run, which country does better will depend on political reform, or its absence.
http://www.nytimes.com/2013/07/15/opinion/the-slowing-of-two-economic-giants.html?pagewanted=1&hp
KOLKATA, India THE worlds two most populous countries are slowing down. To be sure, Chinas output is expected to grow by 7.8 percent this year, and Indias by 5.6 percent far superior to 2 percent for Japan, 1.7 percent for the United States, 0.9 percent for Britain and a shrinkage (negative 0.6 percent) in the troubled euro zone, the International Monetary Fund projected last week.
But there is no sequel in sight for the 10-percent-plus growth China and India posted in 2010. The West can no longer count on their continued expansion to lift its sagging economies. For 2.5 billion people, the consequences are more dire: in India, less money to strengthen the threadbare social safety net, and in China, possible political instability. What does the slowdown mean for these two giants, and which will come out ahead?
Lets start with China, the bigger of the two economies. Talk of a global Beijing consensus state-controlled capitalism as an alternative to the Washington consensus about how poor countries should develop has largely disappeared. Chinas new leaders are focused on problems at home: battling corruption, reining in the overheated housing market, scaling back the governments outsize role in the economy, and cracking down on financial speculation.
China may be close to exhausting the possibilities of technological catch-up with the West, particularly in manufacturing. For China to move up the value chain, and become an advanced-manufacturing powerhouse like Germany, it must move beyond off-the-shelf technology and copying rival designs and reap gains from genuine innovation, which can come about only through research and development.
In India, the collusion between Indian billionaires and politicians, while rampant, is somewhat less direct and more subject to political and media scrutiny. In China, collusion between party officials and commercial interests, especially at the local level, has caused widespread popular anger against arbitrary land acquisition and toxic pollution.
The economist and philosopher Amartya Sen recently argued on this page that India has lagged behind China because it had not invested enough in education and health care, which raise living standards and labor productivity.
On the other hand, Indias experience, like Americas, shows how partisan fragmentation in a rambunctious democracy can undermine effective governance. In the last few years the headline economic stories in India have been about pervasive corruption: politicized allocation of high-value public resources (land, mineral rights, oil and gas, telecommunications), shady public-private partnerships and the galloping cost of elections financed by the illicit incomes of politicians. Indias administrative system, where promotion has little connection to performance, encourages even more malfeasance than Chinas. But India has independent judges, government auditors and a free press checks on corruption that are absent in China.
IN both giant countries there are glimmers of hope. China is making substantial advances in energy-efficient technology and improving health care and pensions. In India, voters are starting to demand good governance, and vigorous social movements against injustice caste oppression, sexual violence and environmental degradation are making a dent.
But Chinas rigid political system makes it heavily dependent on enlightened consensus among its nonelected rulers, while Indias ramshackle, pluralistic democracy has been surprisingly supple, even if its citizens havent reaped the material benefits yet. They share a fundamental problem a lack of accountability, especially at the local level that, if not addressed, will make it impossible to sustain strong economic growth and provide a social safety net. In India, democracy is weakest at the village level: electoral participation is vigorous, but local elites often capture the local government, leaving bureaucrats little autonomy (or money) to carry out substantial improvements. In China, the failure of accountability is national, and inherent in the authoritarian system.
In the short term I expect China to do better than India in improving the material condition of its people, primarily because China has more money to spend on redistribution projects and because its infrastructure and administrative capacity are somewhat better. In the medium term, I anticipate that the two countries rates of economic growth will converge in the not-too-distant future, as India reaps the benefits of having a younger population. But in the long run, which country does better will depend on political reform, or its absence.
