India and China
Last month, the India government announced a plan to establish a manufacturing base for its country. The plan includes seven national industrial parks that would create 100 million jobs over the next 10 years to help with growth in a sector where India is still behind other nations. Currently, manufacturing only contributes 15% of Indian GDP, compared to 35% in China, and 28% in South Korea. The goal of the new plan is to raise the share in India to 25% by 2022.
Few months ago, the Chinese government announced a plan to establish an Information technology base for its country. The plan includes 20 big cities designated as Information technology areas that could create million of high paying jobs over the next ten years to help with growth in a sector where China is still behind other nations.
Today China is known as the “Factory to the world”. For the past twenty years, it has produced almost everything and exported them to every corners of the world. From electronic, toys, clothes, shoes to furniture, tools and machinery etc. Its manufacturing has employed hundred million people and improve the lives of many of its citizens. Manufacturing has certain advantages and disadvantages. It helps create jobs for many unskilled labor workers which is important for a country with a billion people. It brings in a large amount of revenues from exports which push the economy growth to the highest level, and make China the second largest economy in the world. However, without the knowledge and proper management training in manufacturing process, the country is highly polluted by toxic chemical which increase health risks. With many factories located in fertile agriculture lands, it destroys its own agriculture base. Today, as China exports manufacturing products, it has to import foods for its own people. There is not enough agriculture land to produce foods to support a billion people anymore. There are several reports that if the food supply is stopped within three months, famine could happen. This is a serious issue that probably prompted the government to review its economic growth plan, stop the manufacturing development and move quickly into another industry sector such as information technology. With the economy solely based on exports, its economy is depending on other country's economies. Begin in 2007 with the U.S financial crisis and with current European recession, most people stop buying. When export business is slowing down, factories must close and lay-off million of workers. Suddenly China is facing a large number of unemployed workers. As these number continue to increase, it may create a lot of social problems for the government. Last week, a high government official admitted that the economy plan to be “The factory to the world” is coming to an end. He said: “We have learned from this mistake, our new focus is on technology. We will put all efforts into clean technology such as information technology research and development. We will redirect our education systems into this area. It may take several years but we are confident that we will be able to grow our economy in this new direction.”
India is known as the “Information Technology office of the world”. For the past twenty years, India has been successful in providing outsourcing services in areas including information technology, business processes and health care. These high paying jobs also help create additional supporting jobs for this industry but not enough to raise the country out of poverty. As the population has reached over a billion people and continue to rise, India needs a quick solution to create a lot of jobs to keep the economy growing. The manufacturing base economy solution is selected by the central government but the implementation such as land acquisition, environmental clearance and infrastructure development have been left for the local government to handle. Many Indian economists criticize this plan as “Impossible” as local government does not have enough funds to finance the infrastructure needed to make the manufacturing sector a success. For many years, India cannot even build roads, bridges and transportation infrastructures due to the lack of direction and collaboration between central and local government. Instead of follow the plan of China, many analysts believe that India must continue to stay its own course by focus on information technology and engineering. A representative of the opposition party in congress said: “Why are we following the Chinese plan, they even admit that it is a mistake? We are ahead of them and they are following us by adopting our plan. Why are we changing direction? However, with the plan that can create 100 million jobs it would be difficult to resist, especially to a country with over a billion people.
The question is what will happen when both India and China are successful in implement their plans in dominating the technology and manufacturing sectors? It seems obvious that with over two billion people occupied these two areas, there is probably not much left for anyone else.
Sources
- Blogs of Prof. John Vu, Carnegie Mellon University
