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Presented By : SHARVESHKUNWARAMANDEEPIpshita
PGDM
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Overview
Introduction
Emerging markets compared viz:
Power sector
Education system
Oil and gas sector
Port and shipping
Agriculture
infrastructureService industry
Role of FDI
Trade patterns
Trade policies
conclusion
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Introduction
India and china emerging global players:
High economic growth rates
Rapid raising share in world
Large inflows of FDI
Engines of demand growth in commodities
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Contd.
China and India together account for about 37.5% of worldpopulation and 6.4% of the value of world output and income at
current prices and exchange rates
IfChina opened up in 1978, India did so in 1991 i.e 14 yrs after
China therefore any comparison of India of today should be made
with china as it was more than a decade ago as emerging global
powers now
Since the two countries have similar labor endowments anddevelopment lags due to government controls and protected
nature of their economies , they can be expressed to follow
similar growth paths on opening up
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PRE-CONDITIONS FOR A PEACEFUL GLOBAL POWER
TRANSITION
Much of chinas dazzling infrastructure was been
built in the late 1990s and India is gearing upto the
repeat that performance in the latter part of thisdecade.
Foreign inflows into china jumped substantially in
the early 1990s and those into India have jumped in
the mid -2000s.
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Good education and health facilities are necessary
for inclusive development they are state subjects in
India and in China also, local government has the
large share of the responsibility for their provision
The Chinese culture is more homogeneous and
Indian culture is great diversified
Indian greater expertise with market also shows inthe financial sector, which is more deeper and more
robust than Chinese counterpart.
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GDP real growth rate:9.1%(2009)
9.8% (2008) country comparison to the world:
13% (2007)
11.6% (2006)
GDP-Per capita (PPP-Purchasing power parity):
$6,000 (2008)country comparison to the world:
$5,500 (2007)
$4,900 (2006)
note:data are in 2008 US dollars
GDP composition by sector:
agriculture: 10.6%
industry: 49.2%services: 40.2% 2008
China Economic Fact Sheet
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India Economic Fact Sheet
GDP- real growth rate:7.4%(2009)
6.6% (2008)
9% (2007)
9.6% (2006)
GDP per capita (PPP Purchasing power parity)
$2,800 (2008)
$2,700 (2007)
$2,500 (2006)
note:data are in 2008 US dollars
GDP Composition by sector:
agriculture: 17.2%
industry: 29.1%
services: 53.7% (2008)
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Comparing India and Chinas Growth Stories
Indicators India ChinaPolitical System Multi-party
Democracy
One-party
authoritarian rule
Speed of Growth Economic reformsstarted in 1991.
Average 6% growth
rate in past two
decades.
Economic reforms
started in 1978.Average 9.5% growth
rate in past two
decades.
Areas ofSpecialization
Rising power insoftware, design,
services, and
precision industry.
Dominant in massmanufacturing,
electronics and heavy
industrial plants
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Comparing India and Chinas Growth Stories
Indicators India China
Gini index
(standard measure
of inequality)
36.8
47.0 (up 10 points
from 15 yrs ago)
ForeignDirectInvestment(growth)
8.5% yearly 10% yearly
Future Areas of
growth
R&D, bio-
technology, high-
value IT enabledservices (legal,
medical, engineering
architecture),
manufacturing, agro-
based industry
IT business, services
and continued
manufacturing
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Comparison India lags behind china in infrastructure.
China has a weak banking and legal system.
India has the advantage of the English language which has made
it easier to participate in the global economy.
What holds India back are bureaucratic red tape, corruption andits inability to build infrastructure fast enough.
According to Peter Drucker, India has managed rural to urbantransition in a relatively smooth and peaceful manner, whichChina is still struggling to do.
