China Versus India Economic Growth - Research Paper Example

In terms of per capita GDP, India is way behind China with only $1124 compared to China’s $7518. (Runckel, 2002) China has a remarkably well developed infrastructural system. A number of prime factors that have developed a vast difference between the two countries’ economies, this include; labor development, manpower, water management, communication, healthcare services and facilities and also civic amenities (Zeng & Bigsten, 2006). All these key aspects become clearly defined in China, a nation that has placed positive impacts in the country's economy turning it to a leading in the world (Runckel, 2002).

Although India has in the recent times grown and developed tremendously, it still faces problems such as unemployment, poverty, lack of civic amenities and many more. Unlike India, China has continued investing large amounts toward the development of manpower and strengthening of its infrastructure (Chow, 2001). Furthermore, in the sector of manufacturing, China is way ahead of India. In terms of world rankings, China is the third largest nation in manufacturing just behind America and Japan (InternationalMonetaryFund, 2006).

India is at the distant 12th and this point out to the fact that its success in expanding the nation’s service industry is yet to be seen in the sector of manufacturing (Zeng & Bigsten, 2006). China was quick in embracing globalization and other open market economies. While the liberalization of India’s policies started in the early 1990s, China had by the mid 1980s welcomed Direct Foreign Investment and also private investment (Chow, 2001). This introduced a significant change in the country’s economy and its Gross Domestic Product increased considerably (Zeng & Bigsten, 2006) Nevertheless, India enjoys a large upper hand over China in the sector of IT/ BPO (Runckel, 2002).

India’s documented earnings from the BPO sector in 2010 alone were $49.7 billion, while China’s earnings were $35.76 billion (InternationalMonetaryFund, 2006). In the world’s top ten BPO list, seven India cities feature prominently while only a single city from China is on the list (Runckel, 2002). Also, despite China being one of the Socialist countries, it started towards the match to liberalization of its economy way ahead of India. This strengthened its economy to a great deal (InternationalMonetaryFund, 2006).

China is also lagging behind India in tax incentives. Its capital market lags behind India’s capital market in terms of transparency and predictability (Zeng & Bigsten, 2006). India’s stock market is highly transparent and predictable. India possesses Asia’s oldest stock exchange, The Bombay Stock Exchange. China is home to both Shanghai and Shenzhen stock exchange (Zeng & Bigsten, 2006). As far as the issue of capitalization gets concerned, Bombay Stock Exchange is smaller than Shanghai Stock Exchange.

Shanghai Stock Exchange holds $1.7 trillion with about 849 listed companies while Bombay Stock Exchange owns $1 trillion with close to 4833 listed companies (InternationalMonetaryFund, 2006). In spite the size that makes the two different, BSE operates on the principles of global guidelines and is highly stable because of the quality of the listed corporations (Runckel, 2002). Over the years, both these two