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Emerging Giants: China and India in the World Economy
Abstract
China and India are two of the fastest growing countries in the world. The rapid growth of their economies has far-reaching implications for global living standards, poverty reduction, and competitiveness and distribution of income in the rest of the world. Reflecting these facts, there has been a surge of interest in the nature and implications of China and India's economic growth. This volume brings together the best such research on related issues and places them in a comparative perspective. The issues range from the roles of China and India in the world economy, contrasts in their development experience, and challenges to sustaining growth. A key message of this volume is that though both China and India have seen millions lifted out of poverty through successful economic growth, they face serious challenges going forward. Challenges emanate from the fact that growth in the two countries has been concentrated in a few sectors, has relied on unsustainably high levels of capital accumulation in China, and has not generated adequate employment growth in India. China needs to rebalance its growth away from investment and exports, move toward a more rational pricing system for land, power, and fuel, enforce more stringent environmental standards, implement significant reforms of the financial sector, and adopt greater exchange rate flexibility. India needs to grow its manufacturing sector, reform its labor laws, invest in infrastructure, further liberalize its foreign trade, and strengthen its financial system by reducing the dominance and influence of the public sector.
... India's Gross Domestic Product (GDP) growth has increased consistently since the mid-1990s averaging from 6 to 7 percent, and even reaching 9 to 10 percent in some years in the mid-2000s. There have been many studies discussing various aspects of this growth process Bhagwati and Panagariya, 2013;Verma, 2012;Balakrishnan, 2010;Eichengreen et al., 2010;Bosworth and Collins, 2008;Panagariya, 2008;Kochar et al., 2006;Vaidyanathan and Krishna, 2007). One crucial aspect, which is less considered from an overall economy perspective, is the role of productivity growth and structural change, which are essential in achieving ଝ This paper is an outcome of the India KLEMS research project. ...
... Economic growth in India is often compared with that of neighboring China, despite substantial differences between the two countries in the historical development path and institutional environment (see for instance Eichengreen et al., 2010). A major difference between the observed growth process in India and China is the importance of manufacturing in the aggregate growth in China and that of services in India. ...
... Eq. (9) suggests that aggregate TFPG can be decomposed into a weighted average of industry TFPG and the capital and labor reallocation across industries. Note that the weight attributed to industry TFPG in this setting is equivalent to the well-known Domar weight (Domar, 1961). The difference between Domar-weighted TFPG and the aggregate TFPG is the sum of labor and capital reallocation effects, which reflects the movement of these resources across industries. ...
Using detailed sectoral data from India KLEMS, we analyze the role of structural change in determining India's aggregate productivity growth during 1980–2011. In general, the impact of static structural change on aggregate labor productivity growth has been positive, as workers moved to sectors of a relatively higher labor productivity level. However, dynamic reallocation effects—worker movement to fast-growing industries—have not been observed. The pro-market reforms in the 1990s did help a TFP growth-enhancing allocation of capital across sectors. The relative importance of the manufacturing sector for aggregate TFP growth has increased in recent years. Yet, India's structural transformation features the absorption of workers in the construction sector and slow and stagnant job creation respectively in services and manufacturing sectors. This poses a challenge, as the potential for productivity growth in construction and services are limited, and the changing nature of manufacturing production provides less room for absorbing less-skilled workers.
... Industry and business associations within India have argued that India's labour policies are inflexible and are thwarting growth, productivity, and competitiveness (Bhattacharjea, 2006;Bhattacharya, 2007). Yet, despite industry's calls for reform, there has been little official change to India's major labour laws at the national level (Eichengreen, Gupta, & Kumar, 2010;Murali, 2010;Sood et al., 2014). Labour protections were, however, greatly curtailed within the National Manufacturing Policy (NMP), 2011, a policy designed to fulfil India's current investment strategy to increase the manufacturing share of gross domestic product (GDP) as well as employment opportunities for India's large labour force. ...
... India's main labour laws were created following Independence in 1947, the most notable being the Industrial Disputes Act (IDA), which continues to provide the basic framework governing industrial relations and labour protection in India (Eichengreen et al., 2010;Hazra, 2005). Section V-B of the IDA requires firms employing 100 or more workers to obtain government permission for closures, employee layoffs, and retrenchments (Bhattacharjea, 2006). ...
... Section V-B is one of the most contentious for business who argue that that the process to acquire government approval is inconvenient and difficult to obtain (Bhattacharya, 2007). Labour reform efforts by business have targeted the need for an "exit policy", whereby business operations can shut down, lay off, or retrench employees without government approval (Eichengreen et al., 2010;Murali, 2010). ...
Following formal economic liberalisation in 1991, business, in particular big business, has gained increasing access to and influence over policy decision-making in India. Industry has been an outspoken critic of national labour laws and has lobbied extensively for greater labour market flexibility. While business has not been successful in influencing “official” labour reform at the national level, it was able to influence labour policy within the National Manufacturing Policy 2011, which curtailed labour protections and implemented “hire and fire” policies. Utilising qualitative data from 40 face-to-face interviews with policy stakeholders in New Delhi, India, this paper aims to explore how business was able to influence labour reform within this policy as well as underscore the wider social welfare implications that may follow. It will be argued that the ability of business to dictate labour reform, while strong, is somewhat variable as competing factors serve to constrain business influence. Furthermore, the extent to which labour laws are hindering manufacturing investment is widely debatable. Nevertheless, curtailment of labour protections, as afforded in this policy, will have a widespread and damaging impact on workers. While the policy promises to empower rural youth, provide gainful employment, and enable growth to become more sustainable and inclusive for its citizens, it is questionable whether these goals can be achieved alongside the curtailment of labour protections.
