The Indian Elephant and the Chinese Dragon: Differing Development Strategies of India and China and Effects on Business Environments

By Haley, Usha C. V.; Haley, George T. | Indian Journal of Economics and Business, September 2006 | Go to article overview

The Indian Elephant and the Chinese Dragon: Differing Development Strategies of India and China and Effects on Business Environments


Haley, Usha C. V., Haley, George T., Indian Journal of Economics and Business


This paper deals with economic and institutional development policies and trajectories followed by India and China, including an emphasis on education, political philosophy, economic philosophies and sustained investments in future growth. These differing strategies have resulted in vastly different business environments, each with their strengths and weaknesses in the new global economy. The authors conclude that despite capital shortages, Indian companies have consistently outperformed Chinese companies, although the Chinese are catching up in certain sectors. The paper also explores the role of Foreign Direct Investment (FDI) in shaping competitive environments and local companies' strengths. Consequently, the paper has policy and developmental implications for India and China.

INTRODUCTION

Comparisons between the iconic Asian giants, India and China are inevitable and appear to have spawned an industry (see the recent special issues comparing India and China in the Economist, BusinessWeek, and McKinsey Quarterly). India's growth rate of 6% seems solid, but melts beside one of close to 10% for China. Indeed, China appears to have done better than India on virtually every measure of economic growth and poverty reduction. Several Indians, including Prime Minister Manmohan Singh, have spoken about adopting "the Chinese model". Yet, India's different political, cultural and social environments, as well as achievements, should call for a closer examination of the Chinese model. The two countries share a 2,170-mile border and the distinction of each being home to more than one billion people, many of them poor. However, myriad differences exist in their policy orientations that have affected the companies they have spawned and their impacts on the global economy. Several factors indicate that the two countries are committed to divergent paths of development and that the race has not yet been completed.

First, we explore the economic, political and institutional development policies and trajectories that the two countries have undertaken. Next, we underscore the different business environments that have resulted. We focus on the characteristics of the local companies that the countries' business environments have spawned, with their unique, though sometimes complementary strengths and weaknesses. Finally, we explore the implications of our analysis for policymakers and global investors.

THE TRODDEN PATHS

India embarked on its economic reforms more than a decade after China. Consequently, it has had less time to see policy effects. However, enormous differences exist between the economic, political and institutional strategies that the Indian and Chinese governments have undertaken. These strategic paths have led to vastly differing business environments.

First, the Chinese government nurtures and directs economic activity more than the Indian government does. It invests heavily in physical infrastructure and often decides (based on government connections) which companies receive government resources and listings on local stock markets. Second, the two countries have adopted divergent policies towards trade and foreign direct investment (FDI): China has embraced it, India remains cautious. Third, the countries have adopted differing forms of government: China remains a communist, single-party country, India the largest democracy in the world. Fourth, both countries' policies have placed differing emphases on hard infrastructure (such as ports, roads and electricity) and soft infrastructure (such as laws, institutions and financial markets). While China has consistently invested in the hard infrastructure, its investments in the soft have been often prompted by external, especially multinational corporations' and foreign governments', requests. India on the other hand has failed to invest sufficiently in hard infrastructure, but its competitive market policies have allowed soft infrastructure to flourish. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

The Indian Elephant and the Chinese Dragon: Differing Development Strategies of India and China and Effects on Business Environments
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.