China And India

Question 1

What are the key economical advantage for China and India

Answer 1

Large Population which generates a sizable domestic market and a large pool of cheap labour both of which are attractive to foreign MNCs

Question 2

China’s SOE sectors generally consists of:
Why?

Answer 2

Finance and Energy sectors.

Needs massive infrastructure to set up, private firms don’t want to pick up the cost.

Aspect of National Security: Energy and Finance sectors are important to China’s survival as a country.

Question 3

Challenges of China’s SOE:

Answer 3

SOE gets easy access to cheap credit, and therefore they run at excess capacity.

Generally inefficient and breeding grounds of corruption.

Question 4

How did China reform her SOEs?

Answer 4

Restructuring of SOEs:
- Trim down number of SOEs. (Cut down on spending like equipment maintenance and salaries)

• Allow mixed ownership in SOEs, both government and private sector involvement (Reduce state control over SOEs and allow market forces to influence

Question 5

What are some key factors in the divergence between China and India?

Answer 5

1. Capital Accumulation (China faster than India)
2. Rate of Industrialization
3. Trade Liberalization

Question 6

Path of Industrialisation.

Why did India not cut down dependency on agricultural entirely?

Answer 6

Food Security: Need to feed her population

Question 7

What challenges does India face on developing the agriculture sector as its key engine of economic growth

Answer 7

Poor infrastructure and administrative delays affecting the shipping of the agriculture goods for the export market

Unstable supply and prices of crops

To meet her food security objective which is even more critical due to the projected population growth rate. (Farmers might favour exporting to earn more)

Question 8

Challenges to FDI in India

Answer 8

Differences in policy between central and regional government in different parts of India