... The citation network was developed with the shareware TouchGraph Navigator. 41 Furthermore, we clustered the most cited sources based on their main content and constructed a visualized and clustered citation network (shown in Figure 6). ...
... 42 Moreover, Figure 1 shows a comparison of the number of different sources and the number of citations for each category (books and book chapters, journal articles, and other sources). 41 TouchGraph Navigator is a program for creating interactive network visualizations of different databases. The program can be downloaded at http://www.touchgraph.com/ ...
Within the past few decades, developing countries such as China, India, and Brazil have increasinglybecome economically important due to ongoing internationalization. To address risingcompetition in the global market, companies in these countriesuse management accounting (MA) as acentral instrument of corporate management. Issues concerning MA are highlighted by the relativelyyoung and largely explorative field of comparative management accounting (CMA), which has a significantrelevance for accounting research as well as corporate practice. Until now, CMA has focusedon developed countries, especially the United States, Japan, and other highly developed Asian andEuropean countries, whereas only a few studies have investigated MA in developing countries, and assuch scholars have called for further research on CMA in these countries. To respond to this call andto investigate the existing literature on CMA in developing countries, we conducted a citation analysisbased on a sample of 41 peer-reviewedarticles found during a systematic, keyword-based literaturesearch within six databases. The purpose is to provide an overview of the structure of the researchfield of CMA in developing countries and to identify influential publications, journals, and researchers,as well as implications for future research. We analyzed a database of 2,550 references cited inthe 41 articles and constructed a citation network as well as main cluster themes. The findings showthat Accounting, Organizations and Society is the most cited journal, Geert Hofstede is the most citedauthor, Hofstede’s book Culture’s Consequences: International Differences in Work-Related Values(1980) is the central contribution, and national culture is the predominant contingency factor withinthe research field of CMA in developing countries. We conclude with implications for future research,especially a general call for further works on CMA in developing countries and an invitation to drawenhanced attention to other contingency factors in addition to national culture.
... The emergence of India as a major player in the global economy has attracted many scholars to study various aspects of Indian economy (Balakrishnan, 2010;Das, Erumban, Aggarwal, & Sengupta, 2016;Eichengreen, Gupta, & Kumar, 2010;Kochhar, Kumar, Rajan, Subramanian, & Tokatlidis, 2006;Verma, 2012). Several studies examined the productivity growth of different sectors in the Indian economy (Das & Kalita, 2011;Goldar, 2014;Kathuria, Raj, & Sen, 2014). ...
This study employs input-output analyze to determine the extent of structural changes in the Indian economy, as well as how economic sector linkages changed between 2000 and 2019, and identifies the sectors with profound linkages with other sectors. Furthermore, we use the causative matrix to examine the temporal changes in intersectoral interactions. The analysis shows that manufacturing sectors have stronger intersectoral linkages than service sectors, with resource-intensive and scale-intensive manufacturing sectors having the most profound linkages. Furthermore, the causative matrix analysis reveals that Indian sectors became more externalized following the global financial crises while receiving less feedback from other sectors. The results suggest that intersectoral linkages should be taken into account when designing industrial policies and that investment should be encouraged in India's key economic sectors.
... Comparing the "export to GDP ratio" and "value added export to GDP ratio", it is explained that when the export is calculated based on the value added, its contribution to economic growth (following Asian countries example) is being assessed as much higher than the simple net export index calculated in the framework of the SNA (Arora & Cardarelli, 2010). Sometimes both of these indicators are examined and compared (Eichengreen et al., 2010). ...
The aim of this study is to assess the contribution of the international business sector (IBS) to the development of the national economy. A new index has been developed, which is expressed as a primary income share and makes it possible to analyze IBS structure both by the primary income from abroad (received) share and by the value added export share. This study analyzes the long-term development trends of IBS and its structural shifts for OECD and top non-OECD countries. Our new index has increased markedly in OECD countries, where IBS generated a third of primary income in the middle of the second decade of the analyzed period. In contrast, in top non-OECD member countries, this index grew slowly, while IBS generated about one-fifth of primary income. To analyze qualitative shifts in IBS growth in terms of cluster analysis OECD countries have been grouped according to the prevailing IBS models. The results showed that OECD countries changed their basic IBS model moving from the Partial model to the Dual one. It is the change in this basic model that accounts for the long-term trend of increasing gap in the development level of IBS in OECD and top non-OECD countries.
Measuring the international business sector and its two-decade dynamics in OECD countriesAll authors
Sergii Arkhiiereiev & Anastasiia Mytrofanova |
https://doi.org/10.1080/23322039.2022.2067022
Published online
25 April 2022
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... On the contrary, India has not seen such accelerated economic and demographic changes. However, the Indian economy experienced a sustained increase, contributing to the steady growth in its population (AllaouaZoubida, 1997;Jati, 2009;Eichengreen et al., 2010). In 2018, the United Nations reported that the estimated 1,352,642,280 of India's population was approaching the size of the estimated Chinese population of 1,427,647,7860. ...
In 2015, China and India's population represented approximately 35.74% of the total number of people living in the world. Due to the historical context and behavior of the most relevant indicators, this study proposes to utilize a wide variety of demographic, economic, and production indicators from 1952 to 2015 to assess their impact on the GNI in China and India. A comprehensive and new fangled modeling process with stepwise, regularization and distributed lag regression approaches is presented. Accordingly, theoretical results were corroborated through extensive diagnostic tests and an empirical check of the models' predictive capacity. The findings show that GNI in China is most influenced by variables such as reserves in foreign currency and the dependency ratio; whereas, variables of energy production and birth rate were generated for India. Therefore, it's the timing for China to relax the universal two-child policy. Due to the current value below the substitution rate, a gloomy outlook for China's future population and economy is predicted. Conversely, a positive outlook is forecasted for India, given the low price in the future of oil- India's primary raw material.
