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Case Study 3 Preview Focusing on the Issue China and India Exploring the Issue Chinese Capitalism Takes Hold Surge in Economic Growth India s Closed Economy – PowerPoint PPT presentation

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1
Case Study 3
  • Preview
  • Focusing on the Issue
  • China and India
  • Exploring the Issue
  • Chinese Capitalism Takes Hold
  • Surge in Economic Growth
  • Indias Closed Economy
  • India Opens Its Doors
  • Barriers to Success

2
Case Study 3
  • Preview, continued
  • Investigating the Issue Document 1
  • Investigating the Issue Document 2
  • Investigating the Issue Document 3
  • Investigating the Issue Document 4
  • Investigating the Issue Document 5
  • Investigating the Issue Document 6

3
Case Study 3
Building Economic Powerhouses China and India
  • Focusing on the Issue
  • How are the giant emerging economies of India and
    China affecting the world?

4
China and India
  • The question is not whether India and China will
    bump the United States from its position as the
    worlds largest economy.
  • The question is when and which country will get
    there first.
  • Two most populous nations have ambitious programs
  • Move from planned or semi-planned economies
  • Develop vibrant market economies
  • Different pathways with different challenges
  • China with one-party Communist dictatorship
  • India with thriving democracy and religious
    conflicts

5
China and India
  • China began limited economic reforms in the late
    1970s
  • Opened doors to private enterprise in 1990s
  • Wants to be worlds manufacturing capital
  • India opened its economy in the 1990s
  • Seized the opportunities of the
    telecommunications revolution
  • High-speed Internet connections provides
    opportunities for both
  • Connect large labor pools with potential
    employers and customers around the globe
  • Their vigorous moves on the worlds stage affect
    economic planning, markets, and wages in other
    countries
  • No one knows how scenario will play out
  • India and China share disputed border
  • The 21st century is new era of global economic
    interdependence

6
Exploring the Issue
  • The rise of Asian economies began in the 1960s
  • Japan, South Korea, and other so-called Asian
    tigers
  • Industrialized at a breathtaking rate
  • Developed efficient, streamlined manufacturing
    processes
  • Were able to flood global markets with
    inexpensive export goods
  • Todays Asian tigers India and China
  • May not yet match Japans GDP
  • Promising future based on rapid economic growth
  • China emphasizing traditional manufacturing
    industries
  • India focusing on service industries provided via
    the Internet
  • From tax preparation to computer technical support

7
Exploring the Issue
8
Chinese Capitalism Takes Hold
  • Deng Xiaoping
  • Rose to power in 1978 and started China down new
    economic path with slow agricultural, industrial,
    and market reforms
  • Some free market sales, relaxed centralized
    economic planning, regional officials could make
    free-market decisions on some issues
  • Foreign Investment
  • Was encouraged, but not on scale India later
    embraced
  • Special economic zones tested Chinas limited
    capitalism
  • Impressive results, with farm output doubling and
    increase in industrial growth and investment
  • Market Reforms and Strict Curbs
  • Late 1990s saw socialist market economy reforms
  • Population growth restricted to a rate of 13 per
    1,000 people
  • Helped to ease poverty, but created controversy
    at home and abroad

9
Surge in Economic Growth
10
Indias Closed Economy
  • Poverty
  • Since achieving independence in 1948, has
    struggled to overcome desperate, grinding poverty
  • Inspired by Mohandas K. Gandhis philosophy,
    India adopted a socialist economy
  • Closed Economy
  • Indias government strove for economic
    self-sufficiency, with limits on imports and
    foreign investment
  • For more than four decades, Indias economy was
    largely closed
  • Regulation
  • Government embarked on large-scale
    industrialization to limit dependence on foreign
    investment and imports
  • But heavy government regulation resulted in
    decades of inefficiency, overregulation, poor
    output, and quality goods

11
India Opens Its Doors
  • Capitalism
  • In the 1990s India embraced capitalism, moved to
    a market economy
  • Increased privatization allowed, with limited
    private investment
  • More foreign companies were allowed to operate in
    India
  • From Joint to Direct
  • Initially with joint ventures with Indian
    companies, by 2000s was direct foreign
    investment, particularly in telecommunications
  • Economy has grown at an impressive rate of 7
    percent a year since 1991
  • Two factors
  • India a world leader in providing high-tech
    services to businesses worldwide
  • Large pool of highly skilled workers and large
    number of English speakers
  • Democratic government provides flexibility to
    meet the challenges ahead

