A Comparative Political Economy of China and India: A Critical Review

Abstract

AbstractThis study argues, contrary to the projection by the international financial institutions India as one of the ‘success stories’ of pro-market reforms and is likely to emerge as a giant economy in the twenty-first century, the economic transformations of India and China needs to be examined more carefully. Such perceptions have been boosted by its high growth rate over the last three decades. The study attempts to analyse both economies in terms of employment and sectoral changes since pro-market reforms were undertaken in 1978 in China and in 1991 in India. This study is important because the growth and diversification of these economies could have special significance due to the sheer amount of demographic and economic resources, and indeed future potential growth prospects of these regions and could well affect the course of global economic affairs. The study has found China began economic reforms more than a decade earlier than India, when international relations were dominated by the Cold War; as a result, China was able to strike a better bargain in favour of their domestic businesses. China also had a better equipped administration and centralised party to take advantage of the western markets. India adopted economic reforms in 1991, when an increasing number of developing countries had joined a consequently increasingly competitive international market. In the case of both China and India, there is various evidence to indicate that growth is dependent on unsustainable credit boom, which makes both these countries financially vulnerable and makes growth difficult to sustain.KeywordsPolitical economyFinancial institutionsEmployment changesEconomic Reforms in 1991Unsustainable credit boom