Download Yogi and the Mandarin: A Tale of Two Asian Revolutions

Yogi & the Mandarin: A Tale of Two
Asian Revolutions
“China and India. Rarely has the economic
ascent of two still relatively poor nations
been watched with such a mixture of awe,
opportunism, and trepidation. [They] possess
the weight and dynamism to transform the
21st-century global economy.”
August 22, 2005 BusinessWeek
The Yogi

Intuitive

Non-linear

Holistic

Introspective
The Mandarin

Efficiency

Order

Goal-oriented

Creature of hierarchy
Maps
China – 4th largest & most
populous country in the
world with a population of
1.3 billion people.
India – 7th largest & second
most populous country in the
world with a population of
1.17 billion people.
Historic Silk Route Ties
The Silk Route is a series of trade and cultural transmission routes that ran
through the Asian continent connecting the east and west and extended from
southern Europe through Arabia, Egypt, Persia, India till it reaches China.
January 2008
50 yrs ago, India and China were among the poorest and
economically most isolated countries in the world.
How did China and India emerge as
economic giants?
What are India & China famous for
today?
People’s Republic of China 1949
• Modern China was established after a violent armed
conflict between Chinese nationals and imperialist
powers. The communists won under Mao in 1949
giving birth to the People’s Republic of China.
• One party rule. No private property. Collectivized
farming. State owned 77.6% of the economy and
collectives owned everything else.
• Religious and cultural practices were suppressed and
ethnic minorities were marginalized.
• 40 million people starved to death between 1959 and
1962.
• 1966 Mao introduced the “Cultural Revolution” that
involved purging political rivals. 10 million people
were killed.
Mao Zedong
China’s entry in today’s Global Economy
• After Mao’s death Deng
Xiaoping took over as
China’s leader.
• Liberalized Chinese
economy in 1979.
• Started with agricultural
and economic reforms, set
up Special Economic
Zones.
Infrastructure
• China’s most visible infrastructure project to date
is building new roads and highways.
• In 1989 China had 168 miles of expressways by
2004 it built 21,500miles. By 2020 it plans to have
55,000 miles, which is the total length of the entire
American highway system.
• To fulfill its growing economy China has built new
coal mines for electricity use, increased natural oil
and gas consumption and built a modern power
grid.
China – Economic Fact Sheet
GDP – real growth rate:
9.8% (2008) country comparison to the world:
13% (2007)
11.6% (2006)
GDP-Per capita (PPP-Purchasing power parity):
$6,000 (2008)country comparison to the world:
$5,500 (2007)
$4,900 (2006)
note: data are in 2008 US dollars
GDP – composition by sector:
agriculture: 10.6%
industry: 49.2%
services: 40.2% (2008)
Beijing’s Skyline
Beijing Olympics Stadium
China’s One-Child Policy
1980s govt. poster advertizing the One-Child Policy
To accelerate economic growth China decided to curb its population
through the implementation of the One-Child Policy in 1979.
Strict Implementation

Urban families can have only one child whereas rural
families can have more than one child, if the first one is a
girl.

Under this policy, the government has conducted 10 million
forced abortions and 10 million sterilizations

40 million births have been prevented.

30,000 workers in the Family Planning department
implement these policies nationwide.
Indian Independence - 1947
India gained independence from British
rule in 1947 under the leadership of M. K.
Gandhi.

Non-violence
and peaceful civil
disobedience became hallmarks of India’s
freedom struggle.
India’s “Cultural Revolution”:
- The freedom struggle involved an agenda
for emancipation of women and lower castes
through democratic empowerment. India’s
diverse ethnic and religious population
participated in and flourished during the
freedom struggle.

Republic of India
India defines itself as a sovereign, socialist, secular,
democratic republic that was officially constituted on Jan 26,
1950.

India’s constitution guaranteed fundamental rights and
rule of law.

Multiparty democracy with a parliamentary form of
government. The Prime Minister is the elected head of the
government.

Special laws for the protection of ethnic, linguistic and
religious minorities were included in the constitution.

Mixed-Economy

Adopted a socialist-inspired, centrally planned economic
model between 1947 to 1991 under which India’s economy
grew at about 3.5% (called the Hindu rate of growth).

Land reforms were carried out to redistribute land more
equitably.

This economic era came to be known as the “License Raj”
due to the elaborate licenses and regulations that were
required to set up and run business in India. Corruption
and red tape flourished under this system.

All these policies and five year economic plans were carried
out within the framework of a functioning democracy with
routine elections every 5 yrs continuously from 1952 to the
present.
Economic Liberalization in India

In 1991 India adopted economic
reforms.

Current PM and economist
Manmohan Singh is the architect of
India’s economic reforms.

