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Monday, September 17, 2007

Why is India so much poorer than China? 

So I was musing on the routine China-this, China-that coverage these days, and I started thinking, "hey, what about India?"

And then I learned something that most everyone else who has asked that question already knew: India's per-capita GDP is about a third of China's, and is about half of China's PPP GDP.

Here's lots of pretty charts, in convenient PDF format. The intro to that document suggests the issue is that democracy or no, China essentially embraced aggressive market reforms about a decade earlier than India did. Here's a roundtable discussion on the subject of whether India will catch up, by a bunch of experts.

I asked a pretty clever friend what he thought the answer was relative differences in environmental and regulatory controls. And there's probably something to that. But the other thing to note is that compared to China, India has seen far less foreign investment. Whether that is the symptom or the cause of the lower rate of economic growth (and the present rather gaping chasm in average outcomes), there it is.

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