| Latest Economics NCERT Notes, Solutions and Extra Q & A (Class 9th to 12th) | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 9th | 10th | 11th | 12th | ||||||||||||||||
chapter 8 Comparative Development Experiences Of India And Its Neighbours
This chapter undertakes a comparative analysis of the development experiences of India and its two largest neighboring economies, China and Pakistan. It examines their distinct developmental strategies, evaluates their performance based on key economic and human development indicators, and explores the factors that contributed to their successes and failures. Understanding the developmental paths of these neighboring countries provides valuable insights for assessing India's own strengths and weaknesses in the context of an increasingly globalized world.
Introduction
Globalization and economic transformation worldwide have significant implications for countries, including India. Nations are striving to strengthen their economies, forming regional and global economic blocs like SAARC, EU, ASEAN, G-20, and BRICS. Understanding neighboring economies is crucial for assessing one's own position and navigating competition in the global economic space. Comparing developmental processes in the neighborhood is particularly important for developing countries.
Developmental Path—a Snapshot View
India, Pakistan, and China share similarities in their developmental approaches. All three countries began their developmental journeys around the same time – India and Pakistan gaining independence in 1947, and the People's Republic of China established in 1949. All three also adopted central planning as a key strategy.
Similarities In Developmental Strategies
India's first Five Year Plan (1951–56), Pakistan's first (1956), and China's first (1953) marked the beginning of planned development. India and Pakistan adopted similar strategies focusing on a large public sector and social development expenditure. Until the 1980s, their growth rates and per capita incomes were also comparable. China has been following Five Year Plans since 1953, while India followed them until 2017 and Pakistan until 2023 with Medium Term Development Plans.
China
After 1949, China's economy was brought under government control under one-party rule. The Great Leap Forward (GLF) campaign in 1958 aimed for massive industrialization (setting up backyard industries) and introduced the Commune system (collective farming). The GLF faced setbacks due to drought and the withdrawal of Soviet professionals. Mao's Great Proletarian Cultural Revolution (1966–76) sent students and professionals to rural areas for practical learning.
China's rapid industrial growth began after the reforms introduced in 1978. These reforms were phased, starting with agriculture (dividing commune lands for individual use while maintaining collective ownership) and foreign trade/investment. Later, industrial reforms were introduced, allowing private sector firms and township/village enterprises to operate. State-Owned Enterprises (SOEs) were exposed to competition. Dual pricing was introduced, with some inputs/outputs at government-fixed prices and others at market prices. Special economic zones were established to attract foreign investment.
Pakistan
Pakistan's economic policies share many similarities with India, including adopting a mixed economy. In the late 1950s and 1960s, Pakistan implemented a regulated policy framework focused on import substitution for industrialization, combining tariff protection with import controls. The Green Revolution led to mechanization and increased public investment in infrastructure in certain areas, boosting food grain production and changing the agrarian structure. In the 1970s, Pakistan nationalized capital goods industries but shifted towards denationalization and private sector encouragement in the late 1970s and 1980s. Pakistan also benefited from financial aid from Western nations and remittances from emigrants in the Middle East, stimulating growth. Reforms were initiated in Pakistan in 1988.
Demographic Indicators
Comparing demographic indicators provides insights into the population characteristics of India, China, and Pakistan. These three countries together account for a significant portion of the world's population.
Population Comparison
India and China have large populations, each about ten times that of Pakistan. China is geographically larger but has a lower population density than India and Pakistan.
Population Growth
Pakistan has the highest population growth rate, followed by India, and then China (Table 8.1). China's low growth is mainly due to its one-child norm introduced in the late 1970s, although this policy has had implications for its sex ratio.
Select Demographic Indicators, 2017-18:
| Country | Estimated Population (in million) | Annual Growth of Population (%) | Density (per sq. km) | Sex Ratio | Fertility Rate | Urbanisation (%) |
|---|---|---|---|---|---|---|
| India | 1352 | 1.03 | 455 | 924 | 2.2 | 34 |
| China | 1393 | 0.46 | 148 | 949 | 2.2 | 59 |
| Pakistan | 212 | 2.05 | 275 | 943 | 3.6 | 37 |
Note: Fertility Rate for China is listed as 1.7 in the table in the text, but World Bank data for 2018 shows 1.7. The table data is copied as provided in the text.
Sex Ratio
The sex ratio (females per 1000 males) is low and biased against females in all three countries, often attributed to son preference. Recent measures are being adopted to address this. China's one-child norm also led to a decline in sex ratio, which has implications for its future demographic structure (more elderly people). China has since relaxed the policy to allow two children per couple.
