Narayan said, "Why such a difference in outcomes between China and India, despite both countries embarking upon market policies? There are three substantial factors slowing IndiaÂs growth. First, we have never given adequate importance to education and healthcare...Second, the severe infrastructure bottlenecks...Third, India never acted with consistency even in pursuing economic reform..."
I think Narayan was right on about education and consistency (a clear strategy and adhering to it, despite major political crisis in 1989). However, I think infrastructure is a only secondary reason, as it is part of the consistent policy driven by economic affordability as well. While consistent policy and education are certainly important, I tend to think there are something behind education. They are equality and meritocracy. We might as well apply such comparison to the muslim world as well.
- Despite the income disparity and inequality between rural and urban residents, China offers relatively reasonable equal opportunities to everyone.
- Although rural students may quit school after 8th grade (and some girls quit earlier), they do receivee the basic education essential for medium/low skilled jobs.
- Although discrimination to rural migrant workers and women are common, the situation is much less serious than the caste discrimination in India, or sex discrimination in many developing countries, and the muslim world.
- If you work hard enough and are lucky enough, even rural resident or women could succeed and win respect in China
- Another important heritage from the communist/Mao era for China is that women hold up half the sky, the rights of women in urban China are probably better than those in many developed world, esp Korea and Japan.
The underprivileged in India or women in the muslim world do not have the same level of opportunity. Estimate of 160-240M of Dalit in India represents 15-25% of the entire population. The productive population is effectively halved at the muslim world and even lower in India, while the population burden remains high. Let's try to quantify the lost of productivity in a population as below.
Updated: (Thanks to WK Lee for the links) There are two excellent discussions about India education and the caste system. Stratification in social caste not only denied talents from lower caste the opportunity to contribute to the society, it also deprived any motivation to work hard and create wealth for oneself and society. High degree of work specialization based sub-castes may help in improving productivity in ancient time when trade is rather localized. Such "planned economy" is a hindrance to development in modern economy, because the Kurumaas and Golaas population may outgrow that of the sheep population they are supposed to raise, and the best shepard may be born in the Kaapy sub-caste family (there is no evidence that such skills are genetic in nature)
Let's try to quatify this. Let's define Productivity Lost Index as the % of the working population who are deprived the right to work as skilled labor (and the right to "proper" education). Discrimination on better job opportunity among skilled labor is not considered as it is hard to quantify. The disparity might be larger if one include such Universal Discrimination Factot (UDF)
Here are the rough estimates - note here we only focus on the opportunity to work, while there is probably an universal discrimination factor (UDF) over what kind of work is given to the under-privileged across all countries in the world. Singapore and some European countries probably perform best in the UDF measure, US good overall but might be slightly impacted negatively by hidden racial inequality
- Japan/Korea 15% : 30% women(x50%)
- China 15%: assume 50% of the rural(x67%) women(x50%), exclude migrant workers who have left the villages (x67% stayed rural), + 20% of urban (x33%) women (x50%)
- Muslim world 30%: 60% of the women(x50%)
- India 36%: 20% Dalit(x80%) + 50% non-dalit (x80%) women (x50%)
- (appreciate if anyone can provide data to improve my estimate)
(One may want to argue that most women stay at home in Japan. But in reality many Japanese women work and they all receive very good education, not different from that for men. Same for Korea, or the European before women are allowed to vote. One can see as far as economic development is concerned, the opportunity to receive education and work is more important than that of voting. In my estimate above the lower job opportunity for women in Japan and Korea compared with urban China is sort of compensated by similar effect in rural China)
(We can also compare literacy rate: India=59.5%, of which male 70.2%, female 48.3%; China=90.9%; male: 95.1% female: 86.5% notice the male/female literacy disparity ratio is 1.4 (India) vs 1.1 (China) )
Therefore, China is an economy of 1.3bn x 85%=1.1bn, India 1.1bn x 65% =0.7bn! (neglecting the negative effect of the super-poor class which contribute to destructive factors in society such as crime and diseases)
China's formula for success is, not co-incidentally, that of Singapore's. And Singapore's formula of meritocracy is, to a large extent, what American value is. Despite not being a democracy, China embraced much of the values adopted by democratic countries and ruled with a rational decision making processes. That is the reason for China's success. If India will follow China's path, the first thing is bring true equality and meritocracy to all its people. If the muslim world is to restore the glory from the 8th to 19th century, the productivity of 50% of its population need to be liberated.
- "Indian democracy is viewed as a hindrance vis-a-vis the stability of China's authoritarian regime on its liberalizing market and docile unions." - Japan did not have an authoritarian regime, nor did America, or Singapore in 1965 (or Slovenia, Czech, Estonia). I tend to think democracy is only marginally relevant to economic growth. Liberty is, which India also has, sort of. India's democracy did not enhance or hinder its economic development
- "India also lacks a Hong Kong and a Taiwan, next-door technology, and capital hubs". - There are just as many smart and educated Indian in Europe and USA as there are Chinese (or Taiwanese who went back to Taiwan to build the computer industry)
- "If India were to grow faster than China, it must increase its attractiveness to investing companies in terms of its market size and potential for luxury products...This is evidenced by ubiquitous presence of luxury brands from Starbucks to Louis Vuitton in China vs. India" - FDI is important, but it is only one part of consistent policy and meritocracy (Give equal opportunity to competent foreign companies). To make "luxury products" a strategy is, I am sorry, quite misleading and naive. Perhaps she meant to say value-added and technology content like Boeing, Microsoft and Google, or marketing/brand building expertise like P&G.
The fundamental question is still: How to bring the best out of the resources you have? Ans: give everyone a fair opportunity, and set up a level field for them to play. FDI, anti-corruptions, democracy, policy consistency and coherence...They all point to one sign post, fair play and fair reward. Fair play is the fundamental of capitalism. China is still far from perfect, it is hardly the model for fair play. Singapore is. There are so much more that China needs to do. But China learns about fair play very fast and practices it better than other developing countries. The unfairness in India and those other countries is so enormous that it makes China looks like a saint. Such unfairness is sociological and cultural, rather than political or policy driven.
Update: I am grateful that Asiapundit has quoted this post, but I would like to clarify that the inequality for women is only one of the unfairness in India, the caste discrimination is responsible for lost of productivity among many men as well.