Comparison between Indian and Chinese economy on the basis of Population growth

This article compares the Indian and Chinese economy on the basis of population growth. It analyzes the GDP growth rate, labor force, manufacturing and agricultural sector, and domestic demand. The article concludes that China's focus on developing the manufacturing sector and utilizing cheap labor has contributed to its GDP growth, while India's focus on maintaining an agricultural economy has limited its production level.

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Managerial Economics
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Comparison between Indian and Chinese economy on the basis of "Population growth"
India and China are two most populous and growing economy not only in Asia, but in the
world also. In 2016, the population of China was 137.87 crores and that of India was 132.42
crores (World Bank, 2018). China is one of the biggest economies of the world with nominal
GDP $12.014 trillion in 2017, and economic growth rate being 6.9% in 2017, on the other hand,
India’s GDP is quite low, only $2.6 trillion in 2017 with a growth rate of 6.74% (IMF.org, 2018).
1986
1990
1994
1998
2002
2006
2010
2014
0
2000000000000
4000000000000
6000000000000
8000000000000
10000000000000
12000000000000
GDP Comparison between China and
India, 1986-2016
China GDP (current US$)
India GDP (current US$)
GDP
Figure 1: GDP Comparison between China and India, 1986-2016
(Source: World Bank, 2018)
Over the past 30 years, the Chinese economy has grown in an extremely rapid pace, as seen from
the above diagram. With the huge growth of population, the Chinese economy focused on
utilizing the labor force into developing the manufacturing sector alongside the agricultural
sector. The private firms in China were more efficient than the public firms and they had

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invested in expanding the manufacturing sector by utilizing the cheap labor. On the other hand,
India has also seen a huge population growth during this period. However, India kept its focus on
maintaining an agricultural economy while China shifted its focus on becoming an industrial
economy along with maintaining the agricultural growth (Sengupta & Puri, 2016). The cost and
wages were competitive in India but there was also a lack of larger scale opportunities for
utilizing the cheap labor. Hence, the level of production was lower than in China. The labor
market restrictions were higher in India. Huge population growth also helped in maintaining the
domestic demand in China which contributed in the GDP growth (Quer, Claver & Rienda, 2017).
During this time, India was dependent primarily on the agricultural sector and followed by
service sector and the level of trade was also lower due to high level of restrictions. Thus, huge
population growth was not much helpful for increasing the level of production in the country
compared to China.

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References
Imf.org. (2018). Report for Selected Countries and Subjects. Retrieved from
https://www.imf.org/external/pubs/ft/weo/2018/01/weodata/weorept.aspx?
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24&s=NGDPD%2CPPPGDP%2CNGDPDPC%2CPPPPC&grp=0&a=#cs1
Quer, D., Claver, E., & Rienda, L. (2017). Cultural distance, political risk and location decisions
of emerging-market multinationals: a comparison between Chinese and Indian
firms. Journal of the Asia Pacific Economy, 22(4), 587-603.
Sengupta, P., & Puri, R. (2018). Exploration of Relationship between FDI and GDP: A
Comparison between India and Its Neighbouring Countries. Global Business Review,
0972150918760026.
World Bank. (2018). Population, Total. Retrieved from
https://data.worldbank.org/indicator/SP.POP.TOTL