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GDP Growth 2000 to 2050
Source:Goldmann Sachs: The Path to 2050
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
[2003 bn US Dollars]
GermanyBrazil
JapanRussia
-8-
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SECTOR-WISE BREAK-UP OF ECONOMIESCHINA & INDIA
0%
50%
100%
Sectorwise
Break up of
China GDP
Sectorwise
Break up of
China
Population
Sectorwise
Break up of
India GDP
Sectorwise
Break up of
India
Population
Services
Industry
Agriculture
Indias 54% of population is engaged in Agriculture but only accounts for 17% of GDP
-12-
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GROSS DOMESTICSAVINGSCHINA & INDIA
0
10
20
30
40
50
60
70
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
China India
China & India: Gross Domestic Saving as a % of GDP
-14-
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16
India - Low penetration and underserved market
Low penetration providing significant opportunities for future growth Over 400
million people without appropriate access to electricity
14,240
8
,231
8
,459
7,442
6,7
56
6,425
2,340
1,684
618
18,408
0
22000
Canada
United
States
France
Japan
Germany
United
Kingdom
Russian
Federation
Brazil
China
India
(K
wh/year)
Source: World Energy Outlook, 2006; Human Development Report 2007-08, Source: China Electricity Council, China
Power Year Book, Government of India, Ministry of Statistics & Programme Implementation
Per Capita Consumption of Electricity
Large investment required to achieve Govt. target of per capita consumption of 1,000 KWh by 2012
India China
Install apacity in 6
( W)132 622
Percapitaconsumption(per kW ) 618 1,684
Capacity rowth rateover
thepast6years4.4% 11.8%
Capacityaddition inpast6
years ( W)30 303
Comparison with China
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INFRASTRUCTURE * INVESTMENTS
* Transport, Communication & Power
Source: China Statistical Yearbook, RBI, Morgan Stanley Research -15-
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Educationsystem
Growth rate-India@17%, China@13%
Primary, secondary education, vocational education trainning
in china results in 99.1% literacy rate.
Where as in India it is 50 to 60 %
Adult literacy India -61%
China-91%Expenditure on education India- 10.7%
China -12.8%
But coming to quality education India is far more better than
china
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OILAND GAS
b l
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Port and shipping
Indian exports $13.94 billion in august 2009 where as china is $ 95.41 billion.
Indian imports amounted to $130.36 billion where as china is 424.59 billion
The largest container vessel calling at Chinese Port is more than 13,000 teus whereas at Indian container terminal (JNPT) is 6,000 teus.
The draft at Shanghai is 19+ m where as at JNPT it is 11.5m and at Mundra it is 17.5
m.
The berth length at Shanghai is 13,800 m and that at hong kong is 4,426 m whereastotal container berth length at JNPT is 2000 m and at 1280 m at Mundra
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Role of FDI in China
China can afford to have such a high investment rate becauseit has attracted so much foreign direct investment (FDI.
But FDI has accounted for only 3-5 per cent ofGDP in Chinasince 1990, and at its peak was 8 per cent. In the period after2000, FDI was only 6 per cent of domestic investment.
Where as India is only 4%.
Recent inflows of capital have not added to the domesticinvestment rate at all, macro economically speaking, but haveled to the further accumulation of international reserves, nowincreasing by more than $120 billion per year.
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Structural change
China: classic pattern, moving from primary to
manufacturing sector, which has doubled its share of
workforce and tripled its share of output.
India: Move has been mainly from agriculture to services in
share of output, with no substantial increase in
manufacturing, and the structure of employment has not
changed much. Share of the primary sector in GDP fell from
60 per cent to 25 per cent in four decades, but share in
employment still more than 60 per cent.
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Trade patterns
China: Rapid export growth involving aggressiveincreases on world market shares, based onrelocative capital attracted by cheap labour and
heavily subsidised infrastructure.
India: Lower rate of export growth, with cheaplabour due to low absolute wages rather than public
provision and poor infrastructure development. Soexports have not yet become engine of growth,except in services.
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Trade policies
China: export employment was net addition to
domestic employment, since until 2002 China had
undertaken much less trade liberalization than most
other developing countries.
India: increases in export employment were
outweighed by employment losses especially in small
enterprises because of import competition.
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Poverty reduction
China: Officially 4 per cent of the population now lives underthe poverty line, unofficially around 12 per cent. (Reflectsearlier asset redistribution and basic need provision in Chinaunder communism, plus larger mass market and role of
agricultural prices.)
India: poverty ratio much higher and persistent, between 26per cent and 34 per cent depending upon how one interpretsthe NSS data.
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