Comparing Regional Development in China and India

Abstract

Since the early 1990s, the world has witnessed rapid economic transformation and growth in China and India. This has subsequently triggered a boom in comparative studies of the two Asian giants.1 This chapter adds to the literature by focusing on regional growth in the two countries. In particular, it attempts to explore how regional economies in the two vast countries have performed during the period of high growth and assess whether or not regional disparity has deteriorated as economic liberalization deepens. It is found that substantial regional disparity exists in China and India. This disparity has shown an increasing trend in both countries during the period of rapid economic growth, in particular since the early 1990s. However, the increase in regional disparity in both countries largely reflects the enlarging gap between the super-rich regions and the rest of the economy within each country. In other words, economic growth has not led to catch-up effects in the relatively poor regions as postulated by the new growth theories (Abramovitz 1986). This chapter also shows that variations in infrastructure development and the levels of urbanization are the main sources of regional disparity in both countries. In China, the export sector also plays a role in affecting regional development. In India, human capital development in recent years may also affect regional disparity.