Introduction
In past few years, one of the most significant developments in the world economy is the emergence of India and China as major forces in the global economy. The constant growth of these countries is expected to dominate the economy of the whole world for several decades. Both countries contribute as more than one-third of the world’s population. Since 1980, both economies have been successful in achieving remarkable poverty reduction and economic growth rate. In respect of economic growth, it seems that China and India both are similar as both of these countries have large geographies and populations. However, the increasing influence of these two economies and immense economic growth have encouraged the researchers to determine the reason that have lead in contributing to their growth and in comparing the economic growth of these two countries (Bosworth & Collins).
Brief Background of China and India
For years, China has been a leading civilized economy that has outpaced rest of the world in the fields of science and arts. In 19th and early 20th century, the country has to face civil unrest. However, after the Second World War, the country has developed a system of autocratic socialist and for ensuring the sovereignty of the country, the government has imposed strict control over the cost of living and everyday life of people. The country after the year 1978 adapted the mechanism of market-oriented economic development. The output of the country was quadrupled by the year 2000 because of this mechanism. The living standard and population of the country improved and the room for personal choice expanded dramatically. However, the political control over all the activities have remained tight. It has been determined that since the 1990s, the country has enhanced its participation in international companies and its global outreach as well (CIA).
On the other hand, India is one of the oldest Indus Valley which flourished during second and third millennia B.C and the country extends to Northwestern India. The country gained independence in 1947. India with its neighbor has conducted three wars after separation and the last war occurred in 1971. However, the country is facing from several issues such as environmental degradation, overpopulation, widespread corruption, and extensive poverty. Despite having all these issues, the country is constantly able to achieve economic growth and the country has been successful in implementing several economic reforms. The population of India is also one of the success factors and it has helped in making the country an emerging global and regional power (CIA).
Comparative analysis
In many respects, India and China seem to be similar because they both have huge population and have large geographies (Bosworth & Collins). These two countries can be examined through the application of dependency theory. According to the dependency theory, rich become richer at the expense of poor, the theory sees multinational as to maintain the poverty in multiple areas of the world. The theory says that poor countries offer raw material and low cost labor to rich countries and then rich countries by using these resources make core products and poor countries remain dependent on the rich countries for core products. This theory can be easily applied to India and China as both courtiers provide material and labor resources to the rich countries of the world. Both of these countries, despite having immense success are still behind rich nations not in education only, but in health and other aspects as well (Andersen & Taylor, 254).
The paper is an attempt to disclose the meaning of development and growth to India and China and its impact on the citizens of countries. The first indicator that has been used to determine the growth of the country is “Gross Domestic Products.” GDP of both these countries is presented in the figure below:
(World Bank)
Research analysts for the measurement of economic development have used Gross Domestic Products (GDP) as the most common indicator. Gross domestic products (GDP) is defined as the total value of the services and products that are produced in a country within a specific time. The graph above represents the GDP data of India and China from 1966 to 2014. The above graph depicts that the economy of China is much better and larger than India. The graph illustrates that both of the economies’ since the 1990s have been improving. In 2008, both these countries face economic downturn, and this is because of the financial crisis of 2008 that affected all economies of the world. Despite being used widely by researchers, the use of GDP as the only indicator can be misleading due to the different sizes of the countries in terms of population and other factors. Therefore, only GDP may not present an accurate picture of the economy particularly when comparing one economy to another. Hence, it is considered pivotal to use GDP per capita for having a better and more accurate picture when comparing two countries that are different in sizes because GDP per capita presents the GPD divided by the number of citizens of the country.
(World Bank)
The above graph demonstrates that both countries were reporting a flat growth from 1966 to 1992. However, after 1992, both countries reported significant growth per capita and this trend continued. China is ahead of India in terms of economic growth per capital as seen in the graph above. Recently analysts have predicted that India will outpace the growth rate of China and will gain a similar growth, however, this growth will be in the short run only. In the long run, it has been estimated that China will continue to grow at a better pace than India because the country has setup a free market as compared to India that may become a hurdle in its long term growth (Worstall).
GDP Growth and GDP per capita are good measures of economic growth, but it is also essential to determine other aspects of the country that can affect the economic growth of the country as well such as unequal income distribution.
Gini coefficient which is also known as Gini index and Gini ratio are used to measure statistical depression. Gini index measures the extent of deviation of income distribution within a country from equal distribution. Lorenz curve plot shows the total income that has been received against the total cumulative numbers of recipients; the Gini index measures the area between the hypothetical line and equality that is expressed as a percentage of the area that is underlined. The Gini index of 100 represents the position of inequality and “0” refers to the perfect equality. It is the most common indicator of income inequality in the country.
The above data clearly communicates that in a prior era, the income inequality was lower in China as compared to India, but since the 1990s, China is facing higher income inequality as compared to India. The income inequality rise is the cause of the shift in the income from the upper middle class to upper class (Dabla-Norris et al., 11). The income inequality is also the result of an increased in income. In China, over one third of the wealth is determined in the top 1 percent and the remaining population keeps in poverty despite the increase in economic growth (Dabla-Norris et al., 14).
