India's GDP has grown by around 8% a year for the past three years.
Housing prices have gone up by a third in some cities, and housing
loans have grown at a 25% rate. Some were worried that this could
only lead to a slowdown and crash, but the country's finance minister
just announced two days ago that the Indian economy is doing fine and
is not overheating.
India's overall economy is the fourth-largest in the world when
measured by purchasing power parity. Its GDP is $3.6 trillion. It is
growing second-fastest of the major economies of the world, with the
growth of GDP at 8.9%. Due to its large population of over a billion
people, the per capita income is only about $3,300 in purchasing power
parity. It has over 1.03 billion people and is the second-largest
country in the world; one out of six people on Earth is an Indian.
The population has slowed its growth rate since the 1950s, despite
better health care for the elderly, which is good for the country
economically (as there are fewer people to feed and clothe). Improved
health care, higher rates of literacy and self-sustaining food
production has enabled India not to suffer from its huge population as
much as some countries have.
India's economy is diverse and its citizens have become involved in
many different types of industries. Many opportunities were opened to
the country by the rise of the Internet and personal computing,
because many of its citizens are technologically intelligent and can
speak English well.
India's government was formerly very socialist; early in the 1990s,
the government opened India to foreign trade and investment, which has
allowed for the economic growth that the country is experiencing.
Reducing government control has led to success of a more market-based
economy. Poverty has declined due to these reforms, but is still a
major problem in a country of so many people. India has also
allocated large sums of government money each year to repair and
replace India's infrastructure, much of which is still left over from
British colonial times. Each year, railways and transportation
systems are improved. India is second in the world for road
construction, spending more than twice what China does.
Compared to China, India spends little on telecoms, real estate,
power, construction, and transportation. These compose 20% of China's
GDP but only 6% of India's GDP. India's GDP growth rate would be even
higher if it spent more in these areas. To try to stimulate growth,
the Indian government has allowed some of these sectors to be
The largest sector of Indian GDP, at 53%, is the services sector,
which is also growing worldwide.
The middle-class population, with 300 million, is larger than that of
either the US or Europe and is a ripe consumer market.
"Setting up shop in India"
Nov 2nd 2006 DELHI
From The Economist print edition
"INDIA's retail revolution is at last getting started. At the moment
97% of retail sales are made in more than 15m tiny mom-and-pop stores,
mostly of less than 500 square feet (46 square metres). But now
Reliance Industries, the country's largest business group, is to spend
250 billion rupees ($5.5 billion) on big new shops over five years,
starting on November 3rd when it will open 11 convenience stores in
the southern city of Hyderabad. And big foreign companies are moving
in too. The government bans them from selling direct to individuals,
but they have found a side door: starting wholesale and sourcing
companies which supply a local retail partner. The first to do this,
last month, was Australia's Woolworths, in league with Tata, India's
second-largest firm. Tesco, from Britain, is expected to follow soon,
and Wal-Mart and France's Carrefour are also thought to be searching
for a way in."
"For overseas companies looking for growth outside sluggish domestic
markets, India's retail business is one of the most attractive.
Consumer demand is booming as the government's steps to liberalise the
economy have produced GDP growth of around 8-9% a year. Technopak, a
Delhi-based retail consultancy, expects retail sales of $250-300
billion now to rise to nearly $430 billion by 2010. Modern retailers'
share will rise from just 3% now to 16-18%, it says."
Like India, China is a developing country with an emerging economy,
which has grown at a rapid pace since the 1970s. A move from
socialist economic policies to the free market quadrupled the economy
from the '70s to 1998. Foreign investment is high. The economy is the
fourth-largest in the world and second-largest when measured by
purchasing power parity. Its GDP in 2005 was $9.4 trillion. It is
the world's fastest-growing major econonmy and at current rates it
will eventually surpass the United States as the world's largest
economy. It will probably be the second-largest economy by 2030. 70%
of the GDP is in the private sector, which bodes well for continued
growth. There has been an overall tenfold increase in the economy
since the 1970s. The GDP growth rate is about 10% yearly-- although
many analysts say that it is actually closer to 13% because the
government doesn't survey the private sector properly.
China has the world's largest population with 1.295 billion people as
of 2000. Per capita PPP was $7,200 in 2005, with an actual value of
$1,700. Despite its economic growth, most of its people remain poor.
The market reforms and subsequent economic growth have driven the rate
of poverty down from 53% in 1981 to 8% in 2001.
China has propped other economies by taking in imports at a huge
rate-- with a growth in imports of 40% in 2003. China's industrial
production has surged by 50%. China accounts for one-third of the
yearly growth in oil consumption, 90% of the growth in demand for
steel and all of the increase in copper demand.
The largest occupation in China is that of agriculture, for over 50%
of the population. Taxes and fees have made farming unprofitable,
though, and despite 50% of the population farming, agriculture only
takes up 20% of the GDP.
"China is the world's largest producer of rice and wheat and a major
producer of sweet potatoes, sorghum, millet, barley, peanuts, corn,
soybeans, and potatoes. In terms of cash crops, China ranks first in
cotton and tobacco and is an important producer of oilseeds, silk,
tea, ramie, jute, hemp, sugarcane, and sugar beets."
It is also the world's largest supplier of red meat, ranks first in
coal production, and is the world's fifth-largest oil producer.
Despite that, domestic demand for oil and coal has increased so much
that China has been forced to export much of the oil it uses from
Africa. Coal is by far the most widely-used resource for energy, and
as a result China has suffered pollution problems.
