Economic Reforms and Global Integration
In the last two decades of the twentieth century, China and India enjoyed historically unprecedented average rates of growth of their real Gross Domestic Product (GDP) at 10% and 6% per year respectively. Fewer than 10 countries of the world exceeded India’s growth rate and none exceeded China’s during this period (World Bank, 2001: Table 4.1). Although still very poor, with their large populations and rapid growth of GDP, both constitute large domestic markets for a variety of agricultural and industrial products and services. With both engaged in integrating their economies with the world economy, they now compete in markets in the rest of the world for their exports and for external capital.
The primary focus of this chapter is an analysis of economic reforms, post-reform performance and future prospects of both economies. In Section 2, I describe the state of the two economies as they initiated their development efforts, their politico-economic social frameworks, and their achievements in terms of important socioeconomic indicators; Section 3 is devoted to their pre reform development strategies. In the subsequent two sections, I describe the background to, the rationale for, and contents of reforms in China since 1978 (Section 4), and in India since 1991 (Section 5). I concentrate primarily on reforms of foreign trade, industry and the financial sectors. I discuss agricultural reforms only briefly, primarily because the reforms of the two countries are not comparable, with India yet to initiate significant reforms. Section 6 details the achievements of reforms in both countries. Section 7 concludes with an assessment of yet to be initiated, but needed, reforms and the likely future prospects of the two economies.
About the Author
Professor, Department of Economics