The McKinsey Quarterly has an interesting article on the race to growth between India and China. Some of the arguments have already been heard before, but there are some interesting new ones as well. Takeaways and viewpoints:
- China’s growth has been driven by manufacturing, and the country’s planned economy has tapped into domestic savings and foreign investment to build an impressive infrastructure.
- India, by contrast, owes much of its progress to private businesses. Without much assistance from the government, they serve companies in the West’s knowledge-based industries, such as software, IT services, and pharmaceuticals.
- China, unlike India, might have shackled its entrepreneurs-to the detriment of the economy’s long-term health.
- Chinese government has chosen the only method available to kick-start the economy.
- The performance of the two countries should be compared only at the sector level… sectors that escape heavy-handed regulation are the ones most likely to thrive.