Managing Globalization: India and China Compared

I recent years India has been hailed as an emerging economic power almost on par with China.1 Much of the optimism on behalf of India stems from the gradual opening of the Indian economy since the early 1990s and the country’s present high economic growth rates. But the opening of the Indian economy to a rapidly globalizing international economy has not only offered opportunities but also a number of challenges to the economic actors. The aim of this chapter is to assess the strategy behind and the outcomes of the Indian response to economic globalization and subsequently briefly compare it to the path chosen by China. India and China are often seen as following the same basic development strategy—an open market-based liberalizing strategy—with China starting early and India belatedly following. A closer inspection reveals important differences, however, and the aim of the chapter is to highlight some of these differences and discuss the implications for the management by two countries of the challenges arising from economic globalization. The emphasis of the chapter will be on the Indian development, but the brief analysis of the Chinese development follows the same analytical structure facilitating a systematic, illustrative comparison. The assessment will mostly focus on economic parameters, thus largely ignoring essential social and political issues that would be of clear importance in a broader discussion of both present status and future prospects of the two Asian giants.