Chapter 10 - Comparative Development experience of India and its Neighbors class 12th Commerce

Development Path of India , Pakistan and China

India , Pakistan and China have many similarities in their developmental strategies.

• All the three nations started their developmental path at the same time.
• India  and Pakistan got independence in 1947 and People’s Republic of China was established in 1949.
• All the three countries had started planning their development strategies in similar ways. India  announced its first five year plan in 1951, Pakistan announced in 1956 and China in 1953.

 

Pakistan

Historical background Pakistan, officially the Islamic Republic of Pakistan, gained independence on 14 August, 1947. In 1971, a civil war in East Pakistan resulted in the independence of Bangladesh.

 

Geography

Pakistan is located in South Asia and borders Central Asia and the Middle East. Its borders are with China in the North and towards West and Northwest are Iran and Afghanistan and towards East and South East, its borders are with India .

 

Population and language

Pakistan is the sixth most populous country in the world with 162.4 million people (as per 2000 -01 estimates) with a growth rate of 2.5 per cent per annum. The national language is Urdu and English is the official language.

• Introduction of Various Policies; In the late 1950s and 1960s, Pakistan introduced a variety of regulated policy framework for growth of domestic industries. The policy combined tariff protection for manufacturing of consumer goods, together with direct import controls on competing imports.
• Green Revolution; In case of agriculture, the introduction of Green Revolution and increase in public investment in infrastructure led to a rise in the production of food-grains. This changed the agrarian structure dramatically.
• Importance to Role of Public Sector in early 1970s; In the early 1970s, nationalization of capital goods industries took place.
• Importance to Role of Private Sector in late 1970s; In the late 1970s, there was a shift in the government policy, when it adopted the policy of denationalization. Government encouraged the private sector and also offered various incentives to them. All this creatd a conductive climate for new investments.
• Financial Support during late 1970s; During this period, Pakistan also received financial support from;  (i) western nations; and (ii) Remittances from emigrants to the Middle –east. This helped the country in stimulating economic growth.
• Reforms; In 1988, reforms were initiated in the country.

 

China

Historical background

China has one of the world’s oldest people and continuous civilizations, consisting of states and cultures dating back more than six millennia. The people’s Republic of China (PRC), commonly known as China, was established in 1949.

 

Geography

China is situated in eastern Asia, bounded by the Pacific in the east. It is the third largest country in the world.

 

Population and language

China is the most populous country in the world with 1,303.7 million people (as per 2000 -01 estimates) and a growth rate of 1 per cent per annum. Most languages in China belong to the Sino – Tibetan language family.

 

Economy

Great Leap Forward (GLF) campaign: In 1958, a programme named ‘The Great Leap Forward (GLF)’ campaign was invited by Mao to modernise China’s economy.

• The aim of this campaign was to transform agrarian economy into a modern economy through the process of rapid industrialization.
• Under this programme, people were encouraged to set up industries in their backyards.
• 1958, there were 26,000 communes, covering almost all the farm population.

 

Great proletarian Cultural Revolution: In 1965, Mao introduced the Great Proletarian Cultural Revolution (1966 – 76), under which students and professionals were sent to work and learn from the countryside. However, when Russia had conflicts with China, it withdrew its professionals, who had earlier been sent to China to help in the industrialization process.

 

Reforms introduced in China

1. Initial phase:

Later phase Reforms Introduced in China: The present day fast industrial growth in China can be traced back to the reforms introduced in 1978. China introduced reforms in phases.

• In the initial phase, reforms were initiated in in agriculture, foreign trade and investment sectors.

5. In agriculture,commune lands were divided into small plots which were allocated (only for use and not as ownership) to the individual households.

• In the later phase, reforms were initiated in the industrial sector.

5. Private Sector firms and township and village enterprises (enterprises which were owned and opened and operated by local collectives) were allowed to produce goods.

 

Dual pricing in the reform process The reform process also involved dual pricing. This means fixing the prices in two ways;

• Farmers and industrial units were required to buy and sell fixed quantities of inputs and outputs on the basis of prices fixed by the government,
• For other transactions, the inputs and outputs were purchased and sold at market price.

 

SEZ Special Economic Zones (SEZ): In order to attract foreign investors, special economic zones were set.

Demographic indicators

1. Population: China is the most populous country in the world with 1371 people and India  is the second most populated country with 1311 million people. As compared to China or India , population of Pakistan is very less (188 million people)
2. Growth rate of population: As we know that China is the most populated country but its annual growth rate of population is the lowest 0.5%as compared to India  1.2% and Pakistan 2.1%. the reason for the low growth of population is the one -child policy introduced in China in the late 1970s….
3. Density of population: China is the third largest country in the world and growth rate of population is the lowest in China as compared to India  and Pakistan. as a result, density of population of China is the lowest (146person per sq.km) as compared to India  (441 person per.sq.km) and Pakistan (245 person persq.km)
4.  Sex ratio : of son., sex ratio is low and biased against females in all the three countries.. sex ratio is the lowest in India  with 929 females per 1000 males. In China and pakistan, the corresponding figure are 941 and 947..
5. Fertility rate: Fertility rate is calculated as the number of children borne by a women in the reproductive age (15-45) on an average.  Since the introduction of the one -child policy, the fertility rate in chine has fallen from over 3 birth per women in 1980 to approximately 1.6 birth. Fertility rate is the highest in pakistan at 3.7%per women and India  comes second with 2.3 birth per women.
6. Urbanization: urbanization is the highest in china (56%). In India  and pakistan , the corresponding figures are 33% and 39%.