Fertility Rate
China has a low fertility rate, while Pakistan's is very high (Table 8.1).
Urbanisation
China has the highest proportion of urban population, followed by Pakistan and then India (Table 8.1).
Gross Domestic Product And Sectors
Comparing the size of economies and the contributions of different sectors reveals significant differences in their development paths.
GDP Comparison (PPP)
China has the world's second largest GDP (PPP - Purchasing Power Parity) at \$22.5 trillion, while India's is \$9.03 trillion, and Pakistan's is \$0.94 trillion (about 11% of India's GDP). India's GDP is approximately 41% of China's GDP.
Annual Growth Of GDP
China maintained near double-digit growth in the 1980s (10.3%), significantly higher than Pakistan (6.3%) and India (5.7%). However, in 2015–17, China's growth rate declined to 6.8%, Pakistan's to 5.3%, while India's rose to 7.3% (Table 8.2). Political instability and reform processes are cited as reasons for Pakistan's declining growth.
Annual Growth of Gross Domestic Product (%), 1980–2017:
| Country | 1980–90 | 2015–2017 |
|---|---|---|
| India | 5.7 | 7.3 |
| China | 10.3 | 6.8 |
| Pakistan | 6.3 | 5.3 |
Sectoral Contribution To GVA/GDP
Analyzing the contribution of different sectors (Agriculture, Industry, Services) to Gross Value Added (GVA) and employment reveals structural shifts (Table 8.3).
Sectoral Share of Employment and GVA (%) in 2018–2019:
| Sector | Contribution to GVA India (%) | Contribution to GVA China (%) | Contribution to GVA Pakistan (%) | Distribution of Workforce India (%) | Distribution of Workforce China (%) | Distribution of Workforce Pakistan (%) |
|---|---|---|---|---|---|---|
| Agriculture | 16 | 7 | 24 | 43 | 26 | 41 |
| Industry | 30 | 41 | 19 | 25 | 28 | 24 |
| Services | 54 | 52 | 57 | 32 | 46 | 35 |
| Total | 100 | 100 | 100 | 100 | 100 | 100 |
h3 class="yellowheading">Shift In Employment And Output
Typically, development involves shifting employment and output from agriculture to industry, then to services. China follows this pattern, with a declining workforce in agriculture and significant contributions from industry and services. In 2018-19, 26% of China's workforce was in agriculture, contributing 7% to GVA; industry contributed 41% and employed 28%; services contributed 52% and employed 46%.
h3 class="yellowheading">Service Sector Emerging As Major Player
In India and Pakistan, the shift is occurring directly from agriculture to the service sector. In 2018-19, India had 43% of workforce in agriculture (16% GVA), 25% in industry (30% GVA), and 32% in services (54% GVA). Pakistan had 41% in agriculture (24% GVA), 24% in industry (19% GVA), and 35% in services (57% GVA).
The service sector is increasingly important for development and employment in all three countries. In the 1980s, service sector employment was lower in India and China compared to Pakistan, but by 2019, China led with 46%, followed by Pakistan (35%) and India (32%).
Trends in Output Growth in Different Sectors, 1980–2015:
| Country | Agriculture 1980–90 (%) | Industry 1980–90 (%) | Service 1980–90 (%) | Agriculture 2014–18 (%) | Industry 2014–18 (%) | Service 2014–18 (%) |
|---|---|---|---|---|---|---|
| India | 3.1 | 7.4 | 6.9 | 3.1 | 6.9 | 7.6 |
| China | 5.9 | 10.8 | 13.5 | 3.1 | 5.3 | 7.1 |
| Pakistan | 4 | 7.7 | 6.8 | 1.7 | 4.8 | 5.0 |
h3 class="yellowheading">Growth Of Agriculture Sector Declined
Growth in the agriculture sector has declined in all three countries in recent decades.
h3 class="yellowheading">China's Growth Contributed By Manufacturing And Service Sectors
China's growth is fueled by both manufacturing and services.
h3 class="yellowheading">India's Growth Contributed By Service Sector
India's growth is primarily driven by the service sector.
h3 class="yellowheading">Pakistan's Deceleration In All Three Sectors
Pakistan has seen a slowdown in growth across all three major sectors in recent years.
Indicators Of Human Development
Comparing human development indicators provides a broader perspective beyond economic growth, reflecting the well-being of the population.
h3 class="yellowheading">Comparison On Select Indicators
Examining indicators like HDI, life expectancy, schooling, income, poverty, and mortality rates reveals differences in human development outcomes (Table 8.5).
