Growth and Poverty Reduction in China, India and Mongolia - Essay Example

Ref. #382496 Word Count: Growth and Poverty Reduction in China, India and Mongolia I. Country Focus China, India and Mongolia are the subjects of this research paper. There are four main reasons why these countries were selected. First. The size of population and land area. China, India and Mongolia form a large and contiguous landmass that extends from south Asia (India) to east Asia (Mongolia and China). Their combined population adds up to 2.3 billion people, which is almost 40% of the global population of 6.5 billion people. (CIA) Second. Their role in the global economy. China and India are regarded widely as emerging global superpowers. For the past two decades, both India and China have registered rapid, even double digit increases in their gross domestic product (GDP). Although Mongolia's growth is rather modest in comparison, it did register a 7.5% growth rate in 2006 due to an increase in copper prices and in the volume of gold production. China is now second only to the US in per capita purchasing power (PPP) and is projected to surpass it within a decade. It is also projected to become the world's largest economy by 2025. (Economic Strategy Institute) Third. Their concrete experience and lessons learned in the relation between rapid growth and poverty alleviation. Recent economic developments have freed millions of Chinese, Mongolians and Indians from the poverty trap, but hundreds of millions more continue to be impoverished. In many cases growth only increases the gap between the poor and the "newly rich," and between coastal cities and farming communities. China's poor have been especially hit by the privatization of many erstwhile state enterprises and consequences such as the loss of jobs, security of tenure, and other benefits. Fourth. Their long history of interaction and currently changing relations. India and China, and China and Mongolia share common borders; 2,800 kilometers long in the first case, and 1,900 kilometers in the latter. (CIA) Border related hostilities erupted into the 1962 China-India Border War. It was only in 2005, 43 years later, that the two countries forged an agreement for what was called a strategic partnership that could pave the way into a total resolution of border issues and fruitful cooperation. (US AID) Relations between China and Mongolia have also improved recently. In the past, Mongolia's fears of annexation by China and its close relations with the Soviet Union (now the Russian federation) blocked such efforts. Relations between the two countries have improved in the past two decades and by 1994, they had concluded a Treaty of Friendship and Cooperation. (Rossabi) II. Do Higher Growth Rates Ensure Less Poverty and More Equality The research paper will focus on the relationship between growth and poverty eradication. It will also touch on the interaction between economic growth and observance of political rights in China, India and Mongolia, though to a lesser degree. This is the thesis. Rapid double-digit economic growth has not and does not automatically guarantee prosperity and economic equality. This is illustrated by the experience of China, India and Mongolia. In fact, in too many cases, economic growth has been and is still achieved at the expense of the basic economic and political rights of particular sectors and areas. The responsibility of any and all governments is to develop the specific policies and programs, structures and mechanisms, and clear yardsticks that will ensure not only economic growth, but just as important, the realization of the economic and political rights of each and every citizen. III. Resources for Poverty Alleviation India and China are large and populous countries with resources in the form of their population, work force, land, minerals, infrastructure, technology, and other natural and man made reserves. (CIA) Mongolia's population of 2.5 million is exceedingly small compared with the size of its territory. The landlocked country does not have the communication and transportation infrastructure usually considered necessary for developing trade and production. It is also a largely agricultural society that still practices a nomadic lifestyle and relies on herding and livestock production. Not even one percent of its land area is arable and it has no access to the ocean and its riches. What it does have are substantial mineral deposits including gold, silver and oil and a landscape, lifestyle and culture attractive