Betting on India or China

To the extent that a natural experiment on economic development has been set up, the different political systems and trajectories taken by India and China will be instructive . The reason for this being that they are large in both geographical and population terms in addition to having a largely rural and peasant populations. Pertinent differences between them starts with the fact that China's development is based predominantly on manufactured exports while India's growth is presently driven by a service industry of highly educated citizens. added to the differences in the drivers of growth is the fact that India is defensibly classified as a democracy whereas China's government is still authoritarian.

For this blogger, the nation to bet on has been India on account of the fact that its democratic system of governance may be cumbersome, but it allows for a variety of policies to be tested and discarded. On the other hand, China is able to keep dissent underground and make difficult decisions momentarily but that this is impossible to maintain indefinitely. Indeed, a number of publications show that China may be calm but is not necessarily conflict free. Some of the main posts on this blog have therefore consistently questioned the conventional wisdom stating that China's rise into an economic power is inevitable.

John Kay seems to consider that India's growth model based on export of services is unprecedented while China's approach seems to be in the tried and tested path of attracting peasants from land and into wage manufacturing. It states that this industrialization model allows for mass participation in the economy. Will India have to revise its growth drivers before China is compelled to address the political reforms that it's citizens will demand? The experiment is on and the next decade will begin to yield answers.