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Development Path of China and India and the Challenges for their Sustainable Growth

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  • Yuefen Li
  • Bin Zhang

Abstract

The segmentation of global manufacturing and services provided China and subsequently India with a golden opportunity to make full use of their absolute advantage - low-cost, yet educated labour - to integrate into the world economy within a comparatively shorter period of time than some earlier industrialisers. Though international trade functioned as a vent of surplus in view of the narrowness of their domestic markets at the beginning of their economic catch-up, the label of export-led model may not reflect the real picture as imports underwent dramatic increases during their respective growth periods, in particular for China. Foreign direct investment has played a pivotal role in their economic growth and has major presence in international trade and investment in leading sectors of both countries, giving rise to certain special features and weak links for their economic expansion and sustainability of fast economic growth. To maintain more broad-based, fast and balanced growth, it seems that both countries have to redress sectoral imbalances, encourage technology upgrading and cope with future changes in demographic profiles which constituted a trigger to fast economic growth at the time of their respective economic reform. Copyright 2008 United Nations University. Journal compilation 2008 Blackwell Publishing Ltd.

Suggested Citation

  • Yuefen Li & Bin Zhang, 2008. "Development Path of China and India and the Challenges for their Sustainable Growth," The World Economy, Wiley Blackwell, vol. 31(10), pages 1277-1291, October.
  • Handle: RePEc:bla:worlde:v:31:y:2008:i:10:p:1277-1291
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    References listed on IDEAS

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    1. Andrew Mason, 2001. "Population Change and Economic Development: What Have we Learned from the East Asia Experience?," Working Papers 200103, University of Hawaii at Manoa, Department of Economics.
    2. Cooper, Richard, 2005. "A Half-Century of Development," Scholarly Articles 3677048, Harvard University Department of Economics.
    3. Verdoorn, P J, 1980. "Verdoorn's Law in Retrospect: A Comment," Economic Journal, Royal Economic Society, vol. 90(358), pages 382-385, June.
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    Cited by:

    1. Liu, Zhiyuan & Xu, Yue & Wang, Peijie & Akamavi, Raphaël, 2016. "A pendulum gravity model of outward FDI and export," International Business Review, Elsevier, vol. 25(6), pages 1356-1371.
    2. Helmut Wagner, 2015. "Structural Change and Mid-Income Trap – Under which conditions can China succeed in moving towards higher income status?," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 12(2), pages 165-188, December.
    3. Shujie Yao & Dan Luo, 2009. "The Economic Psychology of Stock Market Bubbles in China," The World Economy, Wiley Blackwell, vol. 32(5), pages 667-691, May.

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