Yogi

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Yogi the Mandarin A Tale of Two Asian
Revolutions
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China and India. Rarely has the economic ascent
of two still relatively poor nations been watched
with such a mixture of awe, opportunism, and
trepidation. They possess the weight and
dynamism to transform the 21st-century global
economy. August 22, 2005 BusinessWeek
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The Yogi

• Intuitive
• Non-linear
• Holistic
• Introspective

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The Mandarin

• Efficiency
• Order
• Goal-oriented
• Creature of hierarchy

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Maps
China 4th largest most populous country in
the world with a population of 1.3 billion
people. India 7th largest second most
populous country in the world with a population
of 1.17 billion people.
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Historic Silk Route Ties
  The Silk Route is a series of trade and
cultural transmission routes that ran through the
Asian continent connecting the east and west and
extended from southern Europe through Arabia,
Egypt, Persia, India till it reaches China.
January 2008
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• 50 yrs ago, India and China were among the
  poorest and economically most isolated countries
  in the world.
• How did China and India emerge as economic
  giants?

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What are India China famous for today?
Low-priced consumer goods
Call centers computer engineers
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Peoples Republic of China 1949

• Modern China was established after a violent
  armed conflict between Chinese nationals and
  imperialist powers. The communists won under Mao
  in 1949 giving birth to the Peoples Republic of
  China.
• One party rule. No private property.
  Collectivized farming. State owned 77.6 of the
  economy and collectives owned everything else.
• Religious and cultural practices were suppressed
  and ethnic minorities were marginalized.
• 40 million people starved to death between 1959
  and 1962.
• 1966 Mao introduced the Cultural Revolution
  that involved purging political rivals. 10
  million people were killed.

Mao Zedong
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Chinas entry in todays Global Economy

• After Maos death Deng Xiaoping took over as
  Chinas leader.
• Liberalized Chinese economy in 1979.
• Started with agricultural and economic reforms,
  set up Special Economic Zones.

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Infrastructure

• Chinas most visible infrastructure project to
  date is building new roads and highways.
• In 1989 China had 168 miles of expressways by
  2004 it built 21,500miles. By 2020 it plans to
  have 55,000 miles, which is the total length of
  the entire American highway system.
• To fulfill its growing economy China has built
  new coal mines for electricity use, increased
  natural oil and gas consumption and built a
  modern power grid.

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China Economic Fact Sheet
GDP real growth rate  
9.8 (2008) country comparison to the world 13 (2007) 11.6 (2006) 9.8 (2008) country comparison to the world 13 (2007) 11.6 (2006)

GDP-Per capita (PPP-Purchasing power parity)
6,000 (2008)country comparison to the world 5,500 (2007) 4,900 (2006) note data are in 2008 US dollars 6,000 (2008)country comparison to the world 5,500 (2007) 4,900 (2006) note data are in 2008 US dollars

GDP composition by sector
agriculture 10.6 industry 49.2 services 40.2 (2008) agriculture 10.6 industry 49.2 services 40.2 (2008)
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Beijings Skyline
Beijing Olympics Stadium
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Chinas One-Child Policy
1980s govt. poster advertizing the One-Child
Policy
To accelerate economic growth China decided to
curb its population through the implementation of
the One-Child Policy in 1979.
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Strict Implementation

• Urban families can have only one child whereas
  rural families can have more than one child, if
  the first one is a girl.
• Under this policy, the government has conducted
  10 million forced abortions and 10 million
  sterilizations
• 40 million births have been prevented.
• 30,000 workers in the Family Planning department
  implement these policies nationwide.

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Indian Independence - 1947

• India gained independence from British rule in
  1947 under the leadership of M. K. Gandhi.
• Non-violence and peaceful civil disobedience
  became hallmarks of Indias freedom struggle.
• Indias Cultural Revolution
• - The freedom struggle involved an agenda for
  emancipation of women and lower castes through
  democratic empowerment. Indias diverse ethnic
  and religious population participated in and
  flourished during the freedom struggle.

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Republic of India

• India defines itself as a sovereign, socialist,
  secular, democratic republic that was officially
  constituted on Jan 26, 1950.
• Indias constitution guaranteed fundamental
  rights and rule of law.
• Multiparty democracy with a parliamentary form
  of government. The Prime Minister is the elected
  head of the government.
• Special laws for the protection of ethnic,
  linguistic and religious minorities were included
  in the constitution.

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Mixed-Economy

• Adopted a socialist-inspired, centrally planned
  economic model between 1947 to 1991 under which
  Indias economy grew at about 3.5 (called the
  Hindu rate of growth).
• Land reforms were carried out to redistribute
  land more equitably.
• This economic era came to be known as the
  License Raj due to the elaborate licenses and
  regulations that were required to set up and run
  business in India. Corruption and red tape
  flourished under this system.
• All these policies and five year economic plans
  were carried out within the framework of a
  functioning democracy with routine elections
  every 5 yrs continuously from 1952 to the
  present.

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Economic Liberalization in India

• In 1991 India adopted economic reforms.
• Current PM and economist Manmohan Singh is the
  architect of Indias economic reforms.
• These economic liberalization policies reduced
  government regulation of and investment in the
  economy, encouraged private business and invited
  foreign investment. Quotas and licenses were
  dismantled.

