Comparing India, Pakistan, and China's development

• This unit compares India's developmental experiences with Pakistan and China.
• Geographical boundaries are becoming meaningless in today's globalized world.
• It is important for developing countries to understand their neighbors' development strategies, especially since they share limited economic space in world markets.

Introduction

• Earlier units covered India's developmental experience and policies' varying impacts.
• For the past two decades worldwide economic transformation has implications for all countries, including India.
• Nations are trying to strengthen domestic economies.
• They are forming regional and global economic groupings, for example SAARC, European Union, ASEAN, G-8, G-20 and BRICS.
• Various nations have increasing eagerness to understand neighbors' developmental processes.
• It allows them to comprehend their strengths and weaknesses in comparison to neighbors.
• Understanding other economies in the neighborhood is required, as major common economic activities impinge on overall human development.
• Pakistan and China are largest two of India's neighboring economies.
• India is the largest democracy, with secular and liberal constitution for over half a century.
• Pakistan has a militarist political power structure.
• China has a command economy which only recently started moving towards a democratic system.
• China is undergoing more liberal economic restructuring.

Developmental Path - A Snapshot View

• India, Pakistan, and China have similar developmental strategies.
• All three nations started towards their developmental path at the same time.
• India and Pakistan became independent in 1947.
• People's Republic of China was established in 1949.
• India announced its first Five Year Plan for 1951–56.
• Pakistan announced its first five-year plan, called the 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).
• India has been following the Five Year Plan-based development model until March 2017.
• India and Pakistan adopted similar strategies.
• They created a large public sector and raised public expenditure on social development.
• All three countries had similar growth rates and per capita incomes until the 1980s.

China's Policies

• Post establishment of the People's Republic of China, all critical economy sectors, enterprises, and individually owned lands were government controlled.
• The Great Leap Forward (GLF) campaign was initiated in 1958.
• GLF aimed at industrializing the country on a massive scale and setting up industries in backyards.
• Communes were started in rural areas where people collectively cultivated lands.
• The commune system had 26,000 communes covering almost all farms in 1958.
• The GLF campaign met with problems.
• A severe drought killed about 30 million people.
• Russia withdrew professionals who had been aiding China's industrialization due to conflicts.
• Mao introduced the Great Proletarian Cultural Revolution (1966–76).
• Students and professionals were sent to work and learn from the countryside.
• China's fast industrial growth can be traced back to reforms introduced in 1978.
• Reforms were introduced in phases.
• Initial reforms were in agriculture, foreign trade, and investment sectors.
• Commune lands were divided into small plots allocated for household use in agriculture.
• Individual households were allowed to keep all income after paying taxes.
• Later phase of reforms initiated in the industrial sector.
• Private sector firms, township and village enterprises were allowed to produce goods.

State Owned Enterprises

• Enterprises owned by the government (State Owned Enterprises—SOEs) were made to face competition.
• The reform process also involved dual pricing.
• Farmers and industrial units were required to buy and sell inputs/outputs at government-fixed prices.
• Remaining outputs were purchased/sold at market prices.
• The market share of goods/inputs increased over time as production increased.
• Special economic zones were set up in order to attract foreign investors.

Pakistan's Policies

• Pakistan follows the mixed economy model with both public and private sectors.
• A variety of regulated policy frameworks were introduced in the late 1950s and 1960s.
• The policy combined tariff protection for consumer goods manufacturing with direct import controls competing imports.
• The Green Revolution led to mechanization and increased public investment.
• Infrastructure in select areas rose, leading to a rise in foodgrain production.
• The agrarian structure changed dramatically.
• Nationalization of capital goods industries took place in the 1970s.
• Pakistan's policy orientation shifted in the late 1970s and 1980s.
• The push was towards denationalization and private sector encouragement.
• Pakistan received financial support from western nations and remittances from emigrants to the Middle-East during this period.
• Government offered incentives to the private sector creating a conducive environment for new investments.
• Reforms were initiated in the country in 1988.

Demographic Indicators

• One in every six people is either Indian or Chinese.
• Pakistan's population is about one-tenth of China or India's.
• China is the largest nation geographically though its density is the lowest.
• Pakistan has the highest population growth, followed by India and China.
• The one-child norm introduced in China in the late 1970s is a major reason for low population growth.
• The one-child norm led to a decline in the sex ratio, proportion of females per 1000 males.
• The sex ratio is low in all three countries due to son preference.
• All three countries are adopting to improve the situation.
• The one-child norm also has other implications, such as more elderly people in China.
• China allowed couples to have two children due.
• Fertility rate is also low in China and very high in Pakistan.
• Urbanization is high in China with India having 34% of its people living in urban areas.