... Despite the extensive economic reforms implemented following the Balance of Payment Crisis in 1991 and high GDP growth rates since 2000, manufacturing sector development has lagged behind, and as a result, India's manufactured exports remain underrepresented in world trade flows. 1 While the prevailing labour laws, inadequate infrastructural development and complex regulatory norms for starting businesses have contributed to the stagnation, inadequate access to external finance can be an additional impediment. Credit constraints due to the weaknesses in the financial sector may have prevented the small-and mediumsized firms from growing (Eichengreen et al. (2010)). Moreover, the high cost of credit and limited access to long-term finance are recognized as factors affecting the growth of manufacturing sectors (Department of Commerce Report 2011). ...
This paper examines the relationship between external financing constraints and the intensive margin of exports for manufacturing firms in India. We use a sample of nearly 3200 firms over the period: 2000–2015 and construct a multivariate index proposed by Musso and Schiavo (J Evol Econ 18(2):135–149, 2008) to estimate the degree of external financing constraints. We find that an increase in the degree of external financing constraints faced is associated with lower firm-level exports and this result holds even after accounting for endogeneity issues. We next examine whether business group-affiliated firms are less dependent on external finance to support their overseas sales. We find that financing constraints are a significant binding factor even for firms with access to internal capital markets. Moreover, we find that firm size matters, as a decline in the financial health of small- and medium-sized firms is associated with a significantly larger decline in their export levels. Finally, we find some evidence of industry-level heterogeneity, as financing constraints lead to a more pronounced decline in the exports of firms in industries with greater dependence on external finance.
... Khanna (2011) rather than utilizing information and data the creator makes concrete and particular focuses utilizing stories and accounts and related subjective examination between the nations. Eichengreen et al. (2010) is again another efficient book which is rich in information with diagrams and charts and figures, composed fundamentally from a monetary IJSER and exchange points of view. The book begins talking about the economies of India and China; the parts they play in the worldwide economy, exchange, and fare examples of these two nations and afterward gets into differentiating these two nations in their advancement encounters and the difficulties they look in supporting development later on. ...
Innovation has driven the United States and now US become most dominant and powerful economy, but due to the globalization, there is a swift
growth in the economies in the other part of the world—particularly in China and India. Also, both India and China are gradually becoming engines
of growth and global economy and become the highestemergent economies having high GDP rates. This paper is a detailed study of the seven
factors (like the economy, culture, government policies, infrastructure, education, demography, and market structure) that drive growth and
innovation of India, China and US. In most of the cases the US leads followed by China and then India but in the case of demography, the US and
China are both ageings, and especially from an age viewpoint, the plus point go to India. Still, both India and China have vast challenges with the
education quality and literacy levels of the personnel in general.
... In comparative terms, trade between the European Union and China is second in terms of volume of transactions, with China being the second largest trading partner in the EU, only behind the US (EICHENGREEN et al., 2010). Not only is the EU the largest importer of Chinese products but it also enables its large-scale exports to that market. ...
China is the second largest economy and the biggest exporter in the world. Its growth in 2016 reached 6.7% and it is expected that China may be in the way to become the world's largest economy by the end of this decade , with an internal market of over two billion Euro in potential consumers . China's rise as a major global economy was driven by its WTO accession in 2001 which allowed the opening of its economy. This led China to establish itself as a major global trader and largest world exporter. These notes outline a history of recent trade relations between China and the European Union, discussing its evolving dynamics and volume in international trade.
... Interest in developing countries stems from two main reasons. On the one hand, developing economies like China, India, and Brazil have growing economic importance (Eichengreen et al., 2010;Cesa-Bianchi et al., 2012). On the other hand, social, economic, and political changes in developing countries have led to the emergent possibilities of implementing and adopting MA practices (Guilding et al., 1998;Luther and Longden, 2001). ...
Motivated by the increasing relevance of developing countries (especially China) due to ongoing internationalization, this systematic review analyzes current literature on Management Accounting (MA) in developing countries in order to define what is currently known about and relevant to Comparative Management Accounting (CMA) in developing countries. Our findings show that there is still little current literature on CMA in developing countries. Culture is the most predominant influence within the research field in this context, the current literature lacks theoretical paradigms, existing research focuses on developing Asian countries, and current findings are not generalizable because national cultures are different. Furthermore, we confirm that intercultural MA research in developing countries is important for both academic research and corporate practice by examining the included sample based on three main clusters: MA behavior, MA instruments, and MA change. We conclude with implications for future research, including a general call for further research on CMA in developing countries.
... The above needed to be contextualized within the possibility of China and India becoming the great power as economists had predicted (Morrison, 2014;Meredith, 2008). China and India remained specific for that they had got the possibility of maintaining a market economy within domestic territory itself for they had got the resource of a huge population (Dahlman, 2011;Eichengreen et al., 2010). This market potential and the need of new market and the desire for geospatial supremacy had resulted in shifting of US focus to the Asia-Pacific Region through Back to Asia Policy (Paal, 2012:6-14). ...
The end of cold war had marked a beginning of new world order. China and India became significant
actors for their gradual rise into great stature in international politics. The developments in international
politics such as terrorism had posed threats and open economic policy created new opportunities.
