India, China and Pakistan: A comparison

• Unit IV concerns India's development experiences in comparison with its neighbors
• Focus is on Pakistan and China

Introduction

• In a globalized world, understanding neighbors' development strategies is crucial, especially for developing countries sharing limited economic space
• Comparing developmental strategies helps countries understand their strengths and weaknesses
• Developing countries face competition from both developed nations and each other

Comparative Development

• Understanding neighboring economies is essential due to the significant impact of regional activities on overall human development in a shared environment.
• India, Pakistan, and China began planning development strategies 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 its Medium Term Development Plan in 1956
• China announced its First Five Year Plan in 1953
• Since 2018, Pakistan is working on its 12th Five Year Development Plan (2018-23)
• China is working on its 14th Five Year Plan (2021-25)
• Until March 2017, India followed a Five Year Plan-based development model
• India and Pakistan adopted similar strategies, including creating a large public sector and increasing public expenditure on social development
• Until the 1980s, these countries had similar growth rates and per capita incomes

China's Economic Shift

• After the establishment of the People's Republic of China, all critical sectors, enterprises, and lands were brought under government control
• The Great Leap Forward (GLF) campaign, initiated in 1958, aimed to industrialize the country rapidly
• People were encouraged to establish local industries, mainly in rural areas
• China reforms were introduced in phases, beginning in 1978
• The initial phase focused on agriculture, foreign trade, and investment sectors
• Communes were divided into small plots allocated to individual households for use, not ownership, and households could keep income after taxes
• Later reforms targeted the industrial sector, allowing private sector firms and local collectives to produce goods
• State-Owned Enterprises (SOEs) were made to face market competition
• The reform involved dual pricing
• Special Economic Zones were established to attract foreign investors

Pakistan’s Economic Strategy

• Pakistan also follows a mixed economy model with public and private sectors
• In the late 1950s and 1960s, Pakistan introduced a regulated policy framework that focused on import substitution-based industrialization
• Green Revolution implementation led to mechanization and increased public investment in select areas, boosting foodgrain production and changing the agricultural structure
• Nationalization of capital goods industries took place in the 1970s
• Policy shifted in the late 1970s and 1980s toward denationalization and private sector encouragement
• Pakistan received financial support from Western nations and remittances from overseas workers

Demographic Indicators

• Demographically, India and China each hold about one-sixth of the world's population
• Pakistan's population is about one-tenth that of China or India
• China has the lowest population density among the three nations
• Fertility rate is low in China and very high in Pakistan
• Pakistan has the highest rate of population growth, followed by India and China
• China is highly urbanized, with 59% of its people living in urban areas

Gross Domestic Product and Sectors

• China has the second-largest GDP (PPP) globally, at $22.5 trillion
• India's GDP (PPP) is $9.03 trillion
• Pakistan's GDP is $0.94 trillion or about 11% of India's GDP
• India's GDP is about 41% of China's GDP
• While many developed countries struggled to maintain even 5% growth, China sustained near double-digit growth during the 1980s
• All three countries have the service sector as the largest contributor to share of GVA
• Economic development normally progresses from agriculture to industry to services
• With service sectors growing countries are shifting their workforce to to service sector

Output Growth

• In the 1980s, China maintained its growth rate in the service sector
• India experienced a positive and increasing growth in service sector output
• China's growth is attributed to the manufacturing and service sectors
• India's growth is attributable to the service sector
• Pakistan has slowed down in all three sectors
• China is moving ahead of India and Pakistan in many indicators
• Income indicator such as GDP, proportion of population below povery is among most telling
• With fewer mortality rates, enhanced access to sanitation, improved literacy, and better life expectancy, China had strong numbers compared to neighbours

Development Strategies Appraisal

• Development strategies are often seen as models for other countries
• Reforms were initiated in China in 1978, Pakistan in 1988, and India in 1991
• The new leadership in China was not satisfied with the slow pace of growth and lack of modernization under Maoist rule
• Maoist vision of economic development had failed despite land reforms and collectivization
• Establishing infrastructure in education, health, and land reforms helped improve social and income indicators in the post-reform period
• Each reform measure was first implemented on a small scale and then expanded
• Scholars say that the reform process in Pakistan led to a worsening of all economic indicators
• Pakistan’s growth slowed and poverty re-emerged because agricultural growth and food supply were based on good harvests rather than on an institutionalized process