Gross Domestic Product and Sectors

• China has the second largest GDP (PPP) of $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 accounts for 41% of China's GDP.
• China maintained near double-digit growth during the 1980s while many developed countries struggled to maintain 5%.
• Pakistan was ahead of India, China had double-digit growth, and India was at the bottom in the 1980s.
• There has been a decline in Pakistan's growth as of 2015–17.
• Pakistan has a greater proportion of urban population than India
• The area suitable for cultivation in China is relatively small due to topographic and climatic conditions.
• Only around 10% of China's total land area is suitable for cultivation.
• The total cultivable area in China accounts for 40% of the cultivable area in India.
• More than 80% of people in China were dependent on farming as their sole livelihood until the 1980s.
• The government encouraged people to pursue other activities.
• 26% of China's workforce was engaged in agriculture contributing 7% to the GVA in 2018–19.
• The agriculture's contribution to GVA in India and Pakistan were 16% and 24%, respectively.
• India has a higher proportion of workforce works than agriculture.
• 41% of people in Pakistan work in agriculture.
• 43% of India's workforce is in agriculture.
• 24% of Pakistan's workforce is in industry producing 19% of GVA.
• 25% of India's workforce produces 30% of its GVA.
• Industries contributed 41% to GVA in China and employ 28% of the workforce.
• The service sector contributes the highest share of GVA in all three countries.
• Countries first shift employment/output from agriculture to industry then to services.
• It is happening in China and the workforce engaged in industry in India and Pakistan were low.
• 25 per cent of India's workforce and 24% of Pakistan's workforce were engaged in industry.
• Industries contribute 30% to GVA in India and 19% in Pakistan.
• The shift is taking place directly in these countries to the service sector.
• The service sector is a major player in development for all three countries.
• If one looks at the proportion of the workforce in the 1980s, there was faster shift to service sector in Pakistan as opposed to in India and China.

Trends in Output Growth

• Output growth rates declined for India and Pakistan.
• China was able to maintain the growth rate of its service sector from 1980–1990.
• There was positive and increasing growth in India's service sector output.
• Growth in China is driven by manufacturing/service sectors while India’s is driven by service sector.
• Pakistan has shown deceleration in all three sectors.

Indicators of Human Development

• China is ahead of India and Pakistan for income, poverty, health, mortality, access to sanitation, literacy, and life expectancy.
• China and Pakistan are ahead of India in reducing the proportion of people below the poverty line and sanitation performance.
• India and Pakistan have not been able to save women from maternal mortality.
• China has 29 deaths per lakh births while India and Pakistan have 133 and 140 deaths respectively.
• All three countries report providing improved drinking water sources.
• China has the smallest share of poor among the three countries.
• Problems can occur by using the provided human development indicators.
• Along with these, liberty indicators are also needed.
• One liberty indicator is the extent of democratic participation.
• Obvious liberty indicators like measures of Constitutional protection and the Independence of the Judiciary have not been introduced.
• Human development index may be incomplete and limited without including liberty indicators.

Development Strategies - An Appraisal

• Developmental strategies can be models for guidance.
• Learning from economic performance requires understanding successes, failures, and distinguishing phases.
• Reforms were initiated in China in 1978, Pakistan in 1988, India in 1991.
• China did not have compulsion to introduce reforms.
• China's leadership wasn't happy with the slow modernization under Maoist rule, economic development on decentralization, self-sufficiency, and rejected foreign technology/capital.
• Infrastructural establishment, land reforms, decentralized planning, and small enterprises improved social/income indicators.
• There had already been basic health services extension, more equitable food grain distribution through the commune system before reforms.
• Each reform measure was first implemented at smaller level then extended.
• Experimentation under decentralised government assessed economic, social, and political costs.
• Handing over land cultivation plots brought prosperity and created conditions for rapid growth in rural industries.
• Reform processes led to worsening conditions for Pakistan.
• The growth rate of the GDP of sectoral conditions is unimproved versus the 1980s.
• Though the international poverty line data for Pakistan is healthy, scholars indicate rising poverty there.
• The slowdown of growth has caused poverty to return in Pakistan's economy.
• Reasons are that agricultural growth and food supply rely on good harvests, not institutionalized technical change.
• The economy was in good condition, economic indicators showed stagnation or negative trends when there was no good harvest.
• India borrowed from IMF and World Bank to set right its balance of payments crisis, foreign exchange is an essential component.

Conclusion

• India, China, and Pakistan have traveled seven decades of developmental change.
• All were maintaining the same level of low development until the late 1970s.
• The last three decades have led the countries to different levels.
• India has democratic institutions performed by majority of people still depend on agriculture.
• India has developing infrastructure and improving the standard of living.
• Political instability and dependance on remittances are reasons for the Pakistan economy’s slowdown with agriculture sector.
• Pakistan has been having moderate recovery over the last five years.
• In China, the lack of political freedom and its implications for human rights are major concerns.
• The Chinese used the market economy while maintaining political commitment raising the level of growth as well as alleviation of poverty.
• Public sector enterprises are privatized unlike China which uses the market mechanism to create additional social/economic opportunities.
• There social security has be ensured in China and public intervention in social infrastructure has had positive human development indicators.

Recap

• Developing countries understand each other since globalization competition developed nations.
• India and China and Pakistan have similar physical endowments.
• India, Pakistan and China follow the similar pattern of development implemented quite differential.
• Developmental indicators were about the same till the eighties for China, Pakistan and India.
• Reforms had been launched 1878 , 1988 and 1991.
• China made initiative for structural forms while India, Pakistan were forced.
• One in a countries children have arrested measures which has population different than India.
• Dependency is greater in India but is till the dependency to countries.
• Sectors like industry and Pakistan gradually from agricultural have been classical but India have shifted to service sector
• GDP capita are maintained mainly as industry growth.
• Human development indicators are high because of the stragtegies.
• India and Paksitan have human development, in the long run.
• Liberty indicators have to be implemented well.