Those developments required cooperation among the US. China and India. The relations among the
three nations had been conceptualized as strategic triangle following the realist school of international
politics where US was perceived as the pivot actor. The objective of the study was to map the content
of relationship among US. China and India through a historical perspective. Consequently, an attempt
was made to predict the possible direction of this triangular relations and motives for such relations
resulted in new type world order characterized by multipolar powers while United States remaining as
the super power in the foreseeable future. The data for the study was collected through secondary
sources and they had been descriptive presented to identify evolving trends of relations among the
three nations. The study had concluded that Chinese and Indian ascendancy would displace US as the
super power in the 21st Century.
Key Words: China, India, United States, Triangular Relationship, Conflict, Cooperation
... Sin embargo, los datos desagregados no siempre están disponibles, los valores promedios son los más utilizados y permiten formular conclusiones, dadas las limitaciones que plantean.9 En este sentido, la comparación entre Argentina y Brasil es aleccionadora. ...
¿La intensificación de relaciones comerciales asimétricas entre China y Brasil puede explicar la desindustrialización precoz en Brasil? En este trabajo se mostrará que no es la apertura la que conduce a la desindustrialización, a la baja productividad o a la reducción del valor agregado, sino la manera en la que se implementa. La desindustrialización en Brasil se explica porque la apertura no se acompañó de una política cambiaria e industrial adecuadas.Est-ce que l'intensification des relations commerciales asymétriques entre la Chine et le Brésil peut-elle expliquer le début de la désindustrialisation précoce au Brésil? Dans cet article, on montre que ce ne sont pas : ni la liberté de commerce, ni la faible productivité ou ni la réduction de la valeur ajoutée en soit qui conduisent à la désindustrialisation mais la façon dont elles sont mises en oeuvre. On peut expliquer la désindustrialisation au Brésil parce que l'ouverture au commerce international n'est pas accompagnée ni d'une politique de taux de change ni d'une politique industrielle.Can the intensification of the asymmetric commercial relationships between China and Brazil explain the early deindustrialization in Brazil? In this paper it will be shown that it is not economic openness what leads towards deindustrialization, low productivity, or reduced added value, but the way in which it is implemented. The deindustrialization in Brazil is explained because the economic opening was not accompanied by an adequate exchange and industrial policy.
Die Art und Weise, wie das Verhältnis von Staat und Unternehmen in Indien seit den 1980er Jahren restrukturiert wurde, liefert wichtige Lektionen für das Verständnis des modernen Kapitalismus in großen Schwellenländern, auch im Kontrast zum traditionellen Modell des ostasiatischen Entwicklungsstaats. Ausgehend vom historischen Entstehungskontext entwickeln wir eine Charakterisierung des Staatskapitalismus in den indischen Ballungszentren als „staatlich durchdrungene Marktökonomie“, bevor wir die Schattenseiten dieses Modells, insbesondere gravierende Ungleichheit, skizzieren, die – trotz aller wirtschaftlichen Dynamik des Kapitalismus in großen Schwellenländern wie Indien – notwendig mit diesem Wirtschaftsmodell verbunden sind.
This chapter reminds readers that the recent rise in the volume of publications in the economic history of Imperial China has been promoted by the extraordinarily rapid rate of economic growth achieved by the Peoples’ Republic over the last forty years. The economic and, by implication, the geopolitical advance of communist China to a position of eminence within and significance for the growth of the world economy at large has raised the meta historical question of when, how and why did the Chinese economy decline into a condition of relative backwardness compared with advanced modern economies of Western Europe, North America, Australasia and Japan? The question remains germane and salient because western views of the Chinese state economy and society were (as historiographical surveys reveal) almost entirely favourable before the eras of industrialization and enlightenment in Western Europe. Thereafter western intellectuals entertained increasingly negative perceptions of Chinese civilization that degenerated into Eurocentric levels of denigration and contempt before 1914. Although Eurocentrism became less common in the wake of the barbarous conflicts of the twentieth century, condescension continued until the Chinese economy revealed its underlying potential for modern economic growth after the death of Mao in 1976. Thus, the protracted debate on the Great Divergence can be represented as a controversy inspired by a generation of Sinologists who have attempted with some success to rescue the economic history of Imperial China from a Western tradition of writing that history as one of decline and retardation. The following chapters written by an economic historian of Europe locate this famous debate in historiographical context and are also offered as a survey and critique of that laudable (and for global and comparative economic history) highly provocative, stimulating and heuristic endeavour.
Raising the productivity content of exports is an important issue for developing and emerging countries. What role do foreign firms play in this process? This question has not been adequately studied. We contribute to the literature by generalizing the role of foreign direct investment (FDI) in the host country’s export productivity level. Using panel data, we present new empirical evidence suggesting that FDI boosts the overall productivity level of the developing and emerging countries’ exports.
This Chapter explores the conception of India as a rising power. In the last two decades, India is said to be a growing economic power which is interested in pursuing political and strategic gains. It is indeed listed as a large economy, comparable to other BRIC economies, such as Brazil, Russia, and China. However, these understandings about rising India can be questioned. Taking a social constructivist starting point, this Chapter argues how social phenomena, such as India’s rise, are shaped by human interaction through dialogue between individuals and groups. Exploring India’s so-called emergence in terms of economic growth, military potential, and foreign policy outlook, it demonstrates that these “social facts” can be further interrogated. One interpretation can gain more prominence than the other. The understandings of India are embedded within a larger debate about global transformation which presupposes a particular view of the international order and India’s position within it.
