China, India and the World Economy, by T. N. Srinivasan, Economic and Political Weekly, Vol. 41, No. 34 (Aug. 26 – Sep. 1, 2006), pp. 3716-3727
Abstract:
Among countries with at least 10 million people in 2003, China and India have been growing very rapidly since 1980. Their rapid growth has had a significant impact on the world economy. After describing the two basic channels, namely, import demand and export supply, through which the growth of a country influences growth of the rest of the world and vice versa, the paper turns to its theme, namely, the influence of the growth of China and India. China is integrated to a greater extent than India with the world economy. Although India has succeeded in becoming a major destination of global outsourcing and in exports of information technology enabled services, it lags behind China in the competition to become a global manufacturing hub, though it is catching up. India’s advantage over China lies in its vibrant democracy and the legal and financial systems. The paper concludes that whether or not India overtakes China in the next two decades, it is clear that both countries will be economic powerhouses in the medium term, and undoubtedly, their growth will have significant impacts on the world economy.