Introduction: Comparing Development Experiences

Over the last two decades, globalisation has significantly transformed economies worldwide, creating both opportunities and challenges for countries like India. To navigate this new landscape, nations are forming regional and global economic groups such as SAARC, European Union, ASEAN, G-20, and BRICS to strengthen their domestic economies.

In this context, it has become essential for developing countries to understand the developmental processes of their neighbours. This allows them to comprehend their own strengths and weaknesses, especially as they compete for a limited economic space. This chapter focuses on a comparative study of the developmental strategies of India and its two largest neighbours: Pakistan and China.

It is important to acknowledge the fundamental differences in their political systems:

• India: The world's largest democracy with a secular and liberal Constitution.
• Pakistan: A nation with a history of a militarist political power structure.
• China: A command economy under one-party rule that has recently moved towards more liberal economic restructuring.

Despite these differences, a comparative analysis provides valuable lessons for overall human development in a shared regional environment.

Developmental Paths: A Snapshot View

Similar Beginnings

India, Pakistan, and China share many similarities in their developmental journeys. All three nations embarked on their developmental paths at roughly the same time.

• India and Pakistan gained independence in 1947.
• The People's Republic of China was established in 1949.

All three countries started planning their development strategies in a similar fashion, adopting the Five Year Plan model:

• India announced its first Five Year Plan for 1951–56.
• China announced its First Five Year Plan in 1953.
• Pakistan announced its first plan, the Medium Term Development Plan, in 1956.

Until the 1980s, India and Pakistan adopted similar strategies, such as creating a large public sector and raising public expenditure on social development. As a result, all three countries had similar growth rates and per capita incomes during that period.

---

China's Path

The Maoist Era (1949-1976)

After its establishment, the People's Republic of China, under one-party rule, brought all critical sectors of the economy, including enterprises and land, under government control.

• The Great Leap Forward (GLF): Initiated in 1958, this campaign aimed at rapid industrialisation on a massive scale. People were encouraged to set up industries in their backyards. In rural areas, communes were started, where people collectively cultivated lands. By 1958, 26,000 communes covered almost the entire farm population. However, the GLF campaign met with severe problems, including a devastating drought that killed about 30 million people, and the withdrawal of Russian professionals who were helping with industrialisation.
• The Great Proletarian Cultural Revolution (1966–76): Introduced by Mao Zedong, this movement involved sending students and professionals to the countryside to work and learn from the rural populace.

Economic Reforms (Post-1978)

The fast industrial growth seen in China today is a result of the reforms introduced in 1978. These reforms were implemented in phases:

• Initial Phase: Reforms were initiated in agriculture, foreign trade, and investment. In agriculture, commune lands were divided into small plots and allocated to individual households for use (not ownership). They could keep all income after paying taxes.
• Later Phase: Reforms were extended to the industrial sector. Private firms and Township and Village Enterprises (TVEs) were allowed to produce goods. State Owned Enterprises (SOEs), equivalent to India's PSUs, were made to face competition.
• Dual Pricing: A dual pricing mechanism was introduced where farmers and industrial units had to buy and sell fixed quantities of inputs/outputs at government-fixed prices, while the rest could be transacted at market prices.
• Special Economic Zones (SEZs): To attract foreign investors, SEZs were set up.

---

Pakistan's Path

Pakistan's economic policies show many similarities to India's. It follows a mixed economy model with co-existence of public and private sectors.

• 1950s and 1960s: Pakistan adopted a regulated policy framework focused on import-substitution industrialisation, using tariff protection and import controls. The Green Revolution led to mechanisation and increased food grain production.
• 1970s: A policy of nationalisation of capital goods industries was pursued.
• Late 1970s and 1980s: The policy shifted towards denationalisation and encouragement of the private sector. During this period, Pakistan received significant financial support from western nations and large remittances from its emigrants in the Middle East, which helped stimulate economic growth.
• 1988 onwards: Major economic reforms were initiated in the country.

A Comparative Look at Demographic Indicators

India and China are the two most populous countries in the world, with every one in six people on the planet being either Indian or Chinese. Pakistan's population is significantly smaller, at about one-tenth of either India or China.

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	1.7	59
Pakistan	212	2.05	275	943	3.6	37

Analysis of Demographic Trends

• Population Growth: Pakistan has the highest population growth rate (2.05%), while China has the lowest (0.46%). China's low growth is attributed to its strict one-child norm introduced in the late 1970s. This policy, however, led to a skewed sex ratio and an ageing population, prompting China to later allow couples to have two children.
• Sex Ratio: The sex ratio (females per 1000 males) is low and biased against females in all three countries, reflecting a strong "son preference" in the societies.
• Fertility Rate: China has a low fertility rate (1.7), while Pakistan's is very high (3.6).
• Urbanisation: China is highly urbanised (59%), followed by Pakistan (37%) and India (34%).