Emerging markets refers to some forty former developing economies that have achieved industrialization, rapid economic development, and quickly improving living standards, in the past two decades. The term “emerging market” also describes commercial, political, and human development in these countries. They are increasingly attractive destinations for exports, foreign direct investment, and sourcing of manufactured goods and services. The countries are found in Asia, Latin America, and Eastern Europe. The largest are Brazil, Russia, India, and China, sometimes known by the acronym “BRIC.” Such countries are contributing enormously to global economic growth and a shift in geoeconomic power. Their rise represents how the distribution of global prosperity and economic growth are becoming more diffuse, with no one country dominating the world economy. They are giving rise to a new generation of large multinational enterprises that compete in world markets. Doing business in emerging markets entails various risks and uncertainty.
In the first decade since 2000, China and India have entered into a new era of industrial upsurge, which has made their economic landscapes in the early 2010s enormously different from those of the 1990s. Though the two countries have accelerated deep-going liberalization reforms since the early 1990s (Joshi 1998, Naughton 2007, and Acharya 2009), however, the growth paths of the two have varied greatly, not only in terms of their macroeconomic appearances, but also in terms of the micro-level realities. The aim of this book is to present a detailed comparison of the growth trajectories of representative indigenous firms and clusters during the two decades after the 1990s in China and India, and to explore their relative characteristics in the industrial development process. We also seek to comprehend the underlying socioeconomic backgrounds that have engendered such disparate features.
The balance of the world economy is shifting away from the established economies of Europe, Japan, and the USA, towards the emerging economies of Asia, especially India and China. With contributions from some of the world's leading growth theorists, this book analyses the long-term process of structural change and productivity growth across the world from a unique comparative perspective. Ongoing research from the World KLEMS Initiative is used to comparatively study new sources of growth - including the role of investment in intangible assets, human capital, technology catch-up, and trade in global value chains. This book provides comparisons of industries and economies that are key to analysing the impacts of international trade and investment. This makes it an ideal read for academics and students interested in understanding current patterns of economic growth. It will also be of value to professionals with an interest in the drivers of economic growth and crisis.
What drives innovation and entrepreneurship in India, China, and the United States? Our data-rich and evidence-based exploration of relationships among innovation, entrepreneurship, and economic growth yields theoretical models of economic growth in the context of macroeconomic factors. Because we know far too little about the key characteristics of Chinese and Indian entrepreneurs and the ways they innovate, our balanced, systematic comparison of entrepreneurship and innovation results in a new approach to looking at economic growth that can be used to model empirical data from other countries. The importance of innovation and entrepreneurship to any economy has been recognized since the pioneering work of Joseph Schumpeter. Our analysis of the major factors that affect innovation and entrepreneurship in these three parts of the world - US, China and India -provides a comprehensive view of their effects and their likely futures. • Looks at elements important for innovation and entrepreneurship and compares them against each other within the three countries • Places theoretical modeling of economic growth in the context of the overall macroeconomic factors • Explores questions about the relationships among innovation, entrepreneurship and economic growth in China, India and the US.
Jerome Booth was a key member of the 1999 buyout team that turned the Ashmore group into a highly successful investment manager specialising in emerging markets. Having made his fortune, he has now left Ashmore to devote his time to building up a portfolio of business start-ups, philanthropy (particularly in the area of music, his great love) and writing this admirable book. The heart of the book is the case he makes for investing much more heavily than is customary at the present time in emerging markets, and is directed in particular - although not exclusively - to the institutional investor. It is, of course, widely recognised nowadays that for the foreseeable future the growth prospects of much of the developing world are very much greater than those of the developed world. At the very least, they still have a great deal of catching up to do; and the combination of globalisation and the change from top-down planned economies to largely market economies is enabling them to do so.
This study investigates an under-researched topic: individual-to-individual or team-to-team interactions during the alliance pre-formation phase. We develop a general theory based on the principle of congruity for understanding the micro-dynamics of the alliance formation process. The attitudes of each party in an alliance towards their prospective partner depend on the level of mismatch between their initial evaluations of the contributions of each partner, and on their wish intensity and speed to reach congruity. The impact of different managerial cultural backgrounds (special theory) and mind-sets (special theory application) are theorised. Further applications are considered and all are presented as testable propositions.
This study examines the impact of research and development (R&D)‐specific factors in determining the likelihood of small‐ and medium‐sized enterprises (SMEs) from developed countries to be attractive partners vis‐à‐vis forming alliances with SMEs from large emerging economies (LEEs). This study is founded on the knowledge‐accessing theory of alliance formation, which emphasises the higher efficiency gains of knowledge application as opposed to knowledge generation. We extend this theory to SMEs on the basis that smaller firms, because of their resources constraints and drive to survive, are likely to use alliances to access external knowledge bases leading to new product development (NPD) opportunities because of the low feasibility of acquiring knowledge. As a mix of complex knowledge is necessary to develop most modern products and services, SMEs are also likely to adopt a more flexible operational approach and to accept compromises to forge knowledge‐accessing alliances. We illustrate this theoretical development using primary data collected from British and German biotechnology SMEs, declaring the intention prospectively to form alliances with their counterparts in Brazil. Binary logistic regression was used to identify the factors influencing the likelihood of a firm as an attractive alliance partner. Our results indicate that R&D‐specific factors influence the likelihood of firms to be attractive alliance partners. In particular, firms showing an in‐house innovation history focused on one or few products are more likely to be attractive alliance partners with LEE firms than those that do not. Another R&D‐specific predictor that enhances the chances of alliance partner attractiveness with LEE firms is the firm's focused searching and identifying capability relative to technology or equipment that demonstrates good prospects to improve the firm's line of products. A third predictor refers to the firm's awareness regarding non‐cost obstacles for its own technological development. Implications for policy makers and practitioners are also discussed.
