Of Giant Nations
In her book, Robyn Meredith, senior editor, Asia, at Forbes, discusses how China and India have spurred a new gold rush, and what this means for the rest of the world especially America writes Ganesh Sundararaman

Until the late 1950s, China too was an agrarian economy. But by the late 1990s, the change over to industrialisation had taken place. Starting only in the early 1990s really, “the metamorphosis from farmland to factories was fast”. That’s the real story of China’s economic development. China transformed vast areas of crop fields into industrial land; sent farmers into factories.

By contrast, going by the advice of Prof Mahalanobis in the 1950s, that India needed a strong dual economy, with matching contributions coming from both the industrial and the agrarian sectors, Jawaharlal Nehru, driven further into conviction by the exhortations of Dr Viswesarayya, ventured into state-supported industrialisation of a nation that was totally dependent on agriculture. That it took about half a century to transform into a workable model, and start reflecting in the GDP growth, is a dimension of the size of the population.

Economic evolution is an intrinsic part of The Elephant and the Dragon. Up to the late 1970s, China and India’s economies were comparable. Since then, China is doing a better job of bettering the lives of its citizens. India is leading in computer software but in almost everything else China is advancing more rapidly.
While China built up its economic strength by investing heavily in the manufacturing industry and facilitating foreign trade, the service sector has become a leading driver behind India’s economic growth, contributing to more than half of its total economic growth since the 1990s. Despite their very different approaches, however, both countries can learn from each other in many ways.

Traditionally, advanced economies derive a sizeable contribution from the services sector. This essential difference between the two economies is not really stressed by Meredith. That higher education in China is yet to impact itself on the evolution of indigenous technology is ignored. But Meredith, thanks to her parleys with some of the finest captains of industry in India, has been able to lay out a fairly vivid resume of the emergence of the largest computer-literate population, and the third largest technically trained workforce in the world. China and India together account for about 37.5 per cent of the world’s population and 6.4 per cent of the value of world output and income, at current prices and exchange rates. As the two countries play an increasingly weighty role in the world economy, their expansion is having a noticeable impact on global growth, through a number of channels, with trade and transfer of technology being arguably the strongest and most direct.

Although the two Asian ‘mega-emergers’ appear to have much in common, they have in fact been following two different development paths. China initiated its state-led modernisation reform in the late 1970s, after many years of operating according to the Soviet model. India has relied largely on the private sector to drive reform.

What’s intriguing, though, is that Meredith’s focus is on how America will reorient itself. Coupled with the misplaced concept, that China’s foray into world markets could be a standard of ‘globalisation’, one wonders if Meredith is myopic around America, while it is really these two economics that are really impacting the world system.

Globalisation goes beyond mass manufacture, economies of scale and screwdriver technology. It has more to do with global finance, global manpower systems and being a responsible global corporate citizen living according to global commercial laws. The doyens of Indian industry have practised these tenets. China still suffers from a lack of credibility about many areas of business, except in the efficacy of the world’s cheapest production system for many products.

In the end analysis, The Elephant and the Dragon is all about research and readings on the economies of the two Asian nations. Not so much about reading into the findings from the third point of view.

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