- The Elephant and the Dragon: The Rise of India and China and What it Means to All of Us
China and India are nowadays the fastest growing economies in the world having growth rates of 10 per cent. Both countries have dazzled the world with the overnight transformation they have undergone, going from being poor, closed economies to becoming two giants. The question to answer now is: how did two developing countries achieve these growth rates? In The Elephant and the Dragon: The Rise of India and China and what it Means to All of Us, Robyn Meredith provides readers with an outstanding description of how India and China, two seemingly different nations with the only similarity of being extremely poor, evolved from facing economic stagnation to experiencing mesmerizing economic growth rates. Meredith successfully combines her journalistic experience with her knowledge of Asian history to give a portrait of the economic and political systems of these nations, their rapid growth, and what implications this has for the world.
China and India have experienced high growth rates after they opened their economies. The benefits each nation has seen have been determined, in part, by the political and educational systems they follow. While India has an established democracy, China has an authoritarian government which allows for reforms to take place with fewer obstacles. In terms of education, India is flooded with college graduates while China is still facing a lag in education coming from the closing of universities during the Cultural Revolution. In that line, India attracts white-collar jobs, while China is a magnet for blue-collar jobs which are predominant in factories. Needless to say is the fact that regardless of the type of jobs, globalization has brought along jobs and improved salaries which were not imaginable in the past. Along the benefits China and India are having, there are consequences for the rest of the world. Employees in America and Europe fear a great loss of jobs as a result of outsourcing.
Nowadays, China is an economic power; however, this was not the scene one could see of China before it became an open market economy. Before 1976, China was a country facing famine and extreme poverty as well as existing ban in education enforced under Mao’s regime. After his death, Deng Xiaoping rose to power bringing along new ideas and reforms. Among these, the most important ones were the agricultural and industrial reforms. The former one was characterized by a freedom to choose crops by peasants and by a liberalization of prices. In an attempt to achieve a gradual transition to an industrial economy, the government made several changes. The creation of economic zones, the improvement of infrastructure such as ports and highways, and the exploiting of natural gas and oil reserves provided investors with new incentives. Altogether, these resulted in an invasion of [End Page 246] multinationals which saw China as a country offering low wages, low production costs, and high-quality infrastructure.
India was also a close economy that followed the beliefs of anti-industrialization, central planning, and self-sufficiency. The government enforced barriers to investment, exports, and imports. In 1991, new leaders found themselves in the need of promoting changes which embraced an open economy. The reforms included the reduction of taxes on imports and exports, reduction of production license requirements, elimination of price caps, and better telephone access. Additionally, the agreement of India with the IMF brought along the elimination of commercial and private investment barriers. There are two main limitations for India’s growth. Contrary to China, India still has to make critical improvements in roads, airports, and in welcoming foreign investment. Also, India is a democracy that has had several unstable governments in the past decade. This is an obstacle for the implementation of reforms. Despite that, India is progressing at a slow but steady rate and the creation of economic zones.
China has become very attractive to investors because of low costs, economic incentives, infrastructure, and also because...