Using independent estimates of China's industrial output, this paper compares the performance of the manufacturing sectors in China and India over the past half century at a disaggregated level. It finds that China's industrial growth rate is close to one and half times that of India's over the entire period, with the gap widening gradually. But Indian growth has been more stable. China's superior performance seems understandable in terms of its faster agricultural and exports growth. Does it mean there is little prospect of India catching up with China in the foreseeable future? China seems to suffer from huge excess capacity, misallocation of resources and a gross wastage of capital - as evident from the persistently high capital-output ratio. China's impressive industrial edifice seems to be built on somewhat shaky microeconomic and institutional foundations. In comparison, India's relatively strong foundations and domestic entrepreneurial capital seem to have the potential to improve performance, with a sounder macroeconomic environment: a step up in fixed investment to augment infrastructure supply and agricultural productivity, revival of long-term finance to boost industrialisation, and easier credit delivery to small and medium enterprises.
Since 2003 China has faced increasing pressure, especially from the US and Japan, to revalue the renminbi. In July 2005 China responded by announcing a small revaluation and a switch from a dollar peg to a tightly managed float against a currency basket. The mainstream economic debate, which we briefly review, has focused on whether, and to what extent, the renminbi is undervalued. From a political economy perspective, however, the more interesting question is why China has been so reluctant to significantly revalue the renminbi especially since it was keen to prove itself a ‘responsible member of the international community’ by not devaluing in the wake of the Asian financial crisis in 1997–1998. We argue that this can be explained by three factors. These are, firstly, the diminished ability of China's policy-makers to use the export tax rebate policy to mitigate the effects of a revaluation. Secondly, there are differences in the regional context between the two time periods. Thirdly, in the international game of ‘problem assignment’, China refuses to accept that the US trade deficit is its ‘problem’.
Over the last 5,000 years serious environmental problems—deforestation, desertification, erosion, and widespread pollution of air, land, and water—have prevailed throughout most of China, brought about by a diverse set of social and political contexts. In this paper I focus on an enduring contradiction associated with the post-1978 reforms, namely accelerated environmental resource degradation in rural areas amid unprecedented national economic growth. Declining entitlements to assets and social capital in China's rural village populations are a crucial aspect of altered state-peasant relations, as these are increasingly mediated by the market during China's transition to a hybrid economy. This has resulted in changing patterns of resource use, impacting both the environment and peasant livelihoods. A brief assessment of China's postrevolutionary environmental policy and management practices provides the context for detailed case studies in Henan Province. These examples highlight the relationship between political-economic changes and environmental policy and management. Contrary to reform rhetoric, rural peasants' embracing of reform policies does not necessarily optimize their welfare or promote sustainable use of resources. The case studies reveal alternative pathways for villages, ones that ought to be brought into the policy debate spotlight.
The procedures for constructing a fuzzy number and a fuzzy-valued function from a family of closed intervals and two families
of real-valued functions, respectively, are proposed in this paper. The constructive methodology follows from the form of
the well-known “Resolution Identity” (decomposition theorem) in fuzzy sets theory. The fuzzy-valued measure is also proposed
by introducing the notion of convergence for a sequence of fuzzy numbers. Under this setting, we develop the fuzzy-valued
integral of fuzzy-valued function with respect to fuzzy-valued measure. Finally, we provide a Dominated Convergence Theorem
for fuzzy-valued integrals.
This paper compares the growth prospects of China and India through a growth accounting analysis. Consistent time series for capital stock and employment are constructed using available survey data, and recent revisions to the national accounts for both countries are incorporated. The results allow for a discussion of the sources of growth in both countries, and a consideration of each country's rate of potential growth in light of the outlook for national savings, as demographic shifts occur in each country.
Chinese economic growth statistics are controversial. In recent years they have been challenged on technical grounds as well as on suspicions of data falsification. Angus Maddison in a 1998 OECD study goes further in that he questions China's long-run growth statistics and proceeds to provide an alternative time series. His average annual real GDP growth rate for China in the reform period (1978 through 1995) is 2.39 percentage points below the official one. Angus Maddison's revisions were subsequently incorporated into the Penn World Tables; his GDP estimates for China, thus, have found their way into numerous cross-country studies. This paper critically examines the validity of Angus Maddison's revisions to official data. Copyright 2006 Blackwell Publishing Ltd.
In 1998, the National Bureau of Statistics (NBS) in the published industrial statistics modified the scope of enterprises covered and the enterprise classification system. This paper highlights the modifications and identifies two implications. First, the use of a proportional allocation rule in data aggregation boosts the size of “public ownership,” an important cornerstone of socialism. Second, the switch from compiling detailed statistics on enterprises identified by an administrative criterion to enterprises that exceed a fixed volume of sales revenue poses new difficulties for comparative data analysis but also represents a change in statistical practice that may yet lead to data of better quality.
On the basis of published earnings data, estimated compensation ratios, and estimated hours, China's manufacturing employees averaged about 57 cents compensation per hour worked in 2002.
Since the enactment of the National Environmental Policy Act (NEPA) of 1969, comparative state environmental policy studies have ranged from case studies to systematic input-output analyses. At the present time, however, we still do not know a great deal about the conditions that promote or inhibit state environmental management. This is due to a number of problems that have plagued previous research including, for example, a lack of theory, a reliance upon cross-sectional (versus longitudinal) analysis, limited measures of environmental effort, and inadequate techniques of analysis. The purposes of this article are to review and critique much of this literature, to identify sources of data on states' environmental efforts, and to suggest some remedies for these problems for the next gen-eration of research inquiry.
