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Whos The Next Super Power: India Or China?

As observed in Germany in he 1930s, Soviet Union in the 1950s, Brazil in 1960s and China in the 1990s, authoritative governments often yield short term economic results. As the
authoritarian government is not affected by things like legal recourse,
property rights and public debates, it can acquire considerable economic and
political resources to produce remarkable industrial and economic feats.

On the contrary, democratic systems tend to be careless affairs with loud
public discourse, free press, inflexible land owners and a countless of civil
liberties. The government acts as a supervisory body in democratic system which
results in very few ostentatious government funded projects. Though the
authoritative regime is envied by a number people but this type of model has
led to economic and social alterations in the long run. This is the main
problem that china is facing today.

In the 1980s China concentrated on developing the export driven economy supported by an
artificially underrated currency, while domestic consumption was limited
foreign direst investment was encouraged and huge infrastructural projects were
started. Though the Chinese economy has benefited immensely by theses policies
but with the rising inflation rates, the economic and social cracks have
started to appear. To reduce inflation, if the government allows the currency
to appreciate it will pull down its exports and trigger unemployment. If it
fails to curb inflation, it social unrest will rapidly spread out.

Now that china is running into obstacles of its own design. India here has an
edge as it comes from a well-established democracy which will force India to
surpass China. The disorganized Indian democracy may look messy on the surface
but if you take a deeper look you will see why India will succeed in the long


As India will become urbanized many people will choose to lend or borrow
against their land to provide education to their children, start a business or
buy new apartment. India is on the verge of a transitional phase driven by the
development of manufacturing and other key industries which will require large
numbers of skilled or semi skilled labor. This will lead to migration of rural
inhabitants to cities, which will facilitate sale of land holding owned by the
inhabitants generating $1 trillion in capital by 2050. Further this capital
will have a multiplier effect on the economy which can go beyond $3 trillion.
On the other hand, China has no property rights leaving the people at the mercy
of the authoritarian government. They cannot borrow against property as it is
leased not owned.


The rule of law is fundamental to any modern society India has a 100 year old
well placed legal system. This system is internationally recognized and has
rules that protect intellectual as well as physical property rights. This rule
creates stability and gives security to entrepreneurs who want to establish in
India. More than 6000 companies are listed in Bombay stock exchange as compared
to 2000 in Chinas stock exchange. Companies like Wipro, Tata motors, Infosys, Bharati tele
ventures, Reliance communications and HindalCo are becoming multinational
competitors with globally recognized brands. Over more than 150 global
companies have research and development bases in India. Large number of Indian
companies has been certified by US FOOD & DRUG administration as compared to
any other country outside US.

China has a legal system, which does not protect intellectual and physical
property rights. China is selling pirated movies, software and music, which is
costing the costing the companies around $2 billion of sales. This figure may
be understated as it does not include other pirated products that have been
exported by the government owned Chinese companies.

According to the rule of law, in a democratic society a public servant or a
person acquiring a political position or individuals working in political or
public offices cannot accumulate wealth beyond a certain limit. Democracy may
be a confused thing but it ensures that individual liberties are valued and the
government is responsive to the will of people whether rich or poor. Indias democracy may be far form perfect as it is in its adolescent stage. With the
rise in income, the population will become more aware and Indias government institutions will become more responsive and transparent.


  1. [...] Whos The Next Super Power: India Or China? [...]

  2. Arun Biyani says:

    excellent article.. loved it.

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