Geography Reference
In-Depth Information
foreign equity ceilings in Indian aviation services, private banks, non-news
print publications, and the petroleum industry were all adjusted upwards
in order to attract more international investment (UNCTAD 2005). Yet,
even though China and India are often associated in the general globali-
zation discussion, there are actually fundamental differences between the
two economies and their responses to globalization. First, one obvious
difference is simply in terms of sheer scale. The Chinese economy is almost
three times the size of the Indian economy, with per capita incomes of well
over twice those of India. Second, there are major trade performance dif-
ferences between the two countries. In 1950, China's share of global trade
was 1 per cent while that of India's was 2.2 per cent, whereas by 2002 the
same share had increased to 4.8 per cent for China, while that of India
had actually declined to 0.8 per cent (Lardy 2005). In part, these trade
performance differences are because China's rapid growth began slightly
earlier than India's growth, and also because China's growth has been
more dramatic than India's particularly in terms of its increasing trade
openness. Third, there are also major differences between the two econo-
mies in terms of their industrial structure and sectoral composition.
The structure of GDP by industry in India shows a much greater
emphasis on services than is the case in China, where manufacturing is
still relatively dominant (Panagariya 2005). In 1980, in China agriculture
accounted for 30.1 per cent of GDP, industry for 48.5 per cent (of which
manufacturing alone accounted for 40.5 per cent) and services for 21.4
per cent of GDP (Panagariya et al. 2005). On the other hand, in India
agriculture accounted for 38.6 per cent of GDP, industry for 24.2 per cent
(of which manufacturing accounted for only 16.3 per cent) and services for
37.2 per cent (Panagariya et al. 2005). Even though both countries have
undergone enormous changes during the last three decades, the legacy of
these inherited industrial structures still remains. In 2002 in China agri-
culture accounted for 15.9 per cent of GDP, industry for 50.9 per cent (of
which manufacturing alone accounted for 34.5 per cent) and services for
33.2 per cent, whereas in India agriculture contributed to 24.9 per cent of
GDP, industry to 26.9 per cent (of which manufacturing accounted for
only 15.8 per cent) and services to 48.2 per cent (Panagariya et al. 2005).
As a result of its different industrial composition and also its English
language advantages, the growth of FDI in India, and particularly the
growth of offshoring activities, has been dominated by a range of service
industries, rather than manufacturing. This greater emphasis on service
industries in India, however, is not yet reflected in terms of the financial
services sector. Mumbai, which is currently ranked just within the top 60
global financial centres, is the only Indian city ranked amongst the top
75 financial centres in the world (COL 2009; Long Finance 2011). Yet,
