China, India, and Development Strategy

In The Elephant and the Dragon, Robyn Meredith discusses the rapid rises of China and India as global economic powerhouses. Given the state of these two nations only a generation ago, these rises seem even more spectacular and improbable. China was an oppressive totalitarian communist state, in which economic prosperity was unheard of and extreme poverty the norm. India, though democratic, was similarly undeveloped due to its protectionist regime and stifling anti-business laws. As these states have liberalized their economies, however, they have experienced unprecedented levels of sustained economic growth.

As Meredith’s book is not particularly academic, she does not draw any general theoretical conclusions about development from the Chinese and Indian cases. These can be inferred, however, by comparing and contrasting the Indian and Chinese approaches to development. Some theoretical conclusions about development strategy can be made and applied to other cases in the developing world. First, both countries have been successful in attracting high levels of foreign direct investment. As these states broke down the barriers, either protectionist or socialist, that prevented the inflow of FDI, they experienced massive influxes of foreign capital. This investment has been crucial for the development of industrial capabilities. Secondly, both countries have made significant investments in domestic infrastructure, although India currently lags far behind China with respect to infrastructure development. China’s superior infrastructure has given it an advantage in attracting export-oriented industries that require the transformation of massive amounts of goods. India has been less successful in developing industry because of its poor infrastructure. Thus, infrastructure development is a crucial component of any development strategy. Finally, some aspects of India and China’s development strategies can be linked to their contrasting political systems. India, as a democracy, has implemented reforms in a piecemeal fashion, with progress being contingent on the political environment. China, on the other hand, has been able to implement a continuous series of reforms through its rule by fiat. It could thus be argued that authoritarian rule is actually conducive to the implementation of a coherent development strategy.

Drawing from the cases of China and India, it can be concluded that attracting foreign direct investment and modernizing infrastructure are crucial components of a development strategy. A more controversial conclusion would be that it is easier to achieve development under the leadership of an authoritarian states. Outside of the realm of economic development, however, authoritarianism has more nefarious consequences that must be considered. These have not yet emerged in China, but many expect that they eventually will and could bring the entire development project to a halt.