how is India, equally populated country to China, is nowhere near the economy level China (EVERYTHING is made in here) has achieved with its manpower.
In: Economics
The simple answer is that they’re less efficient with their labor.
As to why that is, it’s a variety of reasons from India being less friendly to outside industry to having a political structure that is slower to China just doing it first and getting first mover advantage to India specializing in more service related fields (eg customer service) instead of manufacturing.
Democracy is nice to have, but it’s a drag when every policy has to be contested for years and even then could potentially be reversed due to changes in ruling party and public interest. China can essentially exercise changes overnight and not care about what the public thinks.
Much of India’s population is still locked into an agrarian lifestyle. Farmers work the field to produce just enough for their families and maybe a little more to bring to market. Citizens like that don’t contribute much to a country’s GDP.
China, meanwhile, shook a lot of those subsistence farmers loose over the last 70 years with a series of policies that range from accelerated versions of Western industrialization (creating urban factory jobs to draw famers into cities from the countryside) to communist-brain human disasters (forced collectivization of farms).
India is pursuing some policies with similar effects, like price reforms for agricultural products, but their approach has been overall much slower and gentler.
China is a dictatorship. Whatever the central government wants, will get passed along to the local government to effectuate. You can’t do that in India.
India is a free democracy not a dictatorship, so decision making is slower. Secondly, China fakes its gdp stats. Thirdly, India is a more import-substitution based economy rather than exporting economy. India has been growing very fast since 1991 liberalisation whereas China liberalised 15 years before India. India’s GDP PPP per capita is similar to China 2012, and India is growing much faster now, so I think India will overtake them in the long term. Dictatorships will always fail in the long run. China is a pack of cards which is already stagnating.
China uses its workforce like a resource, they exploit it. They were able to court the world’s highest economies with their slave wage production facilities and lack of any kind of environmental regulation.
The willingness of their people to accept this and fervently throw their lives away and dedication to perfectionism made it incredibly attractive to corporations that have no morals or principles in the 80s and 90s to today.
There is no ELI5 answer for something with so many political, social and economic dimensions. But here are possibly some points to start with.
1) Political structure. China has a far more centralized authority structure. This is somewhat “efficient” in that decisions made can be more quickly implemented without needing to obtain much popular support. India is a democracy with some power devolved to local states/provinces. This gets really messy with many local power structures opposing central government policies.
2) Economic policy. Until the 1970’s China and India were broadly aligned (ELI5 so this is an oversimplification) in terms of economic policy. Self sufficiency, import substitution and state control. Imports and exports were restricted. Foreign capital (and therefore technology transfer) is slowed down by a lot. By the late 1980’s China had started to embark on a far more outward looking stance. Allowing and encouraging foreign investments. India did not really open up until much later. India has way too many subsistence like, small inefficient farms etc and a system that is rather unproductive.
3) Social structure. The communist govt in China pretty much destroyed the old imperialist system and repressed religion and killed off the landlord class post 1949. The Mao government supported lots of education, more or less egalitarian policies, and some technocratic/meritocratic administration (at least in the Maoist framework). India’s social system resulted in very poor female workforce participation, low education levels on average and the caste society (to be very blunt) made meritocracy a bit of a joke. Another advantage, although it shouldn’t be overstated, that China had is that 90% of the people consider themselves Han chinese.
China is a planned economy, or at least has been for much of its recent history. These are commonly said to be weak and inefficient. However, one thing they are quite good at is achieving a particular economic goal, because they can marshal all of their labor and capital resources towards achieving it. China wanted to be an industrial export economy, so they made a plan to accomplish that and pursued it. They funded big manufacturers and shipping ports, they organized labor into them, and they controlled their currency to make sure the products were cheap to buy. Later on, they liberalized their economy somewhat and allowed some relatively “free” economic activity to boost their productivity even further. But it all comes back to a central, national objective to become an industrial exporter, and them having the political organization and power to accomplish it through a command economy.
India, by comparison, is a much freer and less state-controlled economy. That has advantages, in that every economic actor can make their own decisions to suit themselves. But in terms of national projects, it’s much weaker.
China’s birth rate has slowed over the last century
India’s has not
Between China’s now defunct 1 child rule and their industrialization, their population hasn’t been growing as much. Industrialization has always slowed the birth rate, and many Asian nations don’t even have their birth rate at the replacement level.
India is still able to feed this growing population and still has humans doing jobs that much of the world has automated, namely agriculture
They didnt experiment with communism and a command economy to transition from an agrarian to an industrian economy.
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