India V. China Gdp Per Capita

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[Source: http://www.indexmundi.com/factbook/compare/china.india/demographics]

One will notice that Total Dependency Ratio is higher in India than China, however, for India 43.6% of such is due to youth dependency ratio (while only 24.9% for Cina), while elderly dependency is higher in China (12/5%) than India (8.1%). Both these measures indicate that means the Indian population is younger than the Chinese one.

In light of such fact, many believe that India has a more promising outlook as, in the foreseeable future, it will not only have a greater overall population compared to China, but its population will also be younger and the percentage of active working population will be higher, estimating that by 2030 India will be able to add as much as 200 million workers to its working population (4).

4.2. Human Capital Potential

India’s outlook for a younger population, however, is a challenge as well as benefit. Particularly when one considers the difference in literacy levels between the two countries.

Defining literacy as percentage of population over 15 years of age that can read and write this percentage is a mere 62.8% in India, versus 92.7% in China (5).

If India’s literacy levels do not improve, its workforce will most likely be less skilled and dynamic than China’s— this could well have a negative off-set for India, that will have a lower quality of work and worse work conditions than China, in the long-run.

- Political Systems and their Economic Impact

India is a “turbulent” yet functioning democratic system, where free-market and social upheaval have become part of the culture. China, on the other hand, continues to embrace a largely centralized model for economic development, where government intervention is still very high.

Therefore, while China has been re-building its infrastructure in the past decades, through government spending, India has done so by developing its private sector. To this date, India has a greater level of economic freedom than China and, as a result, it displays a more vibrant and competitive private sector across all industries.

As such, India seems to have created a true-private sector ecosystem that is turning into an engine of growth, while China is still relying on centralized policies to foster economic growth(6).

- What does the future hold?

India and China are two best performing economies in the world— their trajectory has been steadily positive for the past 30 years, with China growing at a faster rate. As such they are on track to becoming the biggest economies in the world.

Martin Wolf, Chief Economist for the Financial Times, predicts that, certeris paribus, China will become the biggest economy in the world and India will be the second biggest in the world by 2050(7).

Conclusion

India and China have been growing at a very high rate in the past 30 years. China, having had a head-start has steeply outpaced India in the last 30 years, and remains a considerably larger economy.

India, on the other hand, has also been growing considerably fast and is on track to become the second biggest economy in the world, after China by, 2050, many analysts believe.

References

- Statistic Times, India v. China GPD, http://statisticstimes.com/economy/china-vs-india-gdp.php

- Investopedia, Nominal GDP Definition, http://www.investopedia.com/terms/n/nominalgdp.asp

- Investopedia, Purchasing Power Parity Definition,

- N.P. Ojha, M. Singhal, The Economic Growth Trajectory of India and China: http://www.livemint.com/Politics/dlpKXKCzc7x1nSuMi8yOCN/The-economic-growth-trajectory-of-India-and-China.html;

- Index Mundi, India v. China, http://www.indexmundi.com/factbook/compare/india.china;

- C. Whalen, Beware, China: India's Economy Could Have an Even Brighter Future, http://nationalinterest.org/feature/beware-china-indias-economy-could-have-even-brighter-future-11027

- M. Wolf, India v. China Economic Growth,