This study joins the debate of whether Chinese manufacturing has experienced a significant catch-up with or a process of falling behind the world's advanced economies. It calculates a new set of industry-of-origin, China–US purchasing power parities (PPPs) for major manufacturing industries at 1987 prices. Then, using a newly constructed data set, it derives China's comparative labour productivity level in manufacturing for 1952–1997. The results show that China's comparative labour productivity increased from about 3.0 in 1952 to 7.6 in 1997 (USA=100), but with a long period of stagnation at around 4.5 between 1958 and 1990. A clear catch-up process has been observed since the beginning of 1990s when China's market-oriented reform deepened.
This paper tracks the story of Indian financial sector reforms in terms of a number of segments such as banking, debt markets, forex markets, and others like non-banking financial companies. This apart, as an offshoot of the financial sector reform, changes in the monetary policy are discussed. In this light, the paper looks at various performance indicators of different segments of the Indian financial sector. In general, it is found that there has been an improvement in efficiency, competitiveness and health of all the segments of the Indian financial sector. The paper raises some issues for the future of this sector.
This article estimates the equilibrium value of the Chinese currency Renminbi (RMB) by controlling for the per capita income level and structural changes in the 1980s and 1990s. It finds that the Chinese currency is moderately undervalued by 22%. Revaluation to the equilibrium level can lead to a net efficiency gain for both China and the rest of the world, although the adjustment should be carefully designed and implemented. I suggest that the revaluation be a one-time adjustment combined with a control on the capital account, to minimize damages from speculations in the foreign exchange market.
Institutional theory argues that institutions in general, and culture in particular, shape the actions of firms and individuals in a number of subtle but substantive ways. The theory has been used to explain a number of significant and substantive managerial differences found in different parts of the world. To date, the examination of venture capital outside the US and Europe, however, has been rather limited. Institutional theory also suggests that there would be differences in how venture capital may operate in other parts of the world, such as Asia where the culture is substantially different from the West. Based on interviews with 36 venture capitalists in 24 venture capital firms investing in China, this exploratory research finds that China's institutional environment creates a number of significant differences from the West. The article discusses the impact of these findings on future research on Asian venture capital, theory development, and the activities of venture capital professionals in that region.
Differences in relative price levels for areas of the United States can be estimated with a modified Country-Product-Dummy (CPD) method often used in international comparisons of the purchasing power of currencies; CPI observations and CE weights are used to estimate experimental price level differentials for 2003 and 2004.
By analyzing the changes in the accounting environment of China during the recent economic reforms, this paper places the development of accounting reforms in China into perspective and assesses the desirability of China?s adopting accounting principles in close conformity with International Accounting Standards (IAS). The recent economic reforms, particularly the enterprise reform, in China have changed the corporate landscape and have profoundly altered the accounting environment. The Chinese accounting profession and government have responded with the enactment of a number of accounting regulations. These regulations have essentially transformed China?s accounting from the traditionally rigid and uniform system into a predominantly Anglo-Saxon approach to financial reporting. Accounting reform in China will be followed by the enactment of 30 detailed accounting standards which will bring China?s accounting practice into further conformity with IAS. However, the paper argues that accounting rules in China should not be formulated to cater to the need of a small number of firms which are already listed (or will be listed) on overseas stock exchanges. Rather, China GAAP should be designed to serve China?s large industrial and commercial enterprises that are characterized by extensive managerial autonomy and an effective separation of ownership and control. These enterprises in China operate in an accounting environment which differs considerably from that which is typically presumed by IAS. China?s accounting environment, both now and in the foreseeable future, is characterized by a lack of independent/professional auditing. Without an independent audit profession, information provided under IAS will be unreliable; therefore, adopting IAS may not be warranted in the specific context of China. The analysis sheds light on the role of IAS in developing and transitional economies with rudimentary auditing and judiciary infrastructure, suggesting the limit of accounting harmonization.
This Article explores contemporary meanings of the rule of law with a focus on its meaning in Chinese history and tradition, as well as Chinese legal institutions. Part I considers the concept of law in China, from early understandings in Confucianism and Legalism to more recent treatments in Chinese Communism. It also reviews efforts that the People's Republic of China has made in recent decades to strengthen its legal institutions. Part II begins with a discussion of the Western jurisprudential idea of the rule of law and suggests a distinction between two basic understandings: (1) rule by law as an instrument of government, and (2) the rule of law as a normative and political theory. The Article proceeds to make a controversial claim that Chinese development of the rule of law may be separated from the development of Western-style democracy, at least in the present historical situation. The Article concludes with several recommendations for promoting the rule of law as a normative and political system in China.
This article describes and analyses changes in the environment and related policy developments in the People's Republic over the past 50 years. When discussing the quality of China's environment it must be remembered that the population of the country has doubled over the past half century and the economy has grown rapidly, particularly over the last two decades. Pessimists argue that the current population of over 1,200 million has exceeded the number which can be supported at a good living standard. Despite such views, there has been some ground for optimism in recent years, with China's greater environmental awareness and increased openness, its realization that the environment can be a tool in international diplomacy, and the increasing importation of environmental protection techniques. Yet overall, China has not done enough to maintain environmental quality and has not chosen to make many environmentally friendly transport investments.
Corporate governance has become a globally debated topic. As multinational corporations enter new global markets, complications abound due to the myriad of corporate governance rules existing among the various legal systems. One example of the new markets becoming more available to American investment is the Chinese market. In light of both the grant of permanent normal trade relations (PNTR) to China and China's anticipated membership in the World Trade Organization (WTO), the American business community is apt to find more opportunity for investment in China. American investors are likely to be increasingly interested in understanding the current Chinese corporate governance regime as they consider the Chinese market for investment of their assets. The goal of this paper is to provide an analysis of the corporate governance system in China and offer some suggestions for improvement to make the Chinese market more attractive to foreign investors. This paper is organized as follows. Part I provides general background information on the historical corporate governance structures prevalent in China. Part II then analyzes current governance issues, in particular those occurring in the context of corporatization of China's State-owned enterprises. Part III offers proposals for reform and is followed in Part IV by our concluding remarks.
