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Culture and Economic Development in Late Comers: Comparing China and India

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Listed:
  • Thomas Barbiero

    (Department of Economics, Toronto Metropolitan University, Toronto, Canada)

  • Haiwen Zhou

    (Department of Economics, Old Dominion University, Norfolk, USA)

Abstract

China and India are both late comers to industrialization. Both adopted similar economic development strategies after World War II, but the per capita GDP diverged significantly in the last 40 years. While economic growth and development have many components, we explain the difference in economic performance by emphasizing the difference in state capacity in the two economies. A country’s state capacity is affected by culture and history. China established a unified language and culture two thousand years ago that enabled it to develop strong state capacity. With a strong state capacity, China made crucial investments in infrastructure and in key heavy industries and developed technological capabilities to help start and sustain growth. India, on the other hand, is a country segmented by religion, caste, and language which has hindered the development of effective state capacity, and thus complementary state investments to spur economic growth. Moreover, India has up to now relied more heavily on expansion of its service sector compared to China, which has hindered its exports, a crucial element that helped China’s economy. India’s future industrialization crucially depends on national integration and concomitant strengthening of state capacity.

Suggested Citation

  • Thomas Barbiero & Haiwen Zhou, 2024. "Culture and Economic Development in Late Comers: Comparing China and India," Working Papers 086, Ryerson University, Department of Economics.
    • Handle: RePEc:rye:wpaper:wp086
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Economic development; state capacity; technological capabilities; political economy; economy of China;
    All these keywords.

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
    • P52 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

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