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Economic Assignment on India and China's Economic Growth Prospects


Task: Does China or India have stronger economic growth prospects?
Please use models relating to capital accumulation, TFP, and human capital. The aim is to use these frameworks to make sense of the various data to fashion a coherent answer to the questions set. Good answers will correctly use the models to provide a framework for your answers. They will also arrange the data in a coherent way that utilises the theoretical ideas and combines them with your own judgements as to what matters for growth. The very best answers will also provide some critical evaluation of these models and the data and in addition show independent thought.


In recent economic scenario there is a stiff competition between various industries within an economy as well as between economies of different countries. In a global perspective it can be said that technological advancements and innovation has paved ways for achieving efficient production systems which in turn helps the economies to achieve growth in the long run. However there are certain prospects that create a staggering impact on the growth process and slow down the growth for some of the economies. It is well known that India and China are two major emerging countries and two biggest developing economies on its way to further growth. In this paper various growth prospects of these two economies will be discussed.

China and India as emerging Economies:
It is known that China and India are two major emerging economies of the world. It can be stated that the global economy will be transformed by these two emerging giants in a number of ways in the forthcoming decades. It can also be said that even though their growth has been rapid, but the main source of this growth still needs to be validated as there has been uneven growth in various sectors(Simon, 2013).

As of 2019, on the nominal basis China is the second and India is the 5th largest country o the world. In terms of Purchasing Power Parity, China is the first and India stand at third position. China and India share 26.64% and 19.40% respectively of total global wealth in PPP and nominal terms. India and China are the major contributors in the GDP among all Asian countries, contributing more than half of the Asia’s GDP. In 1987, both countries were in the same position in terms of nominal GDP. In 2019, the GDP of China is more than five times of India. In nominal terms and PPP terms, the rank of China is 72nd and 75th respectively. On the other hand, in nominal terms and PPP terms, the rank of India is 145th and 126th. In the following diagrams, the GDP and GDP growth of India and China are shown(, 2019).

It can be seen in the below diagram, that China has achieved a higher growth rate than India. However, it is also evident that both countries have achieved a rapid growth over the years and it can be assumed that these countries will continue to grow in future and will emerge as major global economies(Simon, 2013).



Source: (, 2019)

In the following table, the projections by IMF can be shown for the nominal GDP, GDP in terms of PPP, per capital nominal GDP, per capita GDP in terms of PPP, and the growth percentage for India and China.(, 2019)


Source: (, 2019)

It can be stated prom the projections that the GDP growth for both countries will grow extensively in upcoming years. On the basis of its performance in past decades, it can be projected that these economies are on their way to become major global forces.

Now the performance overview of the Global Competitive Index of India and China can be highlighted in order to measure the performance of these two countries.

Performance Overview of India

performance overview of india

Source: (, 2019)

Performance Overview of China


Source: (, 2019)

In the tables above the performance overview of India and China are shown. It can be seen that, India ranks 40th whereas, china ranks 27thin the Global Competitive Index. India has a population of 1,309.3 million and China has a population of 1,382.7 million. Population is one of the major features for the growth of these two economies as it provides a wide market for the products and services and it creates a major consumer base as well as a vast pool of labour force. Thus it has the capacity to induce higher production as well as the market to serve the goods and services. This can be a major factor and operator of the growth machine that works in the favour of these countries(, 2019).
The Global Competitiveness Index comprises of various other pillars. These are health and primary education, macroeconomic environment, infrastructure, institutions, market size, technological readiness, financial and market development, labour and market efficiency, goods market efficiency, higher education and training, innovation and business sophistication. Here the rank is achieved with growth in each of these domains for these economies. It is also evident that these economies have improved significantly in achieving better ranking in the Global Competitiveness Index. In 2012-13, India ranked 59th out of 144 countries and in 2017-18 it ranks 40th out of 137 countries. On the other hand, China ranked29th out of 144 countries and in 2017-18 it ranks 27th out of 137 countries. So it can be said that China ranks better than India but the rate of growth is more rapid for India(, 2019).

Here the Total Factor Productivity or TFP can also be considered. Total factor productivity it the ratio of aggregate out to aggregate input. That means it shows the efficiency of a productive unit to produce more outputs by using smaller inputs. In this sense the technological innovations and efficiency plays a significant role. It is also one of the major contributors in economic growth. In the following tables, the graph for total factor productivity for India and China can be shown(Schaffner. and Julie., 2013). It can be seen in the below table that the TFP for these two countries is increasing at a rapid rate and in 2019, it has reached 1.0 points. This indicates economic growth for these two countries in future.


Source: (, 2019)

In conclusion it can be said that India and China are both global giants with a significant pool of human resource and a consumer market base. So they can be self-reliant in achieving the required growth in the future. From various indicators that has been presented here along with various statistics, it is also evident that both the countries are on their way to higher economic growth and thus it can be inferred that the economic growth prospects for both the countries are very high. Even though China is at a better position in the world economy today, India has the potential to catch up to it to become two major emerging economies in the world in coming days.

References (2019). Total Factor Productivity at Constant National Prices for China. [online] Available at: [Accessed 20 Jul. 2019]. (2019). Total Factor Productivity at Constant National Prices for India. [online] Available at: [Accessed 20 Jul. 2019]. (2019). Building a Shared Future IMF ANNUAL REPORT 2018. [online] Available at: [Accessed 20 Jul. 2019].
Schaffner.and Julie. (2013). Developmental Economics.John Wiley & Sons.
Simon, G. (2013). China and India as a New Center of World Economy: Problems of Development. SSRN Electronic Journal. (2019). Comparing China and India by Economy - [online] Available at: [Accessed 20 Jul. 2019]. (2019). The Global Competitiveness Index 2017-2018 edition. [online] Available at: [Accessed 20 Jul. 2019]. (2019). The Global Competitiveness Index 2017-2018 edition. [online] Available at: [Accessed 20 Jul. 2019].


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