Economists have offered many theories for the U.S. Great Depression, but no consensus has formed on the main forces behind it. Here we describe and demonstrate a simple methodology for determining which theories are the most promising. We show that a large class of models, including models with various frictions, are equivalent to a prototype growth model with time-varying efficiency, labor, and investment wedges that, at least on face value, look like time-varying productivity, labor taxes, and investment taxes. We use U.S. data to measure these wedges, feed them back into the prototype growth model, and assess the fraction of the fluctuations in 1929?39 that they account for. We find that the efficiency and labor wedges account for essentially all of the decline and subsequent recovery. Investment wedges play, at best, a minor role. This article originally appeared in the American Economic Review. (c) American Economic Association. ; RELATED PAPER: Staff Report 328 Business Cycle Accounting
Historically, rapid growth has produced environmental destruction. China is no exception. Because of its huge and growing population, 20 years of over nine per cent per annum growth, a history of neglect and adverse geography, China faces crises. Floods devastate in the south while droughts afflict the north. One in three of China's rural people lacks safe drinking water. China suffers air pollution, deforestation, loss of grasslands, and species, erosion, encroaching desert, acid rain, dust storms that engulf cities such as Beijing and can carry far abroad. It has 16 of the 20 most polluted cities in the world. Environmental degradation grows and China's development is threatened by it. Water shortages have hit industries and factories have been shut by energy crises. The costs of cleaning up the environment will grow still greater if prompt and effective action is not taken. China's government recognises these problems and developed laws and institutions to protect the environment, but at grassroots level they fail to be implemented because local governments value short-term gains in growth and jobs over a better environment. The international community can help, but only China can deal with the problems. Copyright 2007 The Author
Journal compilation 2007 Blackwell Publishing Ltd .
We introduce a new hybrid approach to joint estimation of Value at Risk (VaR) and Expected Shortfall (ES) for high quantiles of return distributions. We investigate the relative performance of VaR and ES models using daily returns for sixteen stock market indices (eight from developed and eight from emerging markets) prior to and during the 2008 financial crisis. In addition to widely used VaR and ES models, we also study the behavior of conditional and unconditional extreme value (EV) models to generate 99 percent confidence level estimates as well as developing a new loss function that relates tail losses to ES forecasts. Backtesting results show that only our proposed new hybrid and Extreme Value (EV)-based VaR models provide adequate protection in both developed and emerging markets, but that the hybrid approach does this at a significantly lower cost in capital reserves. In ES estimation the hybrid model yields the smallest error statistics surpassing even the EV models, especially in the developed markets.
The structure of prices of goods entering into international trade relative to those that do not plays a key role in the Balassa-Samuelson explanation of why countries' exchange rates differ systematically from their currencies' purchasing power. The B-S analysis leads to the proposition that the tradable-nontradable price difference is lower for rich countries than for poor. This paper examines the gap, using prices collected by the International Comparison Program. A variety of regressions were run to see if indeed the difference between tradable and nontradable price parities moved with income in the way B-S expected. They did. Copyright 1994 by Blackwell Publishing Ltd.
This paper conducts a quantitative estimation for the equilibrium value of the Chinese currency, the RMB. After controlling for heteroskedasticity, we find that the RMB was undervalued by 22.5% in 2003, with a P value of .286. These findings confirm that the RMB was undervalued, although the results are not statistically significant.
This paper develops and estimates a structural equilibrium pollution model, in which the price and quantity of industrial pollution are jointly determined by the intersection of environmental demand and supply functions. The industrial environmental demand function relates industrial pollution intensity to the local price of pollution, while controlling for characteristics such as sector, scale, and ownership. The local environmental supply function specifies the pollution price imposed by the host community as pollution rises. The model provides a good fit to available data on provincial variations in China s pollution levy, or industrial emissions charge. Our results also suggest that Chinese industry has reduced emissions significantly in response to the levy.
Recent studies argue that the spread-adjusted Taylor rule (STR), which includes a response to the credit spread, replicates monetary policy in the United State. We show (1) STR is a theoretically optimal monetary policy under heterogeneous loan interest rate contracts in both discretionay and commitment monetary policies, (2) however, the optimal response to the credit spread is ambiguous given the financial market structure in theoretically derived STR, and (3) there, a commitment policy is effective in narrowing the credit spread when the central bank hits the zero lower bound constraint of the policy rate.
This paper focuses on methodological and empirical issues in analyzing regional poverty and inequality trends in China. It provides a time profile of China's regional inequality, outlines the latest development in inequality decomposition techniques, introduces six papers in this special issue of the Review , and finally offers suggestions for future research. Copyright © 2007 The Author; Journal compilation © International Association for Research in Income and Wealth 2007.
This paper addresses the existence of an Environmental Kuznets Curve for China, using a sample of 30 regions, covering the period 1982 1997. The types of pollution included are wastewater, waste gas, and solid waste. We consider the development of the sources of pollution in a pooled cross-section analysis with pollution in absolute levels, in per capita terms, and relative to real Gross Regional Product (GRP). At intermediate levels of GRP per capita, the increase of solid and gas emissions tends to decelerate, but it accelerates again at high levels of GRP per capita. Water pollution decreases with per capita GRP. We also predict future waste gas emissions.