Some Selected Indicators of Human Development, 2017-2019:
| Item | India | China | Pakistan |
|---|---|---|---|
| Human Development Index (Value) | 0.645 | 0.761 | 0.557 |
| Rank (based on HDI) | 130 | 87 | 154 |
| Life Expectancy at Birth (years) | 69.7 | 76.9 | 67.3 |
| Mean years of Schooling (% aged 15 and above) | 6.5 | 8.1 | 5.2 |
| Gross National Income per capita (PPP US$) | 6,681 | 16,057 | 5,005 |
| Percentage of People living Below Poverty Line (National) | 21.9* | 1.7** | 24.3* |
| Infant Mortality Rate (per 1000 live births) | 29.9 | 7.4 | 57.2 |
| Maternal Mortality Rate (per 1 lakh births) | 133 | 29 | 140 |
| Population using at least basic Sanitation (%) | 60 | 75 | 60 |
| Population using at least basic drinking Water Source (%) | 93 | 96 | 91 |
| Percentage of Undernourished Children | 37.9 | 8.1 | 37.6 |
Note: * for the year 2011; ** for the years 2015. Table data is copied as provided in the text.
h3 class="yellowheading">China Moving Ahead
China is ahead of India and Pakistan on many human development indicators, including GDP per capita, poverty reduction, health indicators (mortality rates, life expectancy), literacy, and access to sanitation. China has a significantly lower infant mortality rate and maternal mortality rate compared to India and Pakistan. China also has the smallest share of poor people.
h3 class="yellowheading">India And Pakistan Lagging In Maternal Mortality And Sanitation
India and Pakistan face challenges in reducing maternal mortality and improving sanitation compared to China.
h3 class="yellowheading">Access To Drinking Water Sources
All three countries report high proportions of the population with access to improved drinking water sources.
h3 class="yellowheading">China Has Smallest Share Of Poor
China has made significant progress in poverty reduction.
h3 class="yellowheading">Problem With Human Development Indicators (Liberty Indicators)
A limitation of current human development indices is the lack of sufficient weight given to **liberty indicators**, such as the extent of democratic participation, constitutional protection of citizen rights, independence of the judiciary, and the rule of law. Without these, the index provides an incomplete picture of human development.
Development Strategies — An Appraisal
Understanding the developmental strategies of neighboring countries, particularly their successes and failures, can offer valuable lessons. Comparing their paths, especially since the initiation of reforms (China 1978, Pakistan 1988, India 1991), provides insights.
h3 class="yellowheading">Developmental Strategies As A Model
Countries often look to others' development paths for guidance.
h3 class="yellowheading">Understanding Roots Of Successes And Failures
Analyzing the reasons behind development outcomes is crucial.
h3 class="yellowheading">Distinguishing Between Phases
Comparing pre- and post-reform periods is important.
h3 class="yellowheading">Initiation Of Reforms As Point Of Reference
The timing of reforms provides a basis for comparison.
h3 class="yellowheading">Achievements And Failures In Pre- And Post-reform Periods
Assessing outcomes before and after reforms.
h3 class="yellowheading">Why Did China Introduce Structural Reforms?
China initiated reforms not due to external compulsion but because its leadership was dissatisfied with the slow pace of growth and lack of modernization under the previous policies, which they felt had failed to improve living standards and achieve modernization.
h3 class="yellowheading">Maoist Vision Failed
Policies based on decentralization, self-sufficiency, and shunning foreign engagement did not deliver desired economic results, as per capita grain output stagnated.
h3 class="yellowheading">Infrastructure Establishment And Social Indicators Improvement
Prior investments in education and health infrastructure, land reforms, decentralization, and small enterprises positively impacted social and income indicators post-reforms.
h3 class="yellowheading">Massive Extension Of Basic Health Services
Significant progress in healthcare prior to reforms.
h3 class="yellowheading">Equitable Distribution Of Food Grains Through Commune System
The collective system initially ensured some level of food security.
h3 class="yellowheading">Reform Measure Implementation
China's approach involved phased implementation and experimentation.
h3 class="yellowheading">Reforms In Agriculture Brought Prosperity
Giving cultivation rights to individuals in agriculture boosted productivity and created conditions for rural industrial growth.
h3 class="yellowheading">Scholars Quote Examples Of Rapid Growth In China
Many studies highlight how reforms stimulated rapid growth in China.
h3 class="yellowheading">Pakistan's Reform Process Led To Worsening Indicators
In Pakistan, the reform process is linked to a decline or stagnation in economic indicators compared to the 1980s, and a re-emergence of poverty.
