Comparative Development Experiences of India and its Neighbours

Regional and economic groupings are formed so that countries can strengthen their domestic economies by cooperating with one another. In a globalised world, developing countries face competition not only from developed countries but also from other developing countries. Groupings such as SAARC, ASEAN, EU, G-8, G-20 and BRICS help countries share markets, resources, trade opportunities and policy experience, and also help them understand the strengths and weaknesses of their neighbours.

Countries are trying to strengthen their domestic economies by:

- forming regional and global economic groupings like SAARC, European Union, ASEAN, G-8, G-20, BRICS etc.
- studying the developmental processes of neighbouring countries to learn from their successes and failures.
- adopting policies that improve their internal economic strength in the face of global competition.
- promoting common economic activities that support overall human development in the region.

India and Pakistan followed several similar developmental strategies:

- both adopted a mixed economy model with co-existence of public and private sectors
- both gave importance to planning
- both created a large public sector
- both raised public expenditure on social development
- both initially followed import substitution-based industrialisation
- both later introduced reforms to improve economic performance

The Great Leap Forward (GLF) was a campaign started by China in 1958 to industrialise the country on a massive scale. People were encouraged to set up industries in their backyards. In rural areas, communes were started, and people collectively cultivated land under the commune system. In 1958 there were about 26,000 communes covering almost all the farm population. The campaign, however, faced serious problems, including a severe drought and the withdrawal of Russian professionals who had been helping in industrialisation.

Yes, China’s rapid industrial growth can be traced back to the reforms introduced in 1978. The chapter explains that the present fast industrial growth began after reforms were introduced in phases. First, reforms were started in agriculture, foreign trade and investment. Later, reforms were extended to the industrial sector. Private firms and township and village enterprises were allowed to produce goods, and State Owned Enterprises were made to face competition. Special economic zones were also set up to attract foreign investors. These measures boosted production and industrial growth.

Pakistan followed a mixed path of development:

- It adopted a mixed economy with public and private sectors.
- In the late 1950s and 1960s, it used a regulated policy framework for import substitution-based industrialisation.
- The policy included tariff protection for consumer goods and direct import controls.
- The Green Revolution brought mechanisation and higher public investment in infrastructure in selected areas, increasing foodgrain production.
- In the 1970s, Pakistan carried out nationalisation of capital goods industries.
- In the late 1970s and 1980s, it shifted towards denationalisation and encouragement of the private sector.
- It received financial support from western nations and remittances from workers in the Middle East.
- In 1988, reforms were introduced in the country.

The important implication of the one-child norm in China was that it reduced population growth. However, it also led to a decline in the sex ratio and created the problem of a future increase in the proportion of elderly people compared to young people. Because of this, China later allowed couples to have two children.

The salient demographic indicators are:

- Population: Pakistan has the smallest population, about one-tenth of China or India.
- Population growth: highest in Pakistan, followed by India, and lowest in China.
- Density: highest in India and lowest in China.
- Sex ratio: low and biased against females in all three countries.
- Fertility rate: lowest in China, highest in Pakistan.
- Urbanisation: highest in China.

From the table:
- India: population 1428 million, growth 0.81, density 473, sex ratio 930, fertility 2.0, urbanisation 36%
- China: population 1411 million, growth -0.10, density 150, sex ratio 898, fertility 1.2, urbanisation 65%
- Pakistan: population 240 million, growth 1.96, density 300, sex ratio 948, fertility 3.4, urbanisation 38%

India, China and Pakistan differ in sectoral contribution to GVA/GDP and employment:

- In China, agriculture contributes only 8% to GVA while 23% of the workforce works in agriculture. Industry contributes 38% to GVA and services 54%.
- In India, agriculture contributes 18% to GVA and employs 43% of the workforce. Industry contributes 28% and services 54%.
- In Pakistan, agriculture contributes 24% to GVA and employs 36% of the workforce. Industry contributes 21% and services 55%.

This indicates that:

- China has followed the classical development path from agriculture to industry and then services.
- India and Pakistan have shifted more directly from agriculture to services, with less expansion of industry.
- In all three countries, the service sector is now the largest contributor to GDP/GVA.