12
Barriers to Success
  • Obstacles
  • India still faces formidable obstacles to
    economic success
  • High import tariffs and restrictions on direct
    foreign investment
  • Sparking national debate on how far to
    liberalize, or open up, the economy
  • Two Indias
  • Indias huge population, most of whom still work
    on farms and in small, traditional businesses,
    can be an economic asset
  • The country is expected to become the most
    populous nation within the next 50 years
  • The rapid creation of vast wealth has further
    highlighted the two Indias one largely rural
    and poor the other urban and prosperous

13
Investigating the Issue Document 1
  • In The World Is Flat, author Thomas Friedman
    argues
  • India and China are leveling, or flattening, the
    economic playing field
  • Western industrialized countries are losing their
    advantages
  • Other developing countries risk falling farther
    behind
  • Friedman lists reasons why China is unparalleled
    zone for offshoring
  • Low-wage workers at the unskilled, semiskilled,
    and skilled levels
  • Huge appetite for factory, equipment, and
    knowledge jobs to keep its people employed
  • Massive and growing consumer market
  • Other developed and developing countries
    competing with it have to make themselves
    attractive to offshoring
  • Who can provide the best tax breaks, education
    incentives, and subsidies, on top of their cheap
    labor

14
Analyzing Document 1 Why, according to Friedman,
does China pose a problem for developing
countries like Mexico and Brazil?
15
Investigating the Issue Document 2
As China industrializes and modernizes, its
demand for energy is soaring, as shown in the
graph. The increasing need causes concern about
the possible effect on global energy prices and
supplies.
16
Analyzing Document 2 By roughly how much did
Chinas energy consumption increase between 1980
and 2005? Explain the gap between the two lines
since about 1995. What effect could that have on
the rest of the world?
17
Investigating the Issue Document 3
The U.S. has promoted free trade and capitalism
around the world. In the early years of the
twenty-first century, however, the United States
ran up large budget and trade deficits.
MORIN / The Miami Herald
CWS / CARTOONARTS INTERNATIONAL
http//cartoonweb.com/
18
Analyzing Document 3 Who are the characters in
this cartoon? What are they concerned about? How
does the cartoonist depict China, and why?
19
Investigating the Issue Document 4
Economic change is transforming India and China.
In this article, the writer describes some of
the changes observed during a visit and remarks
on reactions to those changes.
20
Analyzing Document 4 What kinds of changes does
the writer identify? How do you think the writer
feels about the changes?
21
Investigating the Issue Document 5
INDIAS GDP BY SECTOR, 2005 LABOR FORCE BY
SECTOR, 1999
SOURCE CIA WORLD FACTBOOK 2006
Today, a relatively small segment of Indias
labor force generates the largest share of its
income, as measured in gross domestic product
(GDP). These pie graphs illustrate that fact.
22
Analyzing Document 5 What proportion of Indias
labor force produces the largest share of its
wealth, as measured in GDP ? What do you think
accounts for this fact?
23
Investigating the Issue Document 6
  • The writer is a former governor of Hong Kong and
    former European Commissioner for External
    Relations. Noting the high stakes in the
    India-China competition
  • India now trains a million engineering graduates
    a year (against 100,000 each in America and
    Europe) and stands third in technical and
    scientific capacitybehind America and Japan but
    ahead of China.
  • In the geopolitical game of domination add India
    to the stand-off between America and China.
    Should businessmen and politicians place bets?
  • Chinas authoritarian model of development
  • Indias democratic approach
  • The question is given more edge if you accept
    (which I dont) the old Chinese adage, No
    mountain can accommodate two tigers.
  • Chris Patten, Mystery Candidate, Financial
    Times, August 4, 2006

24
Analyzing Document 6 According to Patten, in
what way is the competition more than an economic
one? Rewrite the last sentence in your own words.
What is Pattens view of the issue?
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