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PLAZO: 31/12/2022
Programa Mujeres en Ciencia
VOL. 3, NO. 3, PGS. 1–9


The Journey of China and India to Economic Development
A conversation with Pranab Bardhan

This interview was conducted by Javier Toro.

Pranab Bardhan is Professor of Graduate School at the Department of Economics at the University of California, Berkeley. He is the author of Awakening Giants, Feet of Clay: Assessing the Economic Rise of China and India.

How do the economies of China and India compare today to the world’s? How did they do before undertaking their economic reforms?

China and India are both very large countries not merely in terms of their population but also, throughout history, in terms of their economies. For many hundreds of years these two countries were, in a sense, the largest economies in the world. In 1800, for example, nearly half of the world’s income was generated in these two countries, but after the industrial revolution in the West, colonization and other problems, that share of the world’s income declined sharply. In 1950, after about a hundred years of very unpleasant things happening to both China and India, their proportion of world income was less than 10%. That share has been slowly increasing after the Chinese revolution took place and India became independent. From 1980 onward changes in policy started to take place in both countries —in China a little earlier than in India. Economic reforms started to take place merely because in both countries there was the general feeling that they were suffering due to too much government control. Both countries reformed but, of course, they reformed in different ways. Since then the rate of economic growth in both countries has been much higher than before. Between 1990 and 2010 the growth rate was much faster in China than in India, but both countries had relatively high growth rates compared to the previous period (from 2010 onward, roughly, the Chinese rate has declined slightly, while India’s growth rate has remained reasonably high). For the last year or two India’s growth rate has been higher than China’s. Of course, because of the fast growth in China between 1990 and 2010, the Chinese per capita income is much higher than that of India today —more than three times. Nowadays, I think both countries together generate about a fifth of the world’s income, but by 2035 their share will be about a third, according to most predictions.

What specifically was changed in each country?

The Chinese started by reforming their agricultural sector. Between 1950 and 1980, the Chinese agricultural sector was largely organized according to the commune system. Cultivation was done collectively and cultivation by individual farmers was discouraged. That changed in 1978-79 when agriculture was essentially de-collectivized. Land ownership still remained with the commune, but cultivation was now given into the hands of individual farmers. In a way, individual farmers were essentially cultivating farms that were leased in from the communists. That was a big change in the agricultural sector. Now, India did not need that because, in any case, India already had individual farming, even though at the beginning of the 1950s India also carried out a land reform in which land passed on from the old landlord class to individual farmers. Another difference between China and India is that in the 1980s China also offered much better prices for the crops produced by the farmers. In a way, it was a kind of land reform and price reform. All that together led to a very significant increase in agricultural productivity. By the mid-1980s the Chinese reform also took place in the production of manufactures. In the beginning, it was a kind of rural industrialization. Many small manufacturing units, known as township and village enterprises, started. Technically, they were still not individual companies —they were owned by the village authorities or commune— but most of the work was done by individual people. Then these township an village enterprises gradually passed from the hands of the authorities to the hands of those who carried out the work as they became rich enough to buy them. That also was a big change and a very successful one. The rural sector, which used to be very poor, prospered. In India, manufacturing companies were often privately owned, and most of them were not in the countryside, but in large and small cities, a pattern also found in other countries. There are also two other factors that helped rural industrialization in China. First, rural areas were already electrified when the reforms started —rural electrification was carried out to a great deal in the Maoist period. Second, the health and education of the peasants were quite good for a poor country at that time —a feat also achieved in the Maoist period.

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