Factors which made Chinese Economy more developed than Indian Economy

Abstract

This study compares the economic growth trajectories of India and China, exploring the factors contributing to China's rapid expansion and examining India's potential for similar, or even greater, growth. Beginning with a shared economic landscape in the late 20th century, the paper analyzes why China's economy significantly outpaced India's. The research investigates the roles of education, investment-led growth, foreign direct investment (FDI), and the effectiveness of local governance. It examines the arguments presented by economists like Raghuram Rajan and Davesh Kapur, who highlight the importance of basic education, strategic investment, attracting FDI, and incentivizing local governments to promote economic development. The study explores why India, despite liberalizing its economy, has not achieved the same level of growth as China, focusing on challenges related to local government capacity, the influence of the caste system, and the complexities of premature democracy. Finally, the abstract concludes by considering the recent improvements in India's infrastructure, education, and local governance, suggesting that India may be well-positioned for significant economic growth in the coming decades, particularly given its young and growing population.