Title: Preview
1Case 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
2Case 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
3Case 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?
4China 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
5China 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
6Exploring 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
7Exploring the Issue
8Chinese 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
9Surge in Economic Growth
10Indias 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
11India 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
12Barriers 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
13Investigating 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
14Analyzing Document 1 Why, according to Friedman,
does China pose a problem for developing
countries like Mexico and Brazil?
15Investigating 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.
16Analyzing 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?
17Investigating 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/
18Analyzing Document 3 Who are the characters in
this cartoon? What are they concerned about? How
does the cartoonist depict China, and why?
19Investigating 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.
20Analyzing Document 4 What kinds of changes does
the writer identify? How do you think the writer
feels about the changes?
21Investigating 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.
22Analyzing 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?
23Investigating 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
24Analyzing 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?