China vs. India

There’s an interesting collection of links at Amit Verma’s blog comparing India’s industrial progress to that of China’s. While going through various links I chanced upon this interesting paper (it’s a PDF file) citing various reasons why Indian and Chinese economies are where they are.

This research paper mentions that both India and China have been great civilizations in the past and they were the richest countries in the world but then they drastically declined in the early nineteenth century and then were rapidly eclipsed by Europe and North America. The paper doesn’t mention an important thing: most of the wealth the west has today was usurped from other colonies. Neither India nor China have ever made other countries their colonies. Whatever they have, whatever was left, is all indigenous . Some may say that Japan was utterly annihilated during the Second World War and so was entire Europe. The west at that time had developed a cogent intellectual legacy that helped it during the reconstruction, which the former colonies (India, China, etc.) had lost in the last 2-3 centuries. Japan made full use of post war American guilt.

The paper has certain pointers that are worth noting down.

Another factor that has enabled China to reach a higher stage of affluence than India is the fact that more Chinese take part in the labor force – especially Chinese women. Consider the fact that, in the period 1993-2001, 53% of adult Chinese worked while only 37.7% of Indians worked. This was largely due to the lower female participation in India, itself the result
of cultural factors. On the other hand, as India modernizes and more women enter the labor force, this could provide the basis for faster growth.

It’s true that a big portion of the Indian work-force, the women, are left out of the loop of employment due to various social mindsets. China here certainly has an advantage..

According to a commentary in Asia Times, a cargo that takes six days to travel from Singapore to Mumbai could sit in the port for 30 days before it is unloaded. The reason is that there is insufficient capacity to service today’s large cargo ships at Indian ports. The problem is that the global shipping industry has undergone a technological revolution in which India has been a minor participant.

…Yet Indian ports are poorly prepared compared to those in China. The next generation of container ships will be 340 meters in length and 43 meters wide. These require long docks, deep harbors, and very tall cranes. China, on the other hand, already handles one fifth of the world’s containers and is developing massive new ports in Shenzhen and Shanghai.

I don’t have any knowledge of ports but this is really bad if it is true. May be a majority of people in India think that we needn’t invest in such infrastructure because we export human resources and intellectual resources and exporting tangible goods is not big on our agenda. But what about goods coming to India? Don’t we need megaton heavy machines? What about our rapidly growing consumer market? The more we open to global investments the better there must be the infrastructure. We no longer live in times when things were “just managed”.

Population can both be a bane and a blessing for India. Compared to China, India has quite a young population that means India has more productive years ahead. Due to strict population control there are fewer young people in China, and India can certainly use this as an advantage.

Both these countries shouldn’t reduce themselves to mere international laborers whom people employ from the west most of the time. Our economies, put together, are anyway so large in scales that even if we do business with each other we shouldn’t need other economies to constantly see us investment opportunities and prospective markets.