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CAN INDIA REALLY BE THE 'NEXT CHINA'?

Aruba, October 29, 2015 - The bulls say India is the 'next China'. Odds are they are right, if not today then within a decade or so. But even if this proves to be right in terms of growth, India is a very different country than China on many fundamental dimensions, demography and democracy being key. But most importantly, China has been built on infrastructure, investment and manufacturing, while India has barely scratched the surface on all three. 

India began its economic reform in the early 1990s, more than a decade after China. But in the past 25 years, China has turbocharged its economy while India has languished in relative terms. Why? 
 
Chinese growth has been driven by some of the world's highest investment rates. This has, in turn, made possible an infrastructure revolution of new cities, high-speed rail lines, airports and ports and manufacturing muscle that is the envy of the world. China has also been the world's factory  for 20 years. Its ability to quickly and efficiently move what it produces domestically and around the world has been a critical ingredient in its growth miracle. 
 
Today, India lags far behind China on all three dimensions. India invests about 30% of its GDP, compared with about 50% in China. Manufacturing is about 20% of the Indian economy, compared to China's about 30%. China has arguably the best physical infrastructure outside the western world. India's looks more like the poor country that it still is. 
But this is a real opportunity for India. Increase investment. Improve infrastructure. Grow economic output. This is a tried and true path to growth, and it is one India is poised to follow. 
 
Consider India's vaunted tech sector. We all know about the incredible Indian talent running some of America's tech icons. Google's CEO Sundar Pichai did his undergraduate degree in India before coming to the US for a Stanford Masters and a Wharton MBA. Likewise, Microsoft CEO Satya Nadella received his undergraduate degree in India and followed up with diplomas from US graduate schools. These and so many other Indian-American tech sector executives are testament to the power of the immigration- innovation nexus in the US.
 
 

By orbitalnets.com