Comparing GDP and Sectoral Contribution

Gross Domestic Product (GDP)

China's GDP growth has been a major topic of global discussion. It has the world's second-largest GDP (PPP) at $22.5 trillion. In comparison, India's GDP (PPP) is $9.03 trillion (about 41% of China's), and Pakistan's GDP (PPP) is $0.94 trillion (about 11% of India's).

Country	1980–90	2015–2017
India	5.7	7.3
China	10.3	6.8
Pakistan	6.3	5.3

In the 1980s, China maintained a near double-digit growth rate, and Pakistan's growth rate was ahead of India's. By 2015-17, India's growth rate had seen a moderate increase, while those of Pakistan and China had declined.

---

Sectoral Contribution to GVA and Employment (2018-19)

The contribution of different sectors (Agriculture, Industry, Services) to the Gross Value Added (GVA) and their share in employment reveals the structural composition of the economies.

Sector	Contribution to GVA			Distribution of Workforce
	India	China	Pakistan	India	China	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

Analysis of Sectoral Trends

• In a normal development path, a country shifts from agriculture to industry, and then to services. This is evident in China, where the industry and services sectors are now the major contributors to both GVA and employment.
• In India and Pakistan, the workforce remains heavily dependent on agriculture (43% and 41% respectively), but the economic shift has happened directly to the service sector, which contributes the highest share of GVA (54% in India, 57% in Pakistan).
• China's growth has been contributed by both the manufacturing and service sectors, while India's growth has been primarily service-sector driven. Pakistan has shown a deceleration in all three sectors in recent times.

Human Development Indicators: A Comparative Analysis

Human Development Indicators provide a broader measure of welfare beyond just economic growth. A comparison shows China moving ahead of both India and Pakistan in most areas.

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 (%)	6.5	8.1	5.2
Gross National Income per capita (PPP US$)	6,681	16,057	5,005
People 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 basic Sanitation (%)	60	75	60
Population using basic drinking Water (%)	93	96	91
Undernourished Children (%)	37.9	8.1	37.6

Note: * for 2011; ** for 2015.

Key Observations

• China outperforms India and Pakistan on almost all indicators, including HDI rank, life expectancy, GNI per capita, and poverty reduction.
• India and Pakistan still struggle with high maternal mortality rates.
• A very high proportion of children in India and Pakistan are undernourished (around 38%), compared to only 8% in China.
• A critical point to note is that the HDI does not include 'liberty indicators', such as constitutional protection of citizens' rights or the independence of the judiciary. Without these, the index may be considered incomplete.

An Appraisal of Development Strategies

China's Reform Success

China introduced its reforms in 1978 not due to external compulsion from institutions like the World Bank or IMF, but because its new leadership was unhappy with the slow pace of growth and lack of modernisation under Maoist rule. The Maoist vision of self-sufficiency and shunning foreign technology had failed to deliver growth.

Factors that contributed to the success of China's post-reform period include:

• Pre-reform Foundations: Establishment of infrastructure in education and health, land reforms, and decentralised planning before 1978 created a strong base.
• Phased Implementation: Each reform measure was first implemented on a small scale, and its success or failure was assessed before extending it massively. This experimentation under decentralised government minimised risks.
• Agricultural Reforms: Handing over plots of land to individuals for cultivation brought prosperity to a vast number of poor people, creating a strong support base for further reforms.

---

Pakistan's Challenges

In Pakistan, the reform process led to a worsening of many economic indicators. Scholars attribute the slowdown of growth and the re-emergence of poverty to several factors:

• Dependence on Agriculture: Pakistan's growth was often based on good harvests rather than on an institutionalised process of technical change.
• Volatile Foreign Exchange: Most foreign exchange earnings came from remittances from workers in the Middle East and the export of volatile agricultural products, rather than sustainable manufactured exports.
• Growing Debt: There was a growing dependence on foreign loans and increasing difficulty in repaying them.
• Political Instability: Long periods of political instability hampered consistent economic policy.

However, in the last few years, Pakistan has shown signs of economic recovery with macroeconomic indicators showing stable and positive trends.

---

Conclusion: Lessons from Neighbours

After seven decades, the three countries are at very different levels of development. India, with its democratic institutions, has performed moderately, but a majority of its people still depend on agriculture. Pakistan's economy has been hampered by political instability and over-dependence on remittances and foreign aid.

In contrast, China has achieved remarkable success. Despite a lack of political freedom, it used the 'market system without losing political commitment'. Key lessons from China's experience include:

• The importance of public intervention in providing social infrastructure (health and education) even before reforms.
• Retaining collective ownership of land while allowing individual cultivation ensured social security in rural areas.
• China used the market mechanism to 'create additional social and economic opportunities' rather than just privatising public enterprises, a path different from that of India and Pakistan.

Answer:

Answer:

Answer:

Answer:

Answer:

Answer:

Answer:

Answer:

Answer:

Answer:

Answer:

Answer:

Answer:

Answer:

Answer:

Answer:

Answer:

Multiple Choice Questions

Short Answer Type Questions

Long Answer Type Questions