8/14/2019 GBE Term Paper Presentation
1/20
8/14/2019 GBE Term Paper Presentation
2/20
GBE Term Paper Presentation
Contents
Part I : Birds Eye vie
wPart II : How are the two giantsemerging?
Part III : Going backward to forward
Part IV : Who scores where?
Part V : Conclusions
Part VI : References
8/14/2019 GBE Term Paper Presentation
3/20
GBE Term Paper Presentation
Part I: Birds eye view
Economic indicators
INDIA CHINA
Gross Domestic Product $1.17 trillion $ 6.9 trillion
GDP growth rate 9.1% 11.9%
Population (m) 1,123 1,319
Population growth (annual) 1,2% 0,6%
Inflation 4,3% 5,2%
Export of goods andservices (% of GDP)
Over 40% 21%
Imports of goods andservices (% of GDP)
24% Over 30%
Source:World Development Indicators database, 2008
8/14/2019 GBE Term Paper Presentation
4/20
8/14/2019 GBE Term Paper Presentation
5/20
GBE Term Paper Presentation
ContdThe added va
lue 199022%1990
46%
199032%
2007
29%
2007
53%
2007
18%
India: Composition of GDP
Industry Services Agriculture
Source:Internal elaboration on World Development Indicators database,September 2008
8/14/2019 GBE Term Paper Presentation
6/20
GBE T P P i
8/14/2019 GBE Term Paper Presentation
7/20
GBE Term Paper Presentation
ContdForeign Trade
Export of Goods and Services as % of G0
5
10
15
20
2530
35
40
45
50
2000 2005 2007 2008
CHINA
INDIA
China has been a moreexports dominanteconomy as comparedto India with exports as
high as 40% of ChinasGDP as compared to22% for India in 2007.
Source:www.worldbank.org
GBE T P P t ti
8/14/2019 GBE Term Paper Presentation
8/20
GBE Term Paper Presentationar : ow are e wo g an semerging?
India as back office of the world
FACTORS RELATED AND SUPPORTING INDISTRIES
High profile human resources High R&D investments and capabilities
Skilled labour software R&D Centres/Labs andsoftware training institutes
High level infrastructure, (Reliable/satellitetelecommunication) availability of fastDigital telecommunication links
telecom, power and roads
High technological internal resources IT parks (Bangalore, Hyderabad, Chennai, Pune,Gurgaon)
GBE T P P t ti
8/14/2019 GBE Term Paper Presentation
9/20
GBE Term Paper Presentation
ContdChina as the work shop of the world
FACTORS DEMAND
Unskilled and low cost labour Internal demand(State Owned industries)
Basic industrial infrastructure External demand(exportation)
Cheap raw materials Demand of labor intensive production
Externalsource of technology
Dependent on foreign technology
GBE T P P t ti
8/14/2019 GBE Term Paper Presentation
10/20
GBE Term Paper Presentation
ContdIndia vs China remarks
INDIA
Focus on services
Lower GDP per capita
Strong corporate governanceStrong corporate governancestandardsstandards
Advanced institutional infrastructureAdvanced institutional infrastructure
Commercially-driven companiesCommercially-driven companies
CHINA
Focus on industry
GDP per capitaGDP per capita two times higher thanIndias (in USD PPP terms).
Lack of advanced institutionalinfrastructure and corporategovernance
Indifference towards oil pricesIndifference towards oil pricesfluctuationsfluctuations
Global economic integration throughinternational trade and investments
GBE T P P t ti
8/14/2019 GBE Term Paper Presentation
11/20
GBE Term Paper Presentationar : o ng ac war oforward
Development in strategic terms
INDIA CHINA
Poverty Low level of education
Poor knowledge of the industry dynamics Poor living conditions
Low level of resources Low level of resources
Bad physical infrastructures Low level of institutional infrastructuresand corporate governance
Inadequate supplies of capital Skilled labour necessity
Late process of modernisation Technological capacity
SOME DISADVANTAGES OF BEING BACKWARDCOUNTRIES
GBE Term Paper Presentation
8/14/2019 GBE Term Paper Presentation
12/20
GBE Term Paper Presentation
ContdRole of the government
INDIA before CHINA before
Semi-socialist autarkic economy Socialist economic system
High protection State monopoly of the foreign tradesystem
Difficulty to set up a new business State-owned domestic enterprises
Foreign investment not welcomed Strict control
INDIA now CHINA now
State planning through 5Year Plan 3Step Development Strategy
Mixed economy Reduced control on economy
Reduced control on foreign trade andinvestment
Government supervision through indirectguidance of a more dynamic economy
Privatization trend Many institutions to control and supervise(People's Bank of China, National Development and
Reform Commission, Ministry of Finance)
GBE Term Paper Presentation
8/14/2019 GBE Term Paper Presentation
13/20
GBE Term Paper Presentation
Part IV: Who scores where?
