Chasing the Dragon: Will India Catch Up with China?

204 Pages·2010·3.872 MB·English

by  Mohan Gurusway

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CHASING THE DRAGON
CHASING THE DRAGON
Will India Catch Up with China?
M G
OHAN URUSWAMY
Z D S
ORAWAR AULET INGH
Pearson Education
Delhi • Chennai • Chandigarh
Copyright © 2010, Mohan Guruswamy, Zorawar Daulet Singh
Licensees of Pearson Education in South Asia
No part of this eBook may be used or reproduced in any manner whatsoever without the
publisher’s prior written consent.
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reserves the right to remove any material present in this eBook at any time.
ISBN 9788131724118
eISBN 9788131742846
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CONTENTS
List of Charts vii
List of Tables xi
Preface xiii
1 Introduction 1
2 India Versus China: An Overview of the Major
Socio-Economic Indicators 13
3 FDI in China: A Brief Survey 51
4 A Retrospective Survey: Comparing and Contrasting
Sino-Indian Performance (Post-1980 Period) 67
5 China as a Manufacturing ‘Hub’: Intra–East Asian
Geo-Economic Dynamics 91
6 Lessons from China: A Strategic Economic Policy for India 103
7 How Long Will It Take for India to Catch Up with China? 147
8 The Post-Crisis Challenge 157
Appendix 167
Bibliography 173
List of Frequently Used Terms 181
Index 183
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LIST OF CHARTS
1.1 Major Economies’ Share of Global GDP, 0–2005 3
1.2 Growth Rates, 2004–2008 4
1.3 The Largest Economies in 2050 5
2.1 Share of Public Expenditure on Health in Total Health
Expenditure, 2000 16
2.2 Comparison of Per Capita Income 17
2.3 Growth Rate Comparison of First Ten Years of Reform 21
2.4 Decentralization in China 27
2.5 Centralization in India 27
2.6 China Experiencing ‘Reverse-Drain’ Largely from the USA 30
2.7 Percentage of Worldwide R&D Spending 31
2.8 Number of Science and Engineering (S&E)
Doctoral Degrees 31
2.9 Number of Science Doctoral Degrees 32
2.10 India’s Public Spending on Higher Education 32
2.11 Gas Emerging as a Vital Fuel in India’s Energy-Mix 37
2.12 Natural Gas: Projected Demand–Supply 38
2.13 India’s Energy Mix 39
2.14 India’s Defence Budget as Per Cent of GDP 41
2.15 Underutilization of Capital Expenditure 42
2.16 Service-wise Shares of Defence Budget, 2007–2008 43
2.17 World Military Expenditure 44
2.18 Military Expenditure Increase, 1996–2005 45
2.19 Population in Productive Cohort 46
3.1 FDI Infl ows, 1979–2011 52
3.2 Leading FDI Recipients, 2007–2011 (FDI Infl ows,
Annual Average) 52
3.3 Top Emerging-market FDI Recipients, 2006 53
3.4 FDI Stock as Per Cent of GDP 55
3.5 FDI Infl ows as Per Cent Gross Fixed Capital Formation 56
3.6 As a Proportion of China’s Total GDP in 2002 57
3.7 Realized Foreign Investment as a Per Cent of Total FDI
Infl ow in 2002 58
3.8 Cumulative FDI into Eastern Provinces and Municipalities
by End of 2002 58
3.9 Main Countries of Origin, FDI, 2005 59
3.10 Foreign-invested Enterprises: Contribution to Trade 60
[viii] List of Charts
3.11 FDI Infl ows as Per Cent Gross Fixed
Capital Formation 61
3.12 Round-tripping 63
3.13 Inward FDI Stock, 2002–2011 64
4.1 Sectoral Contributions to GDP, 1980 68
4.2 Sectoral Contributions to GDP, 2003 68
4.3 Sectoral Contributions to GDP, 2006 68