These economic liberalization
policies reduced government
regulation of and investment in the
economy, encouraged private
business and invited foreign
investment. Quotas and licenses
were dismantled.
Manmohan Singh
India – Economic Fact Sheet
GDP- real growth rate:
6.6% (2008)
9% (2007)
9.6% (2006)
GDP – per capita (PPP – Purchasing power parity)
$2,800 (2008)
$2,700 (2007)
$2,500 (2006)
note: data are in 2008 US dollars
GDP – Composition by sector:
agriculture: 17.2%
industry: 29.1%
services: 53.7% (2008)
Comparing India and China’s Growth Stories
Indicators
Political System
India
China
Multi-party
Democracy
One-party
authoritarian rule
Speed of Growth Economic reforms
started in 1991.
Average 6% growth
rate in past two
decades.
Areas of
Specialization
Rising power in
software, design,
services, and
precision industry.
Economic reforms
started in 1978.
Average 9.5% growth
rate in past two
decades.
Dominant in mass
manufacturing,
electronics and heavy
industrial plants
Comparing India and China’s Growth Stories
Indicators
Gini index
(standard measure
of inequality)
Foreign Direct
Investment
Future Areas of
growth
India
36.8
6.8% (up from 0.3%
in 2004)
China
47.0 (up 10 points
from 15 yrs ago)
17.8%
R&D, bioIT business, services
technology, highand continued
value IT enabled
manufacturing
services (legal,
medical, engineering
architecture),
manufacturing, agrobased industry
Comparison…

India lags behind china in infrastructure.

China has a weak banking and legal system.

India has the advantage of the English language which has
made it easier to participate in the global economy.

What holds India back are bureaucratic red tape, corruption
and its inability to build infrastructure fast enough.

According to Peter Drucker, India has managed rural to
urban transition in a relatively smooth and peaceful manner,
which China is still struggling to do.
The of Costs Growth – Human rights

500 million Chinese people have been lifted out of poverty in
a generation….but this has come with a cost.
Suppression of Dissent: In 1989, students protesting against
Communist rule in Tiananmen Square were killed by the
Chinese military.


No Freedom of Expression: Internet and media is state
controlled.
No Freedom of Religion:
Minorities are marginalized – Uighar and Hui Muslims,
Tibetans and Falun gong.

India’s Experiment with the “Mandarin
Model”

In Nandigram village, West Bengal, against the ruling
communist government’s planned to seize 10,000 acres of
land from farmers for a chemical plant. The farmers
protested.

4,000 heavily armed police tried to stamp out protests and
shot dead at least 14 villagers and wounded 70 more. The
Communist party cadres also participated.

The Indian media and civil society protested.

The communists were defeated in subsequent local and
national elections in West Bengal.
Urban-Rural Divide- China
• Extreme income disparity in rural and urban china. The
coastal and urban locations have benefited
disproportionately from the economic policies.
• There has also been an increase in inequality of education
and access to health services. Poor households have not
been able to afford the high private cost of basic education
and healthcare.
• Tens of millions of farmers have become landless in China
as developers and government officials seize farm land
without compensation to farmers.
• There were 87,000 local protests in 2005
Urban-Rural Divide - India

27.5% of India’s population was living below
the poverty line in 2004–2005, down from
51.3% in 1977–1978, and 36% in 1993-1994.

75% of the poor are in rural areas, most of
them are daily wagers, self-employed
householders and landless laborers.
Rule of Law

The authoritarian control of the Communist
Party over all spheres of Chinese society has
meant weak rule of law.

Poor people have little chance of getting their
grievances redressed if they have a dispute with
the Chinese state or powerful businesses. E.g.
Sprucing up of Beijing for the 2008 Olympics

Corruption exists in India as well and the
judiciary is overworked but India has a strong
rule of law.
Democracy & Economic Growth

Does economic prosperity lead to democracy?

No evidence to suggest that prosperity leads to democracy
or vice versa.

However, democracy may slow down economic growth but
it provides essential checks on excessive power.

Nobel Laureate economist Amartya Sen’s theory of famine
and Democracy: "No famine has ever taken place in the
history of the world in a functioning democracy.” (Freedom
as Development)
Elections and Olympics

Chinese Olympics 2008 cost $44 billion.
It was a spectacular achievement for any country, particularly one that
was only a generation ago predominantly poor and economically
isolated.

In
May 2009, the world’s largest exercise in democracy took place in
India.
- 714 million eligible voters
- 828,804 polling centers were set up, including one in Gujarat's Gir lion
sanctuary for a single voter
-1055 political parties
- 6.1 million civil and police officials were on duty
- Electronic voting machines were lugged across the length and breadth
of India on trains, trucks, cattle and bullock carts in some of the
remotest areas.
-131 seats reserved for backward castes and tribal groups
The Jury is still out!
As the 21st century unfolds, will the Yogi and
the Mandarin learn from the positive
qualities of each other?
Some Class room Questions
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What are the different strengths of India and China’s economies?
What does “economic liberalization” or opening up an economy
mean? How did this process occur in India and China?
What are the drawbacks and challenges facing India’s growth?
What are the concerns about China’s economic growth?
Economic growth often pulls people out of poverty and brings
about an improved standard of living to those who benefit from
it. Does it necessarily benefit all sections of society? How do the
stories of India and China throw light on this question?
What are the human costs involved in economic growth?
The End