Emerging Giants China and India in the World Economy

by Eichengreen, Barry; Gupta, Poonam; Kumar, Rajiv

• ISBN13: 9780199575077
• ISBN10: 019957507X
• Format: Hardcover
• Copyright: 2010-06-29
• Publisher: Oxford University Press

Summary

China and India are the two most populous countries in the world, and two of the fastest growing. By sheer virtue of the fact that these two countries are home to 2.4 billions people-two-fifths of the world's population-the rapid growth of their economies has far-reaching implications not just for global living standards and poverty reduction, but also for the distribution of income in the rest of the world. Commensurate with their economic progress, there has been a surge of interest in the nature and implications of their economic growth.

Author Biography

Barry Eichengreen is George C. Pardee and Helen N. Pardee Professor of Economics and Political Science at the University of California, Berkeley. He is also a research associate of the National Bureau of Economic Research and a research fellow at the Centre for Economic Policy Research (London). Dr. Eichengreen served as a senior policy advisor at the International Monetary Fund from 1997-98. A member of the Council on Foreign Relations, he has published widely on international monetary and financial affairs, including Financial Crises and What to Do About Them; Toward A New International Financial Architecture: A Practical Post-Asia Agenda; and Globalizing Capital: A History of the International Monetary System.
Poonam Gupta is an Associate Professor at the Department of Economics, Delhi School of Economics, Delhi University. She has previously worked as an economist in the International Monetary Fund's Research Department, Asia and Pacific Department and the European Department. She has frequently consulted for the World Bank, International Monetary Fund and the Asian and Development Bank. She holds a PhD in Economics from the University of Maryland. Her research interests include issues related to financial crises, capital flows, financial sector, structural transformation and growth, and issues related to the Indian growth experience. Her work has been published in the leading academic journals and in collective volumes.
Rajiv Kumar is Director and Chief Executive of the Indian Council for Research on International Economic Relations. Dr Kumar has been a Member of the National Security Advisory Board since August 2006 and member of the Telecom Regulatory Authority of India since January 2007. From August 2004 to January 2006, Dr. Kumar was Chief Economist with the Confederation of Indian Industry and worked with ADB, Manila for over 10 years as the Principal Regional Economist for Central Asia. He has written several books and contributes regularly to newspapers and journals.

Table of Contents

List of Tables	p. xi
List of Figures	p. xv
List of Contributors	p. xix
Abbreviations	p. xxi
Introduction	p. xxv
China and India in the global economy	p. xxvi
Comparisons and contrasts	p. xxviii
Challenges for sustaining growth	p. xxix
China and India in the Global Economy
What Can Be Learned about the Economies of China and India from Purchasing Power Comparisons?	p. 3
Introduction	p. 3
The growth record in a comparative framework	p. 4
Levels of GDP in China and India	p. 8
PPPs and sources of past and future growth	p. 22
PPPs and exchange rates	p. 28
Conclusions	p. 30
Trading with Asia's Giants
Introduction	p. 32
Context	p. 34
Services trade	p. 39
Composition of goods exports	p. 42
The role of multinational corporations	p. 44
The role of distance	p. 47
Effects of the US trade deficit	p. 55
Conclusion	p. 59
The Chinese Export Bundles: Patterns, Puzzles, and Possible Explanations	p. 62
Introduction	p. 62
Evolving sophistication in export structures: China vs. India	p. 63
What might explain China's precocious export sophistication?	p. 69
Conclusion	p. 79
Data	p. 81
Contrasts in Development Experience
The Cost Competitiveness of Manufacturing in China and India: An Industry and Regional Perspective	p. 87
Introduction	p. 87
Unit labor cost as competitiveness measure	p. 89
International comparisons of productivity and unit labor costs	p. 92
Regional comparison of productivity and unit labor cost	p. 96
Convergence trends in compensation, productivity, and unit labor cost	p. 107
Conclusion	p. 116
Basic data for China and India regional comparisons	p. 118
Law, Institutions, and Finance in China and India	p. 125
Introduction	p. 125
Evidence on China's legal and financial systems and growth in the three sectors	p. 129
Law, finance, and growth in India: Aggregate evidence	p. 144
Firms' financing sources in China: Aggregate evidence and cross-country comparisons	p. 151
Law, finance, and growth in the Indian corporate sectors: Firm level evidence	p. 161
Survey evidence on the Chinese Private sector	p. 167
Conclusions	p. 181
China and India: A Tale of Two Trade Integration Approachers	p. 184
Introduction	p. 184
Main trade developments	p. 189
Trade policy developments	p. 206
Conclusion	p. 223
Challenges to Sustaining Growth
China's Growth Model: Choices and Consequences	p. 227
Introduction	p. 227
The composition of growth in China and India	p. 229
Policy choices	p. 232
The reform agenda	p. 237
Monetary policy	p. 239
Concluding remarks	p. 241
Deconstructing China's and India's Growth: The Role of Financial Policies	p. 243
Introduction	p. 243
China and India's recent growth experience	p. 248
China and India's economy as a neoclassical growth model	p. 249
Calibrating the growth Model	p. 252
Simulating the Solow growth model	p. 255
Investment wedge	p. 257
Interpreting investment wedges as financial frictions	p. 260
Financial sector reforms in India	p. 272
Conclusion	p. 276
Pollution across Chinese Provinces	p. 281
Introduction	p. 281
Pollution and environmental policy in China	p. 284
Data and empirical methodology	p. 286
Analysis of results	p. 291
Conclusion	p. 304
	p. 306
What constrains Indian Manufacturing?	p. 307
Introduction	p. 307
Stylized facts and preliminary evidence	p. 312
Evidence from enterprise surveys	p. 319
Econometric analysis	p. 323
Conclusion	p. 337
Data sources and construction of variables	p. 339
References	p. 343
Index	p. 363
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