• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month
Page
  1. 1
    1
  2. 2
    2
  3. 3
    3
  4. 4
    4
  5. 5
    5
  6. 6
    6
  7. 7
    7
  8. 8
    8
  9. 9
    9
  10. 10
    10
  11. 11
    11
  12. 12
    12
  13. 13
    13
  14. 14
    14
  15. 15
    15
  16. 16
    16
  17. 17
    17
  18. 18
    18

The development strategies which have been adopted by India and China over the last 20 years.

Extracts from this document...

Introduction

I. Abstract The driving forces in the world economy are shifting towards Asia. This paper highlights the development strategies which have been adopted by India and China over the last 20 years. Both the countries have adopted policies aimed at opening up their economies in their quest to transform themselves into developed nations. It is not an easy passage as each of these countries is faced with serious economical challenges. Yet, despite the challenges they have registered spectacular economic growth in the last two decades which are effecting a profound impact on the rest of the world. II. Content page No: Subject Page 1.0 Introduction 3 1.1 Research Problem 3 1.2 Research Objective 4 1.3 Research Question 4 2.0 Research Methodology 4 3.0 Finding 4 3.1 China's economic prospects 5 3.1.1 The phenomenal growth 5 3.1.2 The challenges 6 3.2 India's economic prospects 9 3.2.1 The pace of growth 9 3.2.2 The challenges 11 4.0 Analysis 12 4.1 The world trading system 12 4.2 The world monetary system 13 4.3 Foreign direct investment 14 5.0 Conclusion 15 6.0 Learning outcome/recommendation 16 References 17 1.0 Introduction In 1980, India was the fifth largest economy in the world, while China was eight largest (in terms of Gross Domestic Product (GDP) compared at purchasing power parity exchange rates. By 2001, China has leapt to second place, behind the United States, and India had moved up into fourth place (IMF Survey 2003). Today, these demographic giants account for nearly 40% of the world's population and nearly 20% of the world output. Having vast domestic markets, the two countries have followed inward-looking development strategies for a long period before deciding on opening up. For the last twenty years China and India have pursued opening up economic policies: they have lowered their custom duties, their non tariff barriers and have allowed foreign direct investment. This process of opening up has been accompanied by domestic economic liberalisation, resulting in an accelerated economic growth. ...read more.

Middle

In the mid-1980s, partial deregulation and an expansionary fiscal policy to stimulated growth which resulted in an increasing in both domestic and external debt. Still, it made inroads into virtually all areas of industry (IMF Survey 2003). In July 1991, the more methodical and systemic reform package was introduced by the then Finance Minister, Manmohan Singh, who is the current Prime Minister. This reform produced a more stable and sustainable growth from 1992 on. 3.2.1 The pace of growth For the three decades from 1951 - 1981, India's average annual growth rate was a steady 3.6% that was often termed as the "Hindu rate of growth". However during the 1980 - 2001 periods its average annual rate of growth of GDP was close to 6%. It reached a peak of 7.8% in 1996-97 from the low of 1.3% in the crisis year 1991-92 (IMF Survey 2003). The solidity of the Indian economy is evident from its stability in the backdrop of the Asian crisis in 1997-98 and the world economic slowdown in 2000. With bountiful monsoon rains in 2003, growth is expected to be 8% in 2003-2004 (The Economist 2004, September). The first reforms in the 1980s set the stage for the 2nd wave of reforms in 1991 that transformed its agricultural economic into a broader based economy with the addition of services and industry. Since the mid 1990s, software and computer services have been the most dynamic component of Indian service exports. India is a force to reckon with in information technology (IT). With 20% of world exports, India has thus become the world leading exporter of IT services, ahead of Ireland and the United States (Chauvin 2003). This sector is highly professional and provides a major impetus to the economy. India is also notable for its biotech and pharmaceutical products. Furthermore, the liberalisation of private sectors had created a favourable business environment, which has resulted in the emergence of world class companies that can compete with the best in the West. ...read more.