4.4 Service-sector Growth and Employment Generation 69
4.5(a) Employment in China 70
4.5(b) Changing Composition of Employment in China 71
4.6 Organized Employment in India 72
4.7 The Urbanization Trend in China vis-à-vis India 73
4.8 Trade: A Comparative Perspective 73
4.9 Types of Exports 74
4.10 Types of Exports, 2004 75
4.11 Exports by Type of Enterprises, 2004 75
4.12 China and India: GDP Per Capita (PPP), 1980–2001 76
4.13 Average Annual Growth Rate and Employment Share
of Agriculture, 1978–2003 78
4.14 Industrial GDP in State-owned and Non-state-owned
Enterprises, 1980–2003 (RMB 100 million) 79
4.15 Foreign Investment by Type of Ownership of Enterprise
Invested in 1988–2003 (RMB 100 Million) 80
4.16 FDI as Per Cent of Gross Fixed Capital Formation (GFCF) 83
5.1 Composition of Asian Exports, 1985 93
5.2 Composition of Asian Exports, 2005 93
5.3 Shares in PRC Trade, 1981–2005 95
5.4 Correlation in PRC Trade 95
5.5 Country Share in China’s Total Component Imports 96
5.6 Share of Components in Total Manufacturing Exports 97
5.7 Source of FDI Infl ows to PRC 98
5.8 Share of Major Regions in Global Manufacturing Value
Added (Per Cent), 2002 98
5.9 Contributions of Industries to Trade Balance as
Per Cent of Manufacturing Trade by Technological
Intensity, 2005 99
5.10 Exports of Information and Communication Technology
Goods 100
6.1 Investment/GDP Ratio, 1995–2005 104
6.2 Incremental Capital Output Ratio (ICOR): Five-year Moving
Average 104
6.3 Share (Per Cent) of Fixed-asset Investment (FAI), 2006 105
List of Charts [ix]
6.4 Share of Regions in China’s Export (Per Cent) 107
6.5 Contribution to Global Growth in Market Exchange
Rates (Per Cent) 107
6.6 SOE Output and Employment, 1985–2003 109
6.7 Total Investment in Fixed Assets by Ownership, 2005 110
6.8 Total Investment in Fixed Assets by Ownership,
1995–2005 110
6.9 Distribution of Loans by Ownership, 1988–1992 111
6.10 Distribution of Loans by Ownership, 2003 111
6.11 Total Investment in Fixed Assets by Source
of Funds, 2005 114
6.12 Total Investment in Fixed Assets by Source of Funds,
1981–2004 115
6.13 China’s Foreign Exchange Reserves 115
6.14 Corporate Profi ts Fuel China’s Growth 116
6.15 Contribution to Change in Trade Balance, USD Billion 117
6.16 Soaring Trade Surpluses 118
6.17 Is China De-linking from the East Asian Division
of Labour? 118
6.18 Envisaged Share of Infrastructure Spending for the
Next Five Years 123
6.19 Capacity Utilization for BRIC Economies, Quarterly
2005–2007 124
6.20 Breakdown of Financing: Private Investment—Principal
Contributor 125
6.21 Educational Attainment of the Total Population Aged
15–64, 2000 127
6.22 India’s Education Distribution by Sectors, 2004 128
6.23 Asian Export Ratio 128
6.24 Share in World Trade, 1990–2004 (Per Cent) 129
6.25 The Change of the Composition of India’s Saving and
Investment Rates over Time 135
6.26 Comparison of India’s Saving Rate with That of Other
East Asian Countries 137
6.27 Capital Output Ratio 138
6.28 Breakdown of Household Savings in India 139
6.29 Share of Bank Loans, India 139
6.30 Private Sector: Sources of Funds, 2000–2005 140
6.31 Composition of National Savings Rate 140
7.1 Population Pyramid Summary for Japan 148
7.2 Population Pyramid Summary for China 149
7.3 China and Japan: Mirror-image Demographics 150