to other peoples. In fact copper concentrates is the leading Mongolian export. While these mineral resources can be used for growth and poverty alleviation, their extraction and processing can also be the source of environmental pollution and degradation. (CIA) China and India are both highly populous countries, which can make poverty alleviation that much harder to achieve. India has an edge in agriculture, with nearly half of its total area classified as arable land and more than half a million square kilometers of irrigated land (larger than China). It is no wonder that India is the world's principal cotton producer. It also produces large amounts of fresh vegetables, grains and dairy products for export and domestic consumption, and is increasingly involved in the export of buffalo meat and processed meat products to the Middle East and Asia. It also has the world's fourth largest coal deposits. (CIA) For many investors, China has the advantage of a literate, cheap and competent labor force in and outside export processing zones. Like India it has nearly half a million square kilometers of irrigated land and a relatively developed communication and transportation infrastructure. It has the world's largest potential for the production of hydropower. On the other hand it has to contend with the flooding and destruction of whole communities and part of China's irreplaceable cultural heritage due to the construction of the world's largest dams. The same problem afflicts India. (CIA) In the race for faster and higher growth rates, many natural resources are misused and destroyed. For instance, acid rain now threatens the safety of soil and food in a full one third of China's territory. The Poor are with Us; They are Us After two decades of what others view as astonishing growth, this is the situation of the people of India, China and Mongolia. Almost 405 million people in the three subject countries earn less than $1 a day. (That $1 sets the global poverty level). 274 million of them live in India, 130 million in China and less than one million in Mongolia. In addition, nearly 2.3 billion in China and India earn less than U$2 a day. That is equivalent to one out of every three people in this world. Other sources disagree and assert that not a third but about half of the global population earn less than $2 a day. (Shah) Both India and China have acknowledged this problem of persistent poverty and inequality. People's Daily Online recently featured a survey on 2004-2005 Social Situation Analysis and Prediction made by the China Academy of Social Sciences. It cited the following pressing social problems in China: 40 million farmers have lost the land they till, exacerbating social tension and conflict; the income of those in the top ten percent income grouping is now almost three times higher than those in the lowest ten percent; 24 million people in urban areas need jobs; poverty is still widespread in rural areas; corruption has to be eradicated within the shortest possible time through political reform; environmental pollution is a serious problem; and lastly, social problems have resulted in unparalleled social unrest. Fortune magazine on the other hand calls our attention to the fact that despite supposedly ground breaking advancement, half the total Indian population, and majority of Indian women are illiterate still. The Indian government has also launched programs to ensure a better life for the ordinary citizen by increasing the budget for basic education, health, and rural infrastructure. However, many doubt government's ability to practice accountability and transparency, and guarantee that the budget will actually reach the people. Corruption remains a serious stumbling block to the implementation of poverty eradication programs and the logical target of political reforms. (BBC) The Chinese government, on the other hand, has put a brake on the implementation of political reforms aimed at developing the rule of law, the judiciary and the entire legal system. For instance, "(t)he Chinese government continues to prevent workers from forming independent trade unions, arguing that the party-controlled All-China Federation of Trade Unions (ACFTU) sufficiently ensures their rights. As a result, increasing numbers have taken to the streets and to the courts, seeking redress for lost wages and pensions, forced and uncompensated overtime, unlawful wage deductions, employers' violations of minimum wage regulations, and unhealthy and dangerous working conditions." (Human Rights