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Time to take on the Dragon
US model of capitalism will take many countries like India nearer to China’s level of prosperity
Though there has been no formal cold war between two emerging Asian giants China and India, their growing economic and military presence raises many global concerns about geo-political stability which has become one of the most imperative agendas on the global stage especially for geopolitical interests of superpowers. In such circumstances, Bush’s growing interest towards Indo-US alliance seems to a very prodigious strategy in long term which also impliedly indicates India’s edge over the Chinese Dragon. Though, in many socio-economic indicators, including GDP growth, literacy, poverty eradication and China’s impressive performance in attracting FDIs, have taken China well ahead of India. India has been able to attract just half amount of FDIs, compared to China, and is far behind when it comes to really establishing world-class manufacturing facilities. But a deeper look assures that India has greater competitive edge over the Dragon in long run. It has succeeded to achieve almost equal economic growth rate as that of China, with less than half the amount of China’s FDI. It exhibits India’s greater efficiency in effective utilisation of limited funds. And those big manufacturing facilities that are engineering China to global economic power status, is mostly caused by massive foreign investments. So, wide range of products might be made in China, but not necessarily made by China, whereas in the case of India, made in India is more often synonymous to made by India.
China has been able to attract massive FDIs because of its faster economic liberalisation and introduction of privatisation in its agricultural industry. India has been slow and late in that respect. But what really is driving India and will take it ahead of China, is its strong and booming corporate sector backed by country’s rule of law and strong financial system. Democratic quasi-capitalism model and drive towards the US model of capitalism is actually helping India create more entrepreneurs and increasing competitive environment. Emergence of world-class Indian MNCs like Infosys, Wipro, TCS in software industry, Ranbaxy, Cipla in pharmaceutical industry, Mahindra in auto sector, and conglomerates like Tatas, Birlas and Reliance and there are many lined up to soar; is a sign of it. But business environment in China isn’t same. Businesses are frightened because of quasi-feudalistic rule of laws.
Stock markets in China are dreadfully strange. In 2005, Shanghai Stock Market (SSM) reached nearly 2,200 points but suddenly and surprisingly, it crashed down in April, the same year, wiping out half the wealth from the stock market. On the contrary, though Indian stock market is volatile but its strong regulatory system and impressive corporate performance gives buoyancy to India from any severe disaster. And most importantly, China’s totalitarian government and self-interest of its leaders can emerge as the hardest obstacle on its long journey. The dragon has experienced economic liberalisation as of yet but not political revolution. History bears testimony to the fact that political revival will not be easy for China. Chinese leaders never hesitated to slaughter its people for self-interest and to block any further revivalism. In that regard, Taiwan & Korea witnessed peaceful transformation because of their liberal and soft-political mindset.
To put things in perspective, indicators might not reflect impressive outcomes of present policy initiations and implications for Indian economy but it has proved enough credentials for future prospects. And further, its move towards American way of economy will bestow countless blessings in long run, boosting entrepreneurial spirit, competition and corporate leadership.
By:- Akram Hoque
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