If anything, China has been doing too well of late. Its economy is
growing so fast that observers fear that the result could be inflation
or a financial crisis for the country if it doesn't revalue its
currency, the yuan. The International Monetary Fund recently informed
China that something needed to be done in relation to its currency.
Some have said that China's growth is not as high as it should be, and
that the return on investment per dollar invested in China is not
nearly as high as that of other emerging economies, such as India.
As anyone who has been to a large store in America recently knows,
many things are "Made in China." But last year, China experienced a
labor shortage. Just as in other countries, the minimum wage has
risen, workers have gotten out of poverty and gone on to middle-class
jobs, and it was difficult for factories to find suitable workers.
Companies which rely on Chinese cheap labor to make their product are
thus contemplating moves to other countries such as Vietnam or
"Never too late to scramble"
Oct 26th 2006 BEIJING, LAGOS AND LUSAKA
From The Economist print edition
"China's main aim then was to gain influence. Now China wants
commodities more than influence. Its economy has grown by an average
of 9% a year over the past ten years, and foreign trade has increased
fivefold. It needs stuff of all sorts—minerals, farm products, timber
and oil, oil, oil. China alone was responsible for 40% of the global
increase in oil demand between 2000 and 2004."
"As a result, trade between China and Africa has soared from $3
billion in 1995 to over $32 billion last year. But China's commerce
with the world also expanded over the same period, so Africa makes up
only 2.3% of the total. This constitutes about 10% of Africa's total
Oct 5th 2006
From The Economist print edition
"Domestically, China is now the sixth-biggest buyer of high-tech goods
and services in the world; by 2010 it will be in third place, behind
America and Japan. Meanwhile, revenue from software and services has
increased by around 50% between 2000 and 2005.
They have roughly the same population, but China spends 2.5 times as
much on technology as India does. It is already the world's largest
mobile-phone market, and the second-largest market for PCs. Moreover,
at the end of 2005, China had around 110m internet users, compared
with 51m in India; and today China has 430m mobile-phone users, versus
120m in India. The two countries are adopting technology at different
paces and in different ways."
Russia's outlook is not so bright. Unlike its counterparts above,
Russia has not embraced free market reforms to a great extent.
That does not mean that there is not growth. Russia's GDP is ninth in
the world and grows at 6.8% a year. Its GDP for 2005 was $1.589
trillion and its GDP per capita is $11,000. Russia's economy is
difficult to be measured in comparison to other countries due to its
high rate of inflation and price-fixing for certain utilities.
However, the economy under Vladimir Putin has improved (perhaps due to
the improvement of oil prices during that same time). Not as many
Russians are living in abject poverty as they did a few years ago
after the Soviet reign ended. The middle-class is growing (but there
are still just as many who are poor as middle-class). Putin has kept
inflation down to a low-for-Russia level of 9%. He has stabilized the
country by putting gangsters in jail rather than letting them
terrorize cities. Things are improving, but Russia is just now back
to the level of economic development that it had in 1990, before the
collapse of the Soviet Union. Male life expectancy is only 59; the
population shrinks each year by 750,000 due to people's deaths at
"Richer, bolder—and sliding back"
Jul 13th 2006 NALCHIK
"Admirers of President Vladimir Putin, who plays host to the G8 summit
in St Petersburg this weekend, argue that the new wealth so
conspicuous in Moscow has spread to other parts of Russia too. They
Compared with the 1990s, says Svetlana Garipova of the municipal
government, it is “absolutely another country”."
If the growth rate of the current economy is sustained, Russia will
become the second-largest economy in Europe after Germany and the
sixth-largest in the world within a few years. Low oil prices could
stem the growth, though.
Housing prices have more than doubled in Moscow. The housing market
is geared to the wealthier classes, though, because mortgages are rare
and most buyers pay cash. What happens in Moscow is extremely
important to the country as a whole: despite having only 10% of the
Russian population, Moscow contributes one third of the country's GDP.
Oil prices are up, which is good for an oil-rich country like Russia.
Economic development could slow if global demand for oil diminishes.
According to the above Economist article, "Russia [is] precariously
dependent on the oil price." In fact, much of Russia's exports--
timber, oil, natural gas, and metals, which together account for 80%
of exports-- are prone to fluctuations on the world market. A decline
in prices for these could send Russia into turmoil. However, luckily
for them, these prices are not thought to diminish any time soon and
many countries stand in envy of Russia's abundant natural resources.
From 2000 to 2005, consumer demand internally has grown by 12% each
year, which is a good sign of a modern economy.
In addition, businesses have a hard time getting established in
Russia. Banks do not want to lend to small businesses and the country
is ranked 51st in availability of capital by the Milken Institute.
Its disparities in income between Moscow and the rest of the country
prevent it from becoming a more bustling economy. If these obstacles
could be improved, small businesses might thrive with the oil riches.
Until then, foreign investors will make the difference.
"Chidambaram: no signs of economy overheating"
Wikipedia entry-- Economy of India
"IMF urges China to revamp its currency policy to avoid protectionist backlash"
Introduction to China
Wikipedia Entry-- Economy of China
"The great fall of China?"
May 13th 2004
OECD Report on China's Economy
China Economy Overview
Sep 21st 2006
"Building a new Rome"
Aug 24th 2006 MOSCOW
Economist Articles by Subject: Russia's Economy
Wikipedia entry-- Russia
Thursday, July 19, 2007
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