India China
Referred as The back office of the worldThe technology lab of the world
The workshop of the worldThe factory of the world
DevelopmentStrategy
Homegrown entrepreneurship. Foreign Direct Investment (FDI)
Development
approach
From the ground up. Top-down approach
FDI status Medium Extensive
Domestic firmsenvironment
Nurturing environment fordomestic firms supported bystronger infrastructure thatallows enterprises to flourish.
Restricted environment with manyobstacles for private domestic firms,preventing them from challengingstate-owned enterprises.
Legal System Advanced and decent legalsystem, that provides ownershipprotection for private domesticenterprises.
Unfair & inconsistent legal systemwith low political status. Domesticprivate enterprises are discriminatedagainst several policies andregulations.
GBE Term Paper Presentation
8/14/2019 GBE Term Paper Presentation
14/20
GBE Term Paper Presentation
Contd
India China
Political system Democracy No democracy
Capital market Allows firms to obtaincapital they need to grow.Capital market operateswith greater efficiency and
transparency.
Tightly controlled capitalallocation restricting theability of private companiesto obtain stock market
listings and access themoney they need to grow.
Macro-economicfigures[Growth rate & GDP]
Low performance High performance
Micro economic level Fuller use of resourcesowned necessary for long-term growth.
Misallocation and Inefficientuse of resources dependingon FDI.
GBE Term Paper Presentation
8/14/2019 GBE Term Paper Presentation
15/20
GBE Term Paper Presentation
Published studiesLast year, the Forbes 200, an annual ranking of the worlds
best small companies, included 13 Indian firms but just 4from mainland China.
A report issued in 2000 by the Chinese Academy of SocialSciences concluded that, private and individualenterprises have a lower political status and arediscriminated against several policies and regulations.
In a recent survey of leading Asian companies by the FarEastern Economic Review (FEER), India registered a higheraverage score than any other country in the region,including China.
In a World Bank study published last year, only 52 percentof the Indian firms surveyed reported problems obtainingcapital, versus 80 percent of the Chinese companies polled.
GBE Term Paper Presentation
8/14/2019 GBE Term Paper Presentation
16/20
GBE Term Paper Presentation
ContdWho scores where?
Why
?
IfIndia has so clearly surpassed China atthe grassroots level, why isnt Indias
superiority reflected in the numbers? Whyis the gap in GDP and other benchmarks
still so wide?
8/14/2019 GBE Term Paper Presentation
17/20
8/14/2019 GBE Term Paper Presentation
18/20
GBE Term Paper Presentation
8/14/2019 GBE Term Paper Presentation
19/20
GBE Term Paper Presentation
References
Books: Dancing with giants: China, India, and the global economy, by
Alan Winters and Shahid Yousuf.
Chindia: How China and India are revolutionizing the GlobalBusiness by Pete Engardio.
Papers: Chinas Socialist Market Economy: Lessons for democratic
developing countries, by Arvind Virmani, published by PlanningCommission (Working Paper No. 5/2006 PC).
China and India: A visual Essay, Report by Deutshe Bank.
Transferring the Rebound into Recovery: Published by WorldBank, November 2009.
Websites: www.worldbank.org
www.planningcommission.gov.in
www.imf.org
GBE Term Paper Presentation
8/14/2019 GBE Term Paper Presentation
20/20
GBE Term Paper Presentation
Kapil
Top Related