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Lecture 2

Week 23 (Mar 25) - Nuclear S Asia and India-China comparison.docx

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University of Toronto St. George
Political Science
Professor Kanta Murali

Week 23 – Nuclear South Asia and the India-China economic comparison March 25, 2013 Agenda -India and China -how do the two countries compare in terms of development indicators? -only at the broad superficial level can these two countries be compared -political implications of varied economic patterns -democracy, authoritarianism, and development -does regime type affect economic development? -Nuclear South Asia -background -nuclear weapons and stability in South Asia Comparing India and China -per capita GDP levels -during colonial era – not much diff between the two -increasing gap between the per capita income of the two – China has experienced higher growth in recent decades Regime type and growth -do you think democracy constrains or fosters growth? In what ways might democracy be linked to growth? Different economic patterns -composition of various sectors to GDP -differences in share of industry and manufacturing -india’s missing middle of manufacturing -the manufacturing that it does have tends to be more capital intensive -China – model based on law-wage manufacturing -aging population plus a one-child policy -India – a younger population -question of how to integrate this younger population – can enough jobs be created? -differences in infrastructure -external orientation of the economy -share of trade and exports -role of domestic capital and FDI (foreign direct investment) -differences in human development indicators (China far ahead) -greater policy priority given to human education and health in China compared to India -India spends a lot less on education and health External orientation of the economy -both countries have tremendously large internal markets -China has a greater dependence on external exports -although India has become increasingly dependent on exports in recent years Role of foreign direct investment -until the 1990s – India one of the most closed economies reg. FDI -in the 1990s – allowed FDI very gradually Week 23 – Nuclear South Asia and the India-China economic comparison March 25, 2013 Domestic capital, politics and economic growth -different models -FDI vs. role of domestic capital -different levels of dynamism of the private sector -growing role of business in Indian politics -links to policy -the gradual opening to FDI -debate on how differing role of domestic entrepreneurship will affect future prospects -Huang and Khanna – according to prof these guys are far more bullish on India than is probably warranted -evidence of crony capitalism in both countries Poverty -Inequality -important to recognize that regional inequalities do have political consequences -can Indian federalism address these regional inequalities better? -India has much greater poverty than China Human development Achievements -China’s infant mortality rate has fallen considerably -India’s is declining but still much higher than China’s -literacy rate (over 90% in china compared to 60% in India) -china has placed a far greater priority on human development -contrary to theoretical assumptions – that democracy should be more concerned about the poor/the people -in India its even more puzzling b/c in india the poor vote in the greatest numbers Summarizing key distinctions -growth transformation and poverty reduction -differential rates of change – China’s rate of growth has been much higher (change of a greater intensity) -varied patterns of change -sector-wise contributions to GDP -trade and FDI -role of domestic capital -changing demography -human development indicators -growing inequality in both Economic change and political conditions -economic change under different political and institutional conditions -democratic politics -other institutions – rule of law, property rights -some scholars claim differences in ethnic diversity matter -varied pace and implementation of economic reforms -links to the nature of the political system -India’s process – two steps forward…one step back (Gradual, reversals etc) Week 23 – Nuclear South Asia and the India-China economic comparison March 25, 2013 -China has been
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