In the wake of the Presidential Election as well as the State of the Union address, most Americans are undoubtedly equating Asian economies and trade in Asia to China. This is a fair comparison given the amount of discussion that the American people have listened to or read in the past few months, let alone the past few years. But a new market is on the rise in Asia that has not yet received as much attention by the former presidential candidates or the American public and that is the economy of India. According to an article from The Economist titled "India's Surprising Economic Miracle" the private industry in India has experienced rapid growth and their economy "is expected to grow 8.5% this year...and its growth rate could overtake China's by 2013, if not before,". This is an extraordinary amount of growth for a country that remains to have a low grade infrastructure that includes poor highways and bridges. According to themes we discussed in our class there are three major criteria that the Asian Tigers have in common: free trade, be export oriented, and be allies with the United States. Going one by one through these criteria we can discern if India can be qualified as an Asian Tiger.
First, does India employ liberal economic policies? Yes, reforms in the early 1990's stripped the Indian economy of high tariffs that once encompassed it and allowed firms to trade and participate in the world economy in a much easier fashion (Business in India). Second, is India's economy export oriented? In a manner of speaking, yes. They export services to other countries which also created jobs in India. An example of this are telephone service lines that are located in India even though the actual company may be located elsewhere. However Indian producers have been focused on providing cheaper goods for the citizens of India and not focused as much on the export of their goods. Finally, is India an ally of the United States? Yes they are, and in fact many of their exported services have been exported to the United States. What interests me about the notion that India has a thriving economy is the idea of a regional challenger to China. And going one step further I can imagine one of two separate outcomes: one is they become economic adversaries and two is they implement a regional trade agreement that also includes other Asian Tigers. The development of India's economy will tip the economic balance in Asia, the only question is how it will tip. After comparing India's economy to the criteria of an Asian Tiger it can be said that despite India's problems, their economy is on the rise and should it continue to grow at this rate they will one day rival China for Asia's top economy.
I've never compared India's recent economic growth with the success of the export-oriented economies of the Asian Tigers. I had not considered the potential power of India, especially how "its growth rate could overtake China's by 2013," from the article mentioned above. That really surprised me. I wonder how the United States will react if in the coming years we actually do see a shift in the power of China to another country besides our own...
ReplyDeleteI was also surprised that the article "India's Surprising Economic Miracle" in the Economist stated that "its growth rate could overtake China's by 2013. What was intriguing about the article to me was the conclusion it drew that as the global economy becomes more knowledge intensive it will be an advantage for India in the coming years. From a human rights perspective, it would be much better to see India outgrow China and become more powerful. As far as global stability is concerned, that is a different issue and I would imagine it would be the biggest concern of the United States regarding their reaction if a shift of power does take place between China and India.
ReplyDeleteI think the factor that cripples India the most in its hunt to be the next Asian Tiger is India's lack of a strong bureaucracy. In my opinion, India needs to overcome corruption within its own state before it can be a viable economic power. It has all of the factors it needs to become a regional competitor to China, but lacks the organization.
ReplyDeleteBeing the world's largest democracy, there is no doubt that the Indian government has a tremendous number of people to take care of. Despite it's huge economic growth in the past decade, India is still battling with the poverty, hunger, and illiteracy rampant throughout the country. According to UNICEF, around 46% of children younger than 3 years old are too small for their age. If this trend continues, it will ultimately impede on India's ability to compete as a global superpower because of a small (compared to China's) workforce. Though China suffers social problem of it's own, starvation and illiteracy have been nearly eradicated, and there is a large effort on the part of the government to invest in human capital. Thus, I find the prediction that India's growth rate may overtake China's anytime soon dubious.
ReplyDeleteThe rise of India's economy is indeed very real. It is generally not considered as much of a threat to the US as China's rising economy, yet India continues to grow at a rapid pace. Both countries are considered "BRIC countries" which are countries that are considered to be emerging economies. One interesting similarity between China and India is income inequality. Though both countries are growing at a rapid rate, the population does not necessarily get richer right away. The fact that India is a democracy, however, may have an impact on how politicians respond to this growth. The population is able to demand higher income, better jobs, etc. This could possibly affect wealth distribution in the country. China, on the other hand, is an authoritarian regime that does not necessarily need to respond to the demands of the people. Despite China's growing economy, it is possible that the income gap could remain.
ReplyDeleteGoing along with this idea, an article titled, "India: the next university superpower" written in the BBC news talks about India's ambitions to increase the percent of the population receiving a college degree to 30% by 2025. This percentage is staggering when the population of India is taken into account. They estimate over 30 million college students in 2025. India's hopes to become a knowledge powerhouse might actually be in reach and this will forever change India's economic standing putting them on top.
ReplyDeleteKristen, That is a great point that you are making about how India is pushing huge on education for the future and 30% is a pretty good rate considering how big India is. On top of them I strongly believe that in the Indian government they need to give more opportunities to youth. People who are willing to take country towards a different direction with new ideas. Most of the Indian politicians views on political or as a country in general in pretty backwards and that could cause a big problem for India too.
DeleteJust to bring in a different perspective, a more recent article argues that India's potential has decreased as it's economic growth fell from 8.5% to 5.3%. This is the slowest rate in the last seven years and in addition to that there is a budget deficit equivalent to one tenth of the GDP. Additionally, political problems remain a challenge to India's path as an Asian Tiger. "First, the state machine has still not been modernised. It is neither capable of overcoming red tape and vested interests nor keen to relax its grip over the bits of the economy it still controls." (The Economist) Thus, before becoming an Asian Tiger, India first has to address its domestic problems within politics.
ReplyDeletehttp://www.economist.com/node/21556576?zid=309&ah=80dcf288b8561b012f603b9fd9577f0e
Another issue that continues to be an issue for India's economy is the lack of opportunity for women. Even though they may satisfy the criteria of being an Asian Tiger, they are still far behind on human rights issues for women, which is not only a moral issue, but also an economic one. Despite its expanding middle class and steep growth, it has achieved these gains with low economic participation by women. Compared to china, their economy outperformed India's significantly in 2011, at 9.3 percent compared with India's 6.9 percent. This is huge loss for India as India could have potentially witnessed an additional economic growth rate of 4.2 percentage points if women were given greater opportunity to contribute to professional life. The aftermath of the deadly gang rape in January will be critical in how India will address this problem of inequality.
ReplyDeletehere is the link for that story on Businessweek. http://www.businessweek.com/articles/2013-01-31/indias-economy-lags-as-its-women-lack-opportunity
DeleteI do agree that India needs to work towards giving more opportunity and equality for young girls and women in India. AFter all India has the second largest population growth and if they can work towards providing better system for women to work on their women illiteracy rate, then India will see huge economic growth in India. However as far as human rights for women is concern but China on the other hand over all has a bigger problem to solve when it comes to Human rights issue.
Delete