Watch) IV. Lessons Learned As we have seen economic growth and poverty alleviation are not like fish and chips. They do not always go together. High economic growth rates do not automatically translate into poverty alleviation and eradication. In fact, rapid and substantial economic growth often comes with a price, and that price is usually paid by ordinary working men and women. For instance, keeping wages low and working hours long is the standard policy of many governments of developing and poor countries, designed to attract foreign investment that is considered the key to the country's entry into the world of economic dragons. Unfortunately many labor organizations are unable to protect their interest in the face of widespread joblessness, repression of unions and union officials, and denial of basic labor rights. In the same way, small farmers hard hit by competition from imported agricultural products are forced to hear the death knell of whole industries and sectors. In a society that recognizes, protects and promotes basic human rights there are numerous venues and methods that can be used to make sure that: GROWTH SHOULD FOSTER PROSPERITY AND ECONOMIC EQUALITY THE BURDENS OF ECONOMIC GROWTH SHOULD BE SHOULDERED FAIRLY BY SOCIETY GROWTH SHOULD NOT COME AT THE EXPENSE OF OUR BASIC RIGHTS GROWTH SHOULD NOT BE PURSUED AT THE EXPENSE OF SUSTAINABLE DEVELOPMENT Annex 1 - WORKS CITED 1. BBC. Mongolia Country Profile. http://news.bbc.co.uk/go/pr/fr/-/1/hi/world/asia-pacific/country_profiles/1235560.stm 2.CIA. The World Factbook. http://www.google.com.ph/searchhl=en&q=CIA+world+fact+book&btnG=Google+Search&meta= 3. Colvin, Geoffrey. Asia's Peasant Problem. Fortune. 2006. http://money.cnn.com/magazines/fortune/fortune_archive/2006/05/15/8376882/index.htm 4. Economic Strategy Institute. China Becomes Number One. http://www.econstrat.org/blog/p=24. Accessed 15 Feb. 2007. 5. Human Rights Watch. World Report 2007. http://hrw.org/englishwr2k7/docs/2007/01/11/china14867.htm 6. Murphy, Cait. Why India will overtake China. Fortune. 2006. http://money.cnn.com/2006/08/30/magazines/fortune/IndiavsChina_pluggedin.fortune/index.htm. Accessed 14 Feb. 2007. 7. People's Daily Online. Seven Social Problems Hinder China. http://english.peopledaily.com.cn/ 8. Rossabi, Morris. China seeks to Bolster its Economic Profile in Central Asia. 2000. http://www.eurasianet.org/departments/business/articles/eav081400.shtm 9. Shah, Anup. Poverty Facts and Stats. Global Issues. http://www.globalissues.org/TradeRelated/Facts.asp. Accessed 14 Feb.2007. 10. US AID. Mongolia. http://www.usaid.gov/mn/about/profile.html. Accessed 15 Feb. 2007. 11. US State Department. Background Notes: Mongolia. 2007. http://www.state.gov/r/pa/ei/bgn/2779.htm Accessed 14 Feb. 2007. Annex 2 - Comparative Table Topics Comparative Economics Geography India China Mongolia Natural Resources Fourth largest coal reserves in the world. Iron ore, chromite, manganese, mica, bauxite, titanium ore, natural gas, diamonds, petroleum, and limestone. Large tracts of arable land. World's largest potential source of hydropower. Deposits of coal, iron ore, petroleum, natural gas, tin, mercury, tungsten, antimony, lead, manganese, molybdenum, vanadium, magnetite, aluminum, zinc and uranium. Extensive deposits of oil, coal, copper, molybdenum, tungsten, phosphates, tin, iron, nickel, gold, zinc, silver. Minerals account for a large part of industrial production. Land Use Total area: 3,287,590 sq km, equivalent to a third of the US. Land area: 2,973,190 sq km Water: 314,400 sq km Almost 49 % of total land area is arable land. 2.8% of land area is planted to permanent crops such as fruit trees. 558,080 sq km irrigated land. A little smaller than the US. Total area: 9,596,960 sq km Land area: 9,326,410 sq km Water: 270,550 sq km Almost 15% of total area is arable land; 1.25% planted to permanent crops (2005) Irrigated land: 545,960 sq km (2003) Slightly smaller than Alaska. Total area: 1,564,116 sq km Arable land: 0.76% Permanent crops: 0% Other: 99.24% (2005) Irrigated land: 840 sq km (2003) People 1,095,351,995 population (2006) 1,313,973,713 population (2006) . 