Ssuccess stories of globalization
The past two decades have seen a big fall in the number of
people living on less than US$1.25 a day, the World Bank’s international
poverty threshold — down from 1.9 billion in 1990 to 1.4 billion in 2005. By
this measure, the global poverty rate fell from 42 percent in 1990 to 25
percent in 2005, and may yet fall to 15 percent by 2015, or 900 million people.
However, US$1.25 represents a very low standard of living. Those below it are
in extreme deprivation, and many people above this threshold would regard
themselves as being poor.
Another difference has been becoming less evident in recent
years—the dramatically high rate of GDP
growth in China
compared to the more moderate expansion in India . The Chinese economy has
grown at an average annual rate of 9.8 per cent for two and a half decades,
while India ’s
economy has grown at around 5–6 per cent per year over the same period. Chinese
growth has been relatively volatile around this trend, reflecting stop-go
cycles of state response to inflation through aggregate credit management. The
Indian economy broke from its average post-Independence annual rate of around 3
per cent growth to achieve annual rates of more than 5 per cent from the early
1980s. It is only in the four-year period before the global economic crisis
starting late 2008 that the Indian economy grew at rates in excess of 8.5 per
cent per annum, coming close to the Chinese average.
The Indian pace of poverty reduction has been less than China ’s, not
just because growth has been faster in China , but also because the same 1%
growth rate reduces (or is associated with reduction in) poverty in India by much
less. The so-called growth elasticity of poverty reduction is much higher in China than in India ; this may
have something with the differential inequalities in wealth in the two
countries (particularly, land and education). Contrary to common perception,
these inequalities are much higher in India than in China . The Gini
coefficient of land distribution in rural India was 0.74 in 2003; the 3 For
example, Topalova (forthcoming). In unpublished comment T.N. Srinivasan has
raised some doubts about the methods in this study. corresponding figure in China was 0.49
in 20024. India’s educational inequality is one of the worst in the world:
according to a Table in the World Development Report 2006, published by the
World Bank, the Gini coefficient of the distribution of adult schooling years
in the population, a crude measure of educational inequality, was 0.56 in India
in 1998/2000, which is not just higher than 0.37 in China in 2000, but even
higher than almost all Latin American countries (Brazil: 0.39).
The decline of rural health services in China (along
with one-child policy) may have had some effect on gender equity in life chances.
Male to female ratio in children (below 6 years) is very high at about 1.19 in China (1.08 in India ). But one
should add that female literacy and labour participation rates (above 70% in
urban China ,
24% in urban India )
being substantially higher in China ,
women in China
have had the opportunity to contribute to economic growth much more than in India . Regional
disparity in income (or consumption) is also more in China than in India . But over
the last two decades China’s backward regions have grown at rates almost
comparable to its advanced regions, and regional earning disparities may be
narrowing (though not yet per capita income disparities).
In September 2011, the Indian Planning Commission presented
new estimates for the country’s poverty lines in urban and rural areas, setting
these thresholds at 965 and 781 rupees per capita per month (or about 32 and 26
rupees per capita per day), respectively.
A significant part of the domestic investment in China , about 20
percent of GDP , has gone to
infrastructure projects, which is nearly 10 times more than in India . That has
facilitated the accelerated rate at which the Chinese economy has transited
from agricultural to manufacturing production. In India , the transition has been
towards the information technology (IT) off-shore service industry, with as
much as 60 percent of the labour force remaining engaged in traditional farming
activities.
Public service provision
China and India have made important progress in public
service provision, which is associated with the reduction in the poverty rates
observed in the two countries. The most recent Human Development Report (2011)
shows that the respective Human Development Index (HDI )
for China and India
has grown at an average annual rate of 1.73 percent and 1.51 percent.
But challenges persist. In rural China , for instance, healthcare
access is largely via out-of-pocket expenses that absorb a large share of
household expenditure among poor households. In India , there are serious concerns
about the quality of public services, which are very low by international
standards.
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