(MDGI)
The percentage of the population that lives below $1.25 per day is an indicator of extreme poverty and inequality. It has been determined that in the 1990s, China and India were facing similar poverty situation. However, later India has improved its situation, and was able to reduce the income inequality, and left China behind in terms on equal income distribution. Both countries have tried hard to overcome the inequality situation, but they have a long way to go, and China needs to work harder as compared to India in this regard. India and China have high GDP but higher Gini Coefficient as well. The above graph is illustrating the improved situation on poverty, but another way through which these countries can reduce the poverty level is to enhance the level of education. The more people will be educated, the more they will be able to reach at high positions which means high income and lower poverty. Therefore, it is essential that a mean number of schooling of both countries are determined.
(World Bank)
The above graph communicates the number of schooling years have increased in India and China for adults. By the mean year of 1990, the schooling of adults is more than eight years in India; however, China is still below eight years. For reducing inequality, it is essential to enhance the educational level and quality of the country. Education and income inequality are highly related to each other. The above graph depicts that people in India are getting more education than in China; this is the reason that inequality in China is high as compared to India. The poverty levels in China and India are higher and there is high inequality in these countries. This clearly communicates that rich citizens of these countries are receiving higher, and quality education. Moreover, this also shows that people with less economic advantage are not able to receive higher education.
Human development index considers the capabilities and people as the measure of the development of the country. Human development index is the measure of achievements of key dimensions of human development that include being knowledgeable, have long and healthy life, and a decent standard of living (United Nation Development Program).
The above data declares that despite having more inequality in the distribution of income, more poverty, and less education as compared to India; China has a good living standard, and people of the country has a long and healthy life as compared to India. The human development index includes life expectancy, schooling years, health expenditure, and infant mortality rate. All these components of human development index (HDI) have been analyzed separately one by one in this report.
(World Bank)
Life expectancy at birth refers to the number of years an infant would live if proper care were provided (World Bank). Life Expectancy at birth reflects the overall mortality level of population. It has been determined from the analysis and above figure also demonstrate that the life expectancy at the birth rate of China is far better than India. This is the reason that India despite having lower inequality in income, higher educational level, and lower poverty – as compared to China - has lower economic growth than China. India needs to improve the health environment of the country, as healthy individuals contribute more to economic development by taking part in diverse activities and playing multiple roles.
Infant mortality rate is an indicator of population health. The decreased infant mortality rate communicates that the health condition is improving in both the countries. However, the health condition of India is worse as compared to China. Enhanced socioeconomic development ratio can be used which is used to define the improved health of the population. The graph presents that China is more socioeconomically developed than India. The more the country will be developed, the more the rate of infant mortality will be low. Economically developed, or growing countries spend more on health related technologies that reduce infant mortality rate (Upadhyay & Seivastava, 2). The economic condition of China is better than India. Therefore, the rate of mortality is lower as the health expenditures of the country are higher. İt is considered that the good economic health improves the health of citizens in terms of increased health spendings, but the opposite is also true. The more spendings, the better will be the health of citizens and the more they will contribute to economic development. Therefore, for further growth of the economy, it is essential for both India and China to focus on their health policies and take measures for improving the population’s health.
For clearing the above point that economically growing countries spend more amount of health, health and expenditure graph has been analyzed. It is clear from the above graph that China’s health expenditures are more as compared to India.
Conclusion
The aim of this paper has been to compare the economic situation of both countries by deploying selected quantitative economic indicators that include Population below $1.25 (PPP), GDP growth, GDP per capita, Years of Schooling, Gini Index, Health Expenditures, Human Development Index, Infant Mortality Rate, and Life Expectancy. It has been determined that China is ahead of India in gross domestic products (GDP) and GDP per capita despite having enhanced income inequality, poverty, and decreased educational level as compared to India. This is because the country is spending a significant amount on the health of its citizens. The health of the population has a strong association with economic development. Healthy people are more able to contribute to the development and growth of the economy through putting more efforts and taking part in different activities actively.
Both countries are improving their situations, but there is a long way in improving and gaining economic success. However, India for having significant economic growth needs to focus on its health policies as well so it may outperform China. Youth is an important factor that plays a signifiacnt role in economic development and therefore, their health are important as well.
Works Cited
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Bosworth, Barry P. and Susan M. Collins. Accounting for Growth: Comparing China and India. The Brookings Institution. 2008. 2 Jun. 2016. www.brookings.edu/research/papers/2007/01/17China-bosworth
CIA. The World FactBook. Central Intelligence Agency. 2016. 2 Jun. 2016. https://www.cia.gov/library/publications/the-world-factbook/geos/in.html
Dabla-Norris, Era., Kochhar, Kalpana., Ricka, Frantisek., Suphaphiphat, Nujin and Tsounta, Evridiki. Causes and Consequences of Income Inequality: A Global Perspective. International Monetary Fund. 2015. 2 Jun. 2016. https://www.imf.org/external/pubs/ft/sdn/2015/sdn1513.pdf
MDGI. Population below $1.25 (PPP) per day, percentage. 2 Jun. 2016. http://mdgs.un.org/unsd/mdg/SeriesDetail.aspx?srid=580
United Nation Development Program. Human Development Index (HDI). Human Development Report 2015: Work for Human Development. 2015. 2 Jun. 2016. http://hdr.undp.org/en/content/human-development-index-hdi
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World Bank. Life Expectancy at birth. 2016. 2 Jun. 2016. http://data.worldbank.org/indicator/SP.DYN.LE00.IN
Worstall, Tim. Why China Will Continue To Grow Faster Than India. Forbes. Mar. 2015. 2 Jun. 2016. http://www.forbes.com/sites/timworstall/2015/03/03/why-china-will-continue-to-grow-faster-than-india/#209f47482e26
