It's imperative to demolish myths around the economic achievements of China and India and get a better sense of the real challenges. The author of the book, 'Awakening Giants, Feet of Clay: Assessing the Economic Rise of China and India' (Princeton University Press, 2010) discusses here some of the main themes of the book.
Over the past few years the media have been all agog over the rise of China and India in the international economy--and their remarkable recovery in this current global recession. After decades of relative stagnation, these two countries, containing nearly two-fifths of the world population, have had incomes grow at remarkably high rates in the last three decades.
In the world trade of manufacturing, China, and in that of services, India, have made big strides, much to the consternation--as yet largely unfounded--of workers and professionals in rich countries. Industrial growth, along with acquisition of international companies by China and India, attract much of the Western media's attention.
But more important is what has happened to the lives of people in these two countries and under what structural constraints. It's imperative to demolish myths that have accumulated in the media and parts of academia around the economic achievements of China and India and get a better sense of the real challenges faced by them.
In the recent, often breathless, accounts of the economic rise of China and India, a set of simple generalizations have become part of the conventional wisdom. The familiar story runs along these lines:
Many decades of socialist controls and regulations stifled enterprise in both countries and led them to a dead end. Their recent market reforms and global integration have finally unleashed their entrepreneurial energies. Energetic participation in globalized capitalism has brought about high economic growth in both countries, which in turn led to a large decline in their massive poverty.
In particular, China is now the 'manufacturing workshop of the world' and its industrial growth during the past quarter century is hailed as historically unique, even better than the earlier East Asian 'miracles.' India's economy has been transformed by service-sector-led growth, but overall growth has not been as dramatic as in China. China's better performance suggests that authoritarianism may be more conducive to development at early stages, as demonstrated earlier in South Korea, Taiwan and Singapore.