h3 class="yellowheading">Slowdown Of Growth And Re-emergence Of Poverty In Pakistan
Growth rates have not improved post-reforms, and poverty has resurfaced.
h3 class="yellowheading">Reasons For Slowdown And Poverty
Reasons include agricultural growth being dependent on favorable weather rather than sustained technical change, leading to volatility. Pakistan's foreign exchange earnings were heavily reliant on remittances and volatile agricultural exports, coupled with increasing dependence on foreign loans.
h3 class="yellowheading">Dependence On Good Harvest
Economic performance fluctuated with agricultural output.
h3 class="yellowheading">Borrowing From IMF And World Bank (India's Case)
India's need for external loans for balance of payments highlights the importance of sustainable foreign exchange earnings.
h3 class="yellowheading">Foreign Exchange Earnings In Pakistan
Pakistan's earnings were less stable, making it vulnerable to debt issues.
h3 class="yellowheading">Pakistan's Recovery In Recent Years
Despite past challenges, Pakistan has shown recent signs of economic recovery, with moderate growth and stabilizing macroeconomic indicators in 2017-18 and 2019-20.
Conclusion
India, China, and Pakistan have pursued different development paths over seven decades. While initially similar, they have reached different levels of development. India's democratic system has seen moderate progress, but dependence on agriculture remains high. Pakistan has faced challenges like political instability and reliance on remittances/aid, though recent trends show recovery. China's growth, despite concerns about political freedom, has been remarkable, using a market system while maintaining political control and achieving poverty alleviation. China's approach of retaining collective land ownership provided social security in rural areas, and pre-reform investments in social infrastructure contributed positively to human development outcomes.
h3 class="yellowheading">Learning From Developmental Experiences
Comparing experiences offers valuable lessons.
h3 class="yellowheading">Journey Of Seven Decades
The countries have followed distinct paths since the mid-20th century.
h3 class="yellowheading">India's Moderate Performance
India has shown steady but not rapid development compared to China.
h3 class="yellowheading">Reasons For Slowdown Of Pakistan Economy
Factors like instability, reliance on external factors, and agricultural issues contributed to Pakistan's challenges.
h3 class="yellowheading">Economic Recovery In Pakistan
Recent data indicates positive economic trends in Pakistan.
h3 class="yellowheading">Lack Of Political Freedom In China
China's political system differs significantly and raises human rights concerns.
h3 class="yellowheading">China's Use Of Market System Without Losing Political Commitment
China adopted market mechanisms while maintaining state control.
h3 class="yellowheading">Raising Growth And Alleviation Of Poverty
China has achieved rapid growth and poverty reduction.
h3 class="yellowheading">China Used Market Mechanism To Create Opportunities
Market reforms stimulated economic activities.
h3 class="yellowheading">Collective Ownership Of Land Ensured Social Security
Maintaining collective land ownership provided a safety net in rural areas.
h3 class="yellowheading">Public Intervention Prior To Reforms
Early investments in social sectors contributed to human development outcomes.
h3 class="yellowheading">Positive Results In Human Development Indicators In China
China leads in many human development indicators.
Recap
Summary of the chapter's key points:
h3 class="yellowheading">Developing Countries Keen To Understand Neighbours
Learning from neighbors is important in a globalized world.
h3 class="yellowheading">Similar Physical Endowments, Different Political Systems
India, China, and Pakistan share geographical similarities but have distinct political structures.
h3 class="yellowheading">Similar Planned Development Pattern
All three countries adopted central planning.
h3 class="yellowheading">Developmental Indicators Similar Till Early 1980s
Initial development levels were comparable.
h3 class="yellowheading">Reforms Introduced In Different Years
Reforms began in China (1978), Pakistan (1988), and India (1991).
h3 class="yellowheading">Impact Of Policy Measures Different
Policies had varied outcomes in each country (e.g., one-child norm in China).
h3 class="yellowheading">Majority Workforce Depends On Agriculture
Agriculture remains a key employer, especially in India.
h3 class="yellowheading">China Followed Classical Development Pattern
China's shift was from agriculture to industry, then services.
h3 class="yellowheading">India And Pakistan's Shift Directly To Service Sector
India and Pakistan saw a direct shift from agriculture to services.
h3 class="yellowheading">China's Industrial Sector High Growth Rate
China's industrial sector has been a major growth driver.
h3 class="yellowheading">China Ahead Of India And Pakistan On Human Development Indicators
China leads on many human development measures.
h3 class="yellowheading">Liberty Indicators To Be Considered
It is important to also consider indicators related to political freedom and rights.