 

Growth Indicator

Growth rate is considered as the single most important indicator of an economy during the period. China wit second largest GDP , as measured by purchasing power parity(PPP).is estimated to be of $19.8 trillion. India  GDP (PPP) is $8.07 trillion and pakistan GDP is roughly about 12% of India ’s GDP.

During 1980-90

China was having double-digit growth of 10.3%

Pakistan growth rate was 6.3%

India  was the bottom with just 5.7 %growth rate.

During 2011-15

There was a drastic fall in China growth rate from 10.3% to 7.9%.

Pakistan also met with a drastic decline in growth rate from 6.3% to 4% . as per some scholars , reforms processes introduced in 1988 and political instability were the main reason behind this decline.

India  recorded an increase from 5.7% to 6.7%

Sectoral contribution

In all the three economies, the industry and service sectors have less proportion of workforce, but they contribute more in terms of output.

• China

proportion of workforce engaged inagriculture reduced to 54 per cent in 2000, with contribution to GDP at 15 per cent.

In India

The contribution of agriculture to GDP was 23 per cent. The  proportion of workforce engaged in agriculture was 60 per cent.

In Pakistan

The contribution of agriculture to GDP was same at 23 per cent but proportion of workforce engaged in agriculture was 49 per cent as compared to 60 per cent of India .

Industry (Secondary Sector)

Contribution to GDP

In 2003, secondary sector contributed the highest to China’s GDP at 53 per cent, whereas in India  and Pakistan, the share of secondary sector was 26 per cent and 23 per cent respectively.

Service (Tertiary Sector)

 

Contribution to GDP

• In both India  and Pakistan, the service sector is emerging as a major player of development. Service sector contributes the highest to their GDP, with contribution of 51 per cent in case of India  and 54 per cent got Pakistan.
• The contribution of service sector to the GDP in China was 32 per cent.

Proportion of Workforce

• In the 1980s, Pakistan was faster in shifting its workforce to service sector than India  and China.
• The proportion of workforce engaged in service sector in 1980 for India , China and Pakistan were 17 per cent, 12 per cent and 27 per cent. It reached the level of 24 per cent, 19 per cent (in 1997) and 33 per cent respectively in 2000.

 

Human Development Indicators

• HDI (human development index): Higher value of HDI shows the higher level of growth and development of a country. In 2003, HDI for India , China and Pakistan was estimated to be 0.602, 0,755 and 0.527 respectively.
• Life expectancy at birth: Life expectancy refers to the average number of years from which people are expected to live. China has the highest life expectancy of 71.6 years. India  and Pakistan have the life expectancy of 63.3 and 63 years.
• Means years of schooling: is highest in the China with 7.6% whereas in India  and Pakistan it is 6.3% and 5.1% respectively.
• Infant mortality rate: infant mortality literacy rate refers to number of infants dying before reaching one year of age per 1,000 live births in a year. It is lowest in China with infants and highest in Pakistan with 81 infants. IMR in India  is 63.
• People below poverty line: People below poverty line are the people who do not even have that level of income and expenditure, which is necessary to meet specified minimum levels of calorie intake. . In Pakistan and  China, people below poverty line are 13.4 per cent and 16.6 per cent .whereas, 34.7 per cent population of India  is below the poverty line.
• Maternal mortality rate: Both India  and Pakistan have not been able to save women from maternal mortality. In China, for one lakh births, only 50 women die, whereas in India  and Pakistan, maternal mortality rate is 540 and 500.

 

Appraisal of Development Strategies

China

China did not have any compulsion to introduce reforms as dictated by the World Bank and International Monetary Fund to India  and Pakistan. But, some adverse situations of the economy prior to 1978, forced China to go for reforms.

 

Pre reform periods

• There had been massive extension of basic health services in rural areas.
• Through the economic system, there was more equitable distribution of food grains.
• Despite extensive land reforms, the per capita grain output in 1978 was the same as it was in the mid 1950s.

 

Post reforms period

• Each reform measure was first implemented at a smaller level and them extended on a massive scale.
• Development of infrastructural facilities in the areas of education and health, helped positively in improving the social and income indicators.
• Agricultural reforms (handing over plots of land to individuals for cultivation) brought prosperity to a vast number of poor people.

 

Pakistan

In Pakistan, the reform process led to worsening of all the economic indicators. As compared to 1980s, the growth rate of GDP and its sectoral constituents decreased in the 1990s. the proportion of poor in 1960s was more than 40 per cent which declined to 25 per cent in 1980s and started rising again in 1990s.

 

The reason for the slow –down of growth and re –emergence of poverty in Pakistan’s economy are;

• Agricultural growth and food supply situation was based on good harvest and not on institutionalized process of technical change. When there was a good harvest, the economy was in good condition, when it was not, the economic indicators showed stagnation or negative trends.
• There was growing dependence on foreign loans on the one hand and increasing difficulty in paying back the loans on the other.

 

Yet, in the recent past, it is hoping to improve the situation by maintaining high rates of GDP growth. Pakistan economy witnessed GDP growth at about 8 per cent for three consecutive years (2002 -2005) due to the combined contribution of agriculture, manufacturing and service sector.

Besides facing high rates of inflation and rapid privatization, the Pakistan is increasing the expenditure on various areas that can reduce poverty

 

Question1. compare the GDP growth of India, Pakistan and China.

Question2. Compare the demographic indicators of India with China and Pakistan…

Question3. Discuss the concept of dual pricing in the reform process of China.