2,832,224 population (2006) Life Expectancy Over-all: 64.71 years Males only: 63.9 years Females: 65.57 years (2006) Over-all: 72.58 years Males: 70.89 years Females: 74.46 years (2006) Overall: 64.89 years Males: 62.64 years Females: 67.25 years (2006) Total Fertility Rate Average of 2.73 children (2006) Average of 1.73 children (2006) Average of 2.25 children (2006) Literacy Rate Over-all literacy: 59.5% Males: 70.2% Female: 48.3% (2003) Over-all: 90.9% Males: 95.1% Females: 86.5% (2002) Over-all: 97.8% Males: 98% Females: 97.5% (2002) Government Government Type System of Choosing Leaders Federal republic. Bicameral parliament. Universal suffrage, 18 years old. Prime Minister chosen by members of Parliament from the majority Party. President elected by Parliament and state legislatures. Bicameral parliament. Lower House elected by popular vote. Communist Party dominant force in government and entire country. Universal suffrage, 18 years old. Unicameral National People's Congress (NPC). President and vice president elected by National People's Congress. Premier is nominated by President. NPC confirms appointment. Mixed parliamentary and presidential type. President elected by popular vote. Prime Minister, usually the leader of majority party or coalition, is elected by the Parliament. Government Spending as Percent of GDP Military Spending as a Percentage of GDP 4.3% (2005) Economy Economic Overview Leading Economic Problems Average growth is 7+% since 1996. Poverty was reduced by 10%. Services major source of economic growth. However poverty is still widespread. The huge and growing population is the fundamental social, economic, and environmental problem. Major player in global economy. Double digit and rapid economic growth. Rising incomes. On the downside: Uneven development with growth focused in urban coastal areas. Migration of 100-150 million people from rural areas to cities, difficulty in finding jobs and homes result in unrest. Growing gap between the "rich and poor." Mongolian traditional economy has been based on agriculture, in particular, livestock herding. Economic problems include the decrease of prices of primary sector exports and widespread opposition to privatization. Extremes in weather conditions also killed off many of the country's livestock. Per Capita GDP $3,700 2006 estimate $7,600 (2006) $2,000 (2006 CIA figure) $450 (2005 US AID figure) Population Below Poverty Line Almost 274 million people 25% of total population 2002 estimate 130 million people 36.1% of total population (2004 CIA estimate) 33% (US AID 2005 estimate) GDP Composition by Sector Agriculture: 19.9% Industry: 19.3% services: 60.7% 2005 estimate Agriculture: 11.9% Industry/construction: 48.1% Services: 40% (2006 estimate) Agriculture: 20.6% Industry: 21.4% Services: 58% (2003 estimate) Labor Force by Occupation Labor force by occupation: Agriculture: 60% Industry: 12% Services: 28% (2003) Agriculture: 45% Industry: 24% Services: 31% (2005 estimate) Herding/agriculture: 42%, Mining 42% Manufacturing 6% Trade 4% Public sector 6% (2003) Primary Industries Textiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery, software. Mining and ore processing; Machine building Armaments Textile and apparel Petroleum Cements, chemicals, fertilizers Consumer products Rail cars and locomotives Construction Production of construction materials Mining Oil Food and beverages Processing of animal products and natural fibers Primary agricultural goods Leading cotton producer in the world. Also raises rice, wheat, oilseed, cotton, jute, tea, sugarcane, potatoes plus cattle, water buffalo, sheep, goats, poultry; fish. Agriculture products: rice, wheat, potatoes, corn, peanuts, tea, millet, barley, apples, cotton, oilseed; pork; fish Crops such as wheat, barley, vegetables and forage crops. Livestock such as sheep, goats, cattle, camels, and horses. Industrial Production Growth Rate 7.5% in 2006 22.9% 4.1% in 2002 Electricity Production 630.6 billion kWh (2004) 2.5 trillion kWh (2005) 3.24 billion kWh in 2005 Telephones Telephones - main lines in use: 49.75 million (2005) Telephones - mobile cellular 69,193,321 (2006) Telephones - main lines in use: 350.433 million Mobile cellular: 437.48 million (2006 estimate) Main lines: 156,000 Mobile cellular: 557,200 2005 Internet Service Providers Internet hosts: 1,543,289 (2006) Internet users: 60 million (2005) Internet hosts: 232,780 (2006) Internet users: 123 million (2006) Internet hosts: 272 Internet users: 268,300 2005 Railways Railways: total: 63,230 km Railways: standard gauge: 74,408 km Total: 1,810 km Paved Highways Roadways: Total: 3,383,344 km Paved: 1,603,705 km Unpaved: 1,779,639 km (2002) Paved: 1,515,797 km (34,288 km are expressways) Unpaved: 354,864 km (2004) Total: 49,250 km Paved: 1,724 km Unpaved: 47,526 km 2002 Source: The CIA's World Factbook https://www.cia.gov/cia/publications/factbook/geos/ch.html Accessed 15 February 2007 Read More