CBSE Class 11 Economics Comparative Development Experiences Notes

Chapter-10 Comparative Development Experiences of India & its Neighbors

Every country aims to strengthen its domestic territory. The nations are forming regional & global economic groups like:

• SAARC (South Asian Association for Regional Cooperation) - it consists of 8 countries of South Asia.
• EU (European Union) – it consists of 25 independent states.
• ASEAN (Association of South East Asian Nations)- it consists of 5 countries.
• G 8- It consists of 8 nations Similarities in Development Strategies of India, Pakistan & China
• All the three started towards the developmental path at the same time. While India & Pakistan became independent in 1947, Republic of China was established in 1949.
• All the three started their planning in the similar way. While India announced its first five year plans in 1951, Pakistan did it in 1956 & China in 1953.
• Economic reforms took place in all the three countries. Reforms started in India in 1991, china in 1978 & Pakistan in 1988.
• All the three have same physical features.

Differences in the Development Strategies

India has the largest democracy in the world. Pakistan has authoritarian military power, while China has communist single party regime.

Both India & Pakistan followed a mixed economy approach. China followed approach where the govt. has the central role in all decision making.
Development Strategies of China After People’s Republic of China came into being, all the sectors of the economy & all the land owned by the individual were brought under govt.’s control. A program called ‘Govt. Leap Forward’ was launched in 1958. Its aim was to industrialize the country. Starting from 1978, several reforms were introduced in phases in china. Firstly, agriculture, foreign trade & investment sectors were taken up & then reforms were extended to industrial sector.

Agricultural Reforms- Commune land was adopted. However, the farmers were not given ownership rights on the land. They could keep income from these lands after paying taxes.

Industrial Reforms- For developing industrial sector, private firms were allowed to set up manufacturing units. These created competition between the private sector & the state owned enterprises.

These kinds of reforms in china brought the necessity of Dual Pricing. This means that the farmers & industrial units were to buy & sell fixed quantities of raw material & products on the basis of prices fixed by the govt. & the rest were purchased & sold at the market prices. In order to attract foreign investors, Special Economic Zones (SEZs) were set up.

SEZ- A SEZ is a geographical region that has economic laws different from country’s typical economic laws.

Development Strategies of Pakistan

They followed a mixed economy system with both public & private sectors.

• The introduction of green revolution led to the mechnisation & increase in public investments in infrastructure which leads to rise in production of food grains.
• In the late 1950s Pakistan introduced a variety of regulated policy framework.
• In 1970s, nationalization of capital goods industries took place.
• In 1988, structural reforms were introduced. The main areas were decentralization & encouragement to private sectors.
• During this period, Pakistan also received financial support from western nations & remittances from the Middle East countries. This helped the country in stimulating economic growth. Comparative Study of the Development Indicators of India, Pakistan & China
• Demographic Indicators

The population of Pakistan is very small & accounts for about 1/10th of China or India.
Though China has the largest population, its density is the lowest.
One Child Norm’ introduced in China in the late 1970s is the major reason for low population growth.
The sex ratio is low & biased against females in all the three countries due to son preference.
Urbanization is high in both China & Pakistan with India having only 28% of its population living in urban areas.

GDP Growth Rate

China has the second largest GDP of $7.2 trillion whereas India’s GDP is $3.3 trillion & Pakistan’s GDP is 10% of India’s GDP.
When many developed countries were finding it difficult to maintain a growth rate of even 5%, China was able to maintain near double digit growth for more than two decades.
In 1980s, Pakistan was ahead of India. China was having double digit growth rate.
In 1990s, there was marginal decline in India’s & China’s growth rate whereas Pakistan met with drastic decline of 3.6% due to reform processes & political instability.

Sectoral Distribution of Output & Employment

Agricultural Sector

• The total cultivable land in China accounts for 40% of the cultivable area in India. In China, in year 2000, with 54% of its work force engaged in agriculture, its contribution to GDP is only 15%.
• In both India & Pakistan, the contribution to GDP is same i.e., 23% with about 49% & 60% of people engaged in agriculture in Pakistan & India respectively.

Industrial & Service Sector

• In China, manufacturing contributes the highest to GDP at 53% whereas in Pakistan & India, it is the service sector which contributes the highest with more than 50%.
• In industrial sector, China has maintained the double digit growth rate whereas for India & Pakistan, the growth rate has declined.
• Thus, China’s growth is mainly contributed by the manufacturing sector & India’s growth by service sector. During this period, Pakistan has shown deceleration in all the 3 sectors.

Human Development Indicators

China is moving ahead of India & Pakistan in many indicators like income indicators, percentage of people below poverty line, sanitation, literacy, life expectancy etc.
Pakistan is ahead of India in reducing poverty & also its performance in education, sanitation & access to water.
In China, for 1 lakh birth, only 50 women died whereas in India & Pakistan, it is mare than 500.
India & Pakistan are ahead of China in providing improved water sources.

Development Strategy Appraisal

Success & Failures of Structural Reforms in China

In agriculture, by handling over plots of land to individuals for cultivation, it brought prosperity to the farmers & more equitable distribution of food.
With establishment of infrastructure, land reforms, decentralized govt., & existence of small enterprises helped positively in improving all social & income indicators.
Reforms created conditions for the subsequent financial growth & built up a strong support base for more reforms.

Success & Failure of Structural Reforms in Pakistan

Failures

• The reform process led to worsening of all the economic indicators.
• The proportion of poor in 1960s was more than 40% which declined to 25% in 1980s but stated rising again in the post reform period.
• Agricultural growth & food supply situation were not based on institutionalized process of technical change but on good harvest.
• There was also growing dependence on foreign loans & increasing difficulty in paying back the loans.
• Fall in foreign exchange earnings coming from remittances from middle eat & the exports of highly volatile agricultural products.

Success: the one year performance of Pakistan govt. for the year 2004- 05, Pakistan economy has been witnessing GDP growth of 8% for 3 consecutive years (2002- 05). All the three sectors contributed to the trend.

Conclusion

India: India performed moderately as it is clear from:

Still large no. of people are dependent on agriculture.
Infrastructure is more in many parts of the country.
Still more than 25% of people are below poverty line.

Pakistan: Pakistan performed poorly which can be seen from:

Existence of political instability.
Overdependence on foreign trade.
Poor performance of agricultural sector.

China: China performed comparatively the best as is clear from:

Control of poverty
Positive results in human development indicators.
Improvement in agriculture ensured social security in rural areas.