Abstract
China and India have recently achieved spectacular economic growth where GDP per capita grows rapidly in both countries. Thus, this study examines the contribution of economic sectors to economic growth in both countries by using time series data from 1978 to 2007. Three economic sectors were analyzed: agricultural sector, manufacturing sector and services sector. Augmented Dickey-Fuller (ADF) unit-root test shows that the time series data are stationary at first difference. Then, correlation analysis indicates that each economic sector has strong, positive and significant linear relationship with economic growth in China and India. In addition, the results of multiple regression analysis show that agriculture, manufacturing and services sectors have positive relationship with GDP per capita in China and India. However, the contribution of economic sectors to economic growth differs in China and India. Manufacturing sector contributes the highest to China’s economic growth while services sector is the highest contributor to India’s economic growth.
Highlights
The spectacular economic growth of China since the early 1980s and India since the late 1990s has been a hot topic of discussion in the fields of economic development and economic reform for the past few years
This study has focused on examining the contribution of economic sectors to economic growth in China and India from 1978 to 2007
The results of the study indicate that manufacturing sector is the highest contributor to real Gross Domestic Product (GDP) per capita in China
Summary
The spectacular economic growth of China since the early 1980s and India since the late 1990s has been a hot topic of discussion in the fields of economic development and economic reform for the past few years. Both countries embarked on economic reforms characterized by deregulation and liberalization, which opened up their economies to international trade and attracted foreign investment. India launched widespread economic policy reforms in 1991, in response to fiscal and balance of payments crises Before their economic reforms, China and India had similar economic structures which are characterized by a large public sector and heavy dependence on agriculture. Before 1980, economic growth in both China and India, as measured by the growth rate of per capita Gross Domestic Product (GDP) was relatively slow
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