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moneysense.ca, 19/07/06
China + India > United States?
The Globe and Mail featured an interesting article on how the rapid growth of emerging economies is radically reshaping the global economy. The article points out that the Chinese and Indian economies together are bigger than the United States in purchasing power parity (PPP) terms. This is not a surprise: the combined population of China and India is 2.4 billion, which is eight times larger than that of the United States. Thus, even in PPP terms the average American is eight times richer than the average Chinese or Indian. In dollar terms, the gap is even larger. It is also not a surprise that emerging economies have higher growth than more mature economies. China (and to some extent, India) has come far economically, but they still have a lot of catching up to do. It would be unwise to extrapolate recent trends far into the future.
moneysense.ca, 19/07/06
To add to that, I do not know about China but the quality of life in India needs to improve thousands of times to even to compare with US. (Not that US has ideal quality of life).
Few examples:
1) Indian train system (for that matter 90% of infrastructure) needs to be fixed to sustain growth. As you may have seen on TV reports about Mumbai bomb blasts, people are hanging around train cars, between the train cars to get to work. It’s so dangerous!!!
2) Corruption became way of life. Even though there are few improvements it is till corrupt.
Example: You need to pay under-the-table to get starting from birth certificate, driving license and passport police report. In US it is very simple to get these things. You apply with small fee and they provide you the document. You do not need to go around begging for those things in US wasting your productive days. Why should someone pay Rs 500/- to get birth certificate.
3) Growth in India is not organic. Most of the big cities are getting very crowded making real-estate sky rocketing, inflation is very high and traffic is getting worse.
Having said that, life in India is getting better. Most people who are willing to work hard are finding jobs. There is lot of hope. People are very loving and welcoming and mostly peace loving. It is amazing a country with so many languages, colors, cultures and religions sticks together and hoping to become a player in bigger world.
This drives me crazy! People are ignoring the numbers! Anybody who has access to a copy of The Economist magazine can see the trade statistics in the back pages of the magazine. Countries like China and India, including Canada, all have massive trade surpluses fuelling their economies. Most countries around the world have trade surpluses. The USA and the UK (mainly the USA) have massive trade deficits – big enough to soak up the entire world’s exports. And that is why when America’s economy sneezes, everybody else catches a cold. It’s like going to a farmer’s market where everybody is selling and you only have one or two buyers that are buying up everything. What happens on the days that those two buyers fail to show up?