Manmohan Singh
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India Economic Fact Sheet
GDP- real growth rate 6.6 (2008) 9 (2007)
9.6 (2006) GDP per capita (PPP Purchasing
power parity) 2,800 (2008) 2,700 (2007) 2,500
(2006) note data are in 2008 US dollars GDP
Composition by sector agriculture
17.2 industry 29.1 services 53.7 (2008)
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Comparing India and Chinas Growth Stories
Indicators India China
Political System Multi-party Democracy One-party authoritarian rule
Speed of Growth Economic reforms started in 1991. Average 6 growth rate in past two decades. Economic reforms started in 1978. Average 9.5 growth rate in past two decades.
Areas of Specialization Rising power in software, design, services, and precision industry. Dominant in mass manufacturing, electronics and heavy industrial plants
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Comparing India and Chinas Growth Stories
Indicators India China
Gini index (standard measure of inequality) 36.8 47.0 (up 10 points from 15 yrs ago)
Foreign Direct Investment 6.8 (up from 0.3 in 2004) 17.8
Future Areas of growth RD, bio-technology, high-value IT enabled services (legal, medical, engineering architecture), manufacturing, agro-based industry IT business, services and continued manufacturing
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Comparison

• India lags behind china in infrastructure.
• China has a weak banking and legal system.
• India has the advantage of the English language
  which has made it easier to participate in the
  global economy.
• What holds India back are bureaucratic red tape,
  corruption and its inability to build
  infrastructure fast enough.
• According to Peter Drucker, India has managed
  rural to urban transition in a relatively smooth
  and peaceful manner, which China is still
  struggling to do.

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The of Costs Growth Human rights

• 500 million Chinese people have been lifted out
  of poverty in a generation.but this has come
  with a cost.
• Suppression of Dissent In 1989, students
  protesting against
• Communist rule in Tiananmen Square were killed
  by the Chinese military.
• No Freedom of Expression Internet and media is
  state controlled.
• No Freedom of Religion
• Minorities are marginalized Uighar and Hui
  Muslims,
• Tibetans and Falun gong.

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Indias Experiment with the Mandarin Model

• In Nandigram village, West Bengal, against the
  ruling communist governments planned to seize
  10,000 acres of land from farmers for a chemical
  plant. The farmers protested.
• 4,000 heavily armed police tried to stamp out
  protests and shot dead at least 14 villagers and
  wounded 70 more. The Communist party cadres also
  participated.
• The Indian media and civil society protested.
• The communists were defeated in subsequent local
  and national elections in West Bengal.

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Urban-Rural Divide- China

• Extreme income disparity in rural and urban
  china. The coastal and urban locations have
  benefited disproportionately from the economic
  policies.
• There has also been an increase in inequality of
  education and access to health services. Poor
  households have not been able to afford the high
  private cost of basic education and healthcare.
• Tens of millions of farmers have become landless
  in China as developers and government officials
  seize farm land without compensation to farmers.
• There were 87,000 local protests in 2005

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Urban-Rural Divide - India

• 27.5 of Indias population was living below the
  poverty line in 20042005, down from 51.3 in
  19771978, and 36 in 1993-1994.
• 75 of the poor are in rural areas, most of them
  are daily wagers, self-employed householders and
  landless laborers.

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Rule of Law

• The authoritarian control of the Communist Party
  over all spheres of Chinese society has meant
  weak rule of law.
• Poor people have little chance of getting their
  grievances redressed if they have a dispute with
  the Chinese state or powerful businesses. E.g.
  Sprucing up of Beijing for the 2008 Olympics
• Corruption exists in India as well and the
  judiciary is overworked but India has a strong
  rule of law.

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Democracy Economic Growth

• Does economic prosperity lead to democracy?
• No evidence to suggest that prosperity leads to
  democracy or vice versa.
• However, democracy may slow down economic growth
  but it provides essential checks on excessive
  power.
• Nobel Laureate economist Amartya Sens theory of
  famine and Democracy "No famine has ever taken
  place in the history of the world in a
  functioning democracy. (Freedom as Development)

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Elections and Olympics

• Chinese Olympics 2008 cost 44 billion.
• It was a spectacular achievement for any
  country, particularly one that was only a
  generation ago predominantly poor and
  economically isolated.
• In May 2009, the worlds largest exercise in
  democracy took place in India.
• 714 million eligible voters
• 828,804 polling centers were set up, including
  one in Gujarat's Gir lion sanctuary for a single
  voter
• 1055 political parties
• 6.1 million civil and police officials were on
  duty
• Electronic voting machines were lugged across
  the length and breadth of India on trains,
  trucks, cattle and bullock carts in some of the
  remotest areas.
• 131 seats reserved for backward castes and tribal
  groups

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The Jury is still out!

• As the 21st century unfolds, will the Yogi and
• the Mandarin learn from the positive
• qualities of each other?

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Some Class room Questions

• What are the different strengths of India and
  Chinas economies?
• What does economic liberalization or opening up
  an economy mean? How did this process occur in
  India and China?
• What are the drawbacks and challenges facing
  Indias growth?
• What are the concerns about Chinas economic
  growth?
• Economic growth often pulls people out of poverty
  and brings about an improved standard of living
  to those who benefit from it. Does it necessarily
  benefit all sections of society? How do the
  stories of India and China throw light on this
  question?
• What are the human costs involved in economic
  growth?

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The End