Conclusion

With statistic like this, it's no surprise that offshore outsourcing has become a major economic issue in the West and in the case of America it is also a hot political issue that is being debated in the current US presidential campaign. If this trend continues, there will be less FDI flowing into other nations especially the developing nations, which spells doom to their economy especially those who rely on FDIs for development. 5.0 Conclusion Clearly economic, political and structural challenges remain. However, it should not deny that much progress has been made in the last 20 years. Both countries have been successful in shrinking the size of the state's contribution to the economy and expanding the private sector, while their improved economic engagement with the rest of the world is encouraging. Looking ahead, India should eventually start to close the gap with China, given its favourable demographics. Further progress in both countries in terms of financial reform and reduction in the scale and influence of the public sector, will have major implications on the rest of the world economy. With that, China will inevitably emerge from this process as the co-engine of economic growth for the entire world (Erdman 2004). In the case of India, it is destined to join the ranks of United States and China as principle engine of global economic growth within a matter of years, not decades (Erdman 2004). 6.0 Learning outcome/recommendation What key lesson can be gleaned from this experience? It is clearly seen that the growth of a country is dependent upon the integration between the internal and external environment. In opening the economy to the external environment, a country is able to identify the strengths and weaknesses of its economy. Based on this revelation, new policies should be introduced to realign the economic progress with the nation's aspiration. Therefore, countries that remain alert to the changing dynamics of comparative advantages and are able to position themselves to respond effectively will benefit. This lesson is equally true in the case of India and China as they continue on the path of trade and investment reforms. III. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. Retailing In India - A Government Policy Perspective

    In India too, the retail industry is large. Retail is the country's largest source of employment after agriculture, has the deepest penetration into rural India, and generates more than 10% of India's GDP. With close to 12 million retail outlets, India has the highest retail outlet density on the world.

  2. Citigroup has successfully faced the challenges of the 19th and 20th centuries and has ...

    The amazing pace at which these economies are growing and the consumer spending is increasing has provided and continues to provide unparallel opportunities in these once ignored parts of the world. The political leadership in these countries understands the importance of globalization and privatization and there is a paradigm shift in the attitude towards MNCs.

  1. Evaluate the impact of Nike's outsourcing strategy and factory location on the host nation

    The overtime of 2-4 hours also violates Chinese labour, which allows for only 36 hours overtime a month.12 If we consider the above evidence it demonstrates that Nike still has a negative impact on the host nation even if laws are in place to prevent this as workers are still exploited.

  2. Compare and contrast the approaches to economic reform adopted in China and Russia

    in Russia and promotion of new nSOEs (non-state-owned enterprises) in China and foreign investments policies. 2. PRE-REFORM CONDITIONS IN CHINA AND RUSSIA Any comparison or attempt to assess China's and Russia's approaches to economic reform must take in consideration the diametrally diverse economic, but also social and political, conditions which

  1. The current and future prospects of Virgin

    Government Macroeconomic Policies Policy by government, they include rate of inflation, interest rate, unemployment level, economic growth, exchange rate and more. On inflation rates this is when the prices increases of goods or services which then brings down the spending power of customers.

  2. This report will establish the opportunities and threats presented to Sony by the EU ...

    Ireland: has joined the euro currency with the 2nd to smallest population of 3,776.6 million. It has a GDP per head of $20,605 and each head has the spending power on average of $18,684 in PPP due to this we can tell that Ireland is developed.

  1. Kingfisher is the largest home improvement retailer in Europe and the third largest in ...

    Also, �898.1m is made up of items other than trade and other creditors, even though Kingfisher has become more efficient by reducing its bank loans and overdrafts. Acid test has fallen from 0.52 in 2003 to 0.37 in 2004 which shows that Kingfisher is dependant on inventory.

  2. Was the Marshall Plan the cause for the successful economic recovery in post war ...

    The first 6 months of 1950 showed a similar production growth. By the end of the period, in 1960, the annual industrial production growth rate was a remarkable 15 percent annually. The booming industry provided plenty of new jobs: in 1948 an estimated 230,000 new jobs became available.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work