The Chinese-Indian Economic Model

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From Confucians to Consumers
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It isn't too hard to produce really good growth rates for five years.

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<p>So, the real problem in economy is trying to work out, if you wish, &quot;Is that society, that economy, producing the means for sustained growth over long periods of time?&quot; Surprisingly, it isn't too hard to produce really good growth rates for five years; almost any sensible government can plough resources in a manner to do that. The question is: Can you sustain that over 20 years or 25 years? That's the really difficult part. And that's where the India and China model are interesting, because China's been able to sustain this for almost 30 years. India's reforms began a little later, but we're now looking at about 20 years. And both of them have been able to sustain their growth rates at the way they're doing, but you can start looking at the fact that India is now looking at China and saying that, &quot;Well, our domestic-driven internal consumption model, maybe if we can add one more engine to the driver, by adding an export-led, investment-driven model, like China does, then our economy will grow that much faster.&quot; And China is basically saying the same thing, &quot;If we can add an Indian engine, which would be domestic consumption-driven, to our export, investment-driven model, then our economy will also move a little faster as well. And in a more stable, long-term manner.&quot; So, what I think you're starting to see is these two economies starting to get closer and closer together, because they will take a bit of each other's economic growth model and absorb it into their system. And when you talk to economists and say, &quot;Well, which one got it right?&quot; They say, &quot;Well, they're both getting it right; there's no particular law that says you have to start with an investment, export model, and then switch to a domestic consumption model.&quot; You could do it either way, there's no reason that you should have it one way only and then they will do it another way and so on.</p>
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Pramit Pal Chaudhuri explains how India and China, both emerging economic giants, are getting closer and closer together. He talks about how each is looking at the other's economy and attempting to integrate the most useful policies into their own economic model.