Future Growth of India and China

Will China and India be able to keep up their current growth rates? What should the two countries do to sustain this level of growth and bring up the level of prosperity? In a PPT India and China it has statistically compared the economies and industries between these two countries.

Continuing to implement policy reforms will be a major factor contributing to the growth of these two economies. Since both India and China boast of large markets, with a huge population that is mainly poor, a good policy framework is essential to the continued growth of these economies. Over time growth will result in a better quality of private entrepreneurship and public institutions.

India ranks performs better than China on the managerial quality and innovativeness of entrepreneurs. But India has failed in the quality and effectiveness of its public institutions while China concerted efforts and investments in the public sector has resulted in notable achievements in infrastructure and raising the quality of life in China. Given that China is encouraging the entrepreneurial spirit and has already established effective public spending, the future growth prospects of China seem much better than India.

India and China have followed different development strategies and though India is not outperforming China overall, it is doing better in key areas. In the next few decades, India is expected to become the third largest economy and China the number one and India and China contributing to more than half of the world’s manufacturing output.

Both the economies have to continue growing rapidly to provide jobs to the tens of millions entering the workforce annually. India’s long-term potential maybe higher, because of the one-child policy, China’s working-age population will fall rapidly in the next few years. While India would have a much younger and a substantially larger working-age population.

India’s problems lie in bureaucratic red tape, rigid labor laws, and its inability to build infrastructure fast enough. It will take India many years to build the highways, power plants, and airports needed to rival China in mass manufacturing. With China now focusing on software and pledging intellectual property rights protection, India fears that a lot more design work will move to China, to be closer to the manufacturing bases.

China and India is expected to disrupt workforces, industries, companies and markets in the future and how they integrate and manage their growth with the rest of the world will determine the nature of the global economy of this century.