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EJCE Year: 2009, June. Volume: 6 - Issue: 1

Structural Change and Economic Development in China and India

by Vittorio Valli ; Donatella Saccone

Start page: 101 - End page: 129

Keywords: economic development; structural change; fordist model of growth; China's economy; India's economy

Jel code: O11; O53; O57; P51

DOI:

Abstract:

The comparison of the periods of rapid economic growth in China since 1978 and India since 1992 markedly show different patterns of development and structural change. However, both countries experienced some advantages of "relative economic backwardness" and some aspects of the "fordist model of growth". China had an anticipated and deeper structural change, spurred mainly by economic reforms and the growth of the internal market in the 1980s, and, since the mid-1990s, by a very rapid penetration of its industrial products in the world market. However, a substantial part of China's exports in medium and high tech sectors are due to joint-ventures with foreign multinationals. India had a more balanced structural change and a slower insertion in the world market, although some sectors, such as software, steel, automotive and pharmaceuticals are recently increasing their share in the world markets. Owing to the huge number of micro-enterprises and the great size of the informal sector, India benefited much less than China from the economies of scale and from the third wave of the "fordist model of growth". Both countries, but in particular China, experienced negative externalities of this recent phase of rapid growth, such as higher inequalities, pollution and urban congestion.

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