Finance, Forex and Investments

Why do you people think China will do better than India, economically?

Both China and India have unleashed pent-up economic energy, but they’re not traveling the same development path. China has followed the traditional route, becoming a center for low-wage manufacturing and exporting clothing, toys, electronics and other goods. India has emphasized services, using its large English-speaking labor force for call centers, data-processing operations and the like. Growth rates give China’s goods-dominated strategy the better track record so far. But India’s approach may pay off better longer term. A look at per capita incomes around the world shows that the wealth of nations eventually depends more on services than industry. India possesses advantages that bolster a services strategy. Two are legacies of British rule: large numbers of English-speaking workers and familiarity with the West. India also offers an ample supply of educated workers, many of them college graduates available at a fraction of what they could earn in the U.S. and other advanced economies. China’s labor force includes larger numbers of educated workers, but the country has a ways to go before matching India’s advantages in language, cultural compatibility and communications technology. India also had the blessing of good timing. Services trade has surged in recent decades, providing new opportunities in the global marketplace. Two factors are at work. First, the Internet and other technologies have made international communications faster and cheaper, lowering barriers to marketing and delivering services over vast distances. Second, rising incomes have shifted consumers’ spending from goods, boosting demand for services and making it an engine for economic growth. Globalizing companies exploit new technologies by moving services work to low-wage economies—an extension of domestic outsourcing known as offshoring. To meet the needs of foreign multinationals, Indian companies offer services that include computer programming, tax return processing, back-office numbers-crunching, debt collection and cross-border tutoring. One database of the business-processing segment of India’s offshoring industry lists more than 900 companies employing almost 575,000 workers. In addition to the homegrown services companies, multinationals like Dell and IBM have established their own operations in India. The country’s major offshoring firms, for their part, have gone global, even setting up operations in China and the U.S. Although the tentacles of India’s service providers stretch around the globe, the chief export destinations are the U.S., Britain and the Middle East. Industry experts extol India’s edge in delivering global services. Business consultant A.T. Kearney put India at the top of its 2007 Global Services Location Index, based on such factors as cost, worker skills and information technology infrastructure. Jones Lang LaSalle, another consultant, included the Indian cities of Bangalore, Delhi and Chennai on its list of the 10 lowest-cost offshoring destinations. India’s fastest-growing services exports are linked to offshoring. Business services, which make up a quarter of the country’s services exports, shot up 107 percent in 2006 and 138 percent in 2007. Software services, two-fifths of the services exports, rose about 33 percent each of the past two years. Financial services exports may be relatively small, but they grew roughly 140 percent in both 2006 and 2007. These recent gains build on earlier ones. In the past decade, India’s services sales have risen from 18 percent to 38 percent of all exports, topping the 30 percent of the U.S., the largest seller of services in the global marketplace. At the same time, China’s services sales have fallen from 13 percent to 8 percent of all exports, confirming that sales have risen faster for its goods than its services. India expects even greater success selling its services in the future. The Federation of Indian Chambers of Commerce and Industry, the country’s largest business group, estimates services exports will more than triple in the next five years, growing much faster than goods shipments and reaching more than 50 percent of total exports in 2012. The largest chunk of any country’s services output meets its consumers’ demand for such things as transportation, recreation, and help around the office, store and house. In developing economies, many of these domestic services involve low-productivity work, and they’re rarely exported. By contrast, globally traded services tend to be knowledge-intensive, requiring more-educated and productive workers. What India sells doesn’t match the sophisticated services exports of the U.S. and other advanced economies. However, India’s exports are more likely to be at the top end of its services hierarchy. In fact, export success has allowed India to achieve a high level of services productivity for a nation at its stage of economic development. A typical Indian services worker generat A typical Indian services worker generates over $25,000 a year in output—significantly more than Russia, a country with four times the per capita income. India more than doubles the services productivity of Indonesia, a country with similar per capita income. Average income is four times higher in Turkey and more than twice as high in Mexico, two countries that eclipse India in services productivity. That's all. Kind Regards and Happy New Years to Everyone. Economics Student

Public Comments

1. tl;dr
2. wow you are extremely intelligent. seriously what is your iq?