Comparing Development: India, Pakistan, and China

Introduction

• Geographical boundaries are becoming less significant in today's globalized world
• Understanding the strategies of neighboring countries is important for developing nations due to shared economic space.
• This analysis focuses on India, Pakistan, and China.

Comparison Scope

• A comparison of India’s developmental experiences with Pakistan and China is presented.

Developmental Paths

• India, Pakistan, and China initiated their developmental paths around the same time
• India and Pakistan gained independence in 1947
• The People’s Republic of China was established in 1949.
• India announced its first Five Year Plan for 1951-56
• Pakistan announced their first 'Medium Term Development Plan' in 1956
• China announced its First Five Year Plan in 1953
• Pakistan is working on the 12th Five Year Development Plan (2018-23) since 2018
• China is working on its 14th Five Year Plan (2021-25)
• Until March 2017, India followed the Five Year Plan model

China: Initial Economic Changes

• After the establishment of the People's Republic of China, critical sectors, enterprises, and individually-operated lands were brought under government control.

The Great Leap Forward (GLF)

• Launched in 1958
• Aimed at rapid industrialization
• People were encouraged to start industries locally
• Communes were established in rural areas
• People collectively cultivated lands under the commune system
• By 1958, 26,000 communes covered nearly all the farm population

GLF Problems and Cultural Revolution

• GLF faced issues such as severe drought that caused approximately 30 million deaths
• Conflicts with Russia led to the withdrawal of Russian professionals
• The Great Proletarian Cultural Revolution (1966–76) was introduced in 1965
• Students and professionals were sent to work and learn in the countryside

China's Economic Reforms (1978)

• Current industrial growth traces back to reforms initiated in 1978
• Reforms were introduced in phases
• Initial phase involved agriculture, foreign trade, and investment sectors.
• Commune lands were divided into small plots allocated to individual households for use, not ownership.
• Households could keep all income after paying taxes
• Industrial sector reforms followed
• Private firms and township/village enterprises were allowed to produce goods

State Owned Enterprises (SOEs) in China

• Enterprises owned by the government were made to compete
• Reform involved dual pricing
• The government fixed prices for required quantities of inputs/outputs
• The rest were transacted at market prices.
• Special Economic Zones were established to attract foreign investors.

Pakistan's Economic Policies

• Pakistan also follows a mixed economy model supporting public and private sectors
• Pakistan introduced a regulated policy framework with tariff protection for manufacturing of consumer goods
• Green Revolution led to mechanization
• Increased public investment in infrastructure in select areas
• This led to increased foodgrain production and dramatic changes in the agrarian structure
• Capital goods industries were nationalized in the 1970s
• Policy shifted towards denationalization and encouragement of the private sector in the late 1970s and 1980s
• Pakistan received financial support from western nations and remittances

Demographic Overview

• Globally, one in six people are Indian, and another is Chinese
• Pakistan’s population is about one-tenth that of China or India
• China is the largest nation by area but has the lowest population density among the three

Population and Fertility Trends

• Scholars identify the one-child norm introduced in China in the late 1970s as the main cause for low population growth
• This policy also led to a skewed sex ratio
• The sex ratio is low and biased against females in all three countries due to son preference
• All three countries are adopting measures to improve the sex ratio

China's One-Child Policy Implications

• The one-child norm also led to more elderly people compared to young people
• China allowed couples to have two children for this reason
• Fertility rate is low in China and high in Pakistan
• Urbanization is high in China with 59% compared to India's 34%

Gross Domestic Product (GDP)

• China possesses the second largest GDP (PPP) at $22.5 trillion
• India's GDP (PPP) is $9.03 trillion
• Pakistan's GDP is $0.94 trillion, about 11% of India's GDP
• India's GDP is about 41% of China's GDP

Economic Growth

• China maintained near double-digit growth during the 1980s
• Pakistan was ahead of India in the 1980s
• There was a decline in Pakistan's growth in 2015-2017 compared to China and India

Workforce in Agriculture

• China has a relatively small cultivatable area, with only 10% of its land suitable for cultivation
• The cultivable area in China accounts for approximately 40% of the cultivable area in India
• More than 80% of people in China depended on farming for livelihood until the 1980s
• The government incentivized people to leave fields for other jobs

Employment by Sector

• In 2018–19, with 26% of its workforce in agriculture, agriculture contributed 7% to China's Gross Value Added (GVA)
• In India and Pakistan, agriculture's contribution to GVA was 16% and 24% respectively
• India has a larger workforce in agriculture
• Pakistan: About 41% of people work in agriculture
• India: 43% work in agriculture
• Pakistan: 24% of the workforce engaged in industry
• Pakistan: industry produces 19% of GVA
• India: industry workforce accounts for 25% of the population
• India: the workforce produces goods worth 30% of GVA

Sector's Contribution to GVA

• Industry contributes 41% to GVA in China
• Industry employs 28% of workforce
• Service sector contributes the highest share of GVA in all the three countries

Shift in agriculture to other sectors

• In the normal course of development, employment and output shift from agriculture to industry and then to services
• China's workforce in industry in India and Pakistan was low
• The contribution of industries to GVA is at 30% in India and 19% in Pakistan
• The three countries are shifting directly to the service sector
• Service sector is emerging as a major player of development in all three countries

Service sector in Pakistan, India and China

• Pakistan was faster in shifting its workforce to the service sector than India and China,in the 1980s
• India, China and Pakistan employed 17, 12 and 27 per cent of its workforce in the service sector.
• Service sector employment in 2019 = 32% (India), 46% (China) and 35% (Pakistan)

Agriculture Industry Decline

• Growth in agricultural sector, which employs the largest proportion of workforce in all the three countries, declined
• China maintained near double-digit growth in the industrial sector in the 1980s
• Recent years = Decline

Output Growth rates

• For India and Pakistan, growth rate declined whereas China was able to maintain the rate of growth during 1980–1990 in the sector
• China's manufacturing output in the service sectors
• India's service sector saw increasing growth
• Pakistan experienced deceleration in all three sectors.

Human Development Indicators (HDI)

• China is moving ahead of India and Pakistan in indicators like GDP per capita, proportion of population below the poverty line, mortality rates, access to sanitation, literacy, and life expectancy

Poverty Reduction

• China and Pakistan are ahead of India in reducing the proportion of people below the poverty line

Maternal Mortality Rate (MMR)

• India and Pakistan have not been able to improve on low women mortality rate
• China = 29
• India = 133
• Pakistan = 140
• All countries are providing improved drinking water sources

Liberty Indicators

• Human development indicators cannot be viewed with convection
• This is because they aren't sufficient
• Extent of democratic participation needs to be measured

Development strategies in 3 countries

• The reform process in Pakistan led to the worsening of all the economic indicators
• Pakistan relied on agriculture and good harvest
• India had to borrow from the IMF and World Bank to set right its balance of payments crisis
• Foreign exchange is an essential component for any country
• Political instability is the main reason for the Pakistan economy slowdown
• India with democratic institutions is performing moderately with dependence on agriculture

Conclusion

• India, China and Pakistan traveled for 7 decades of development
• Political instability and the reliance on agriculture in Pakistan slowed down economic growth
• China used the market system without losing political commitment
• China retained land ownership and gave it to the people for cultivation to produce social security
• Public intervention has brought human development in China.