A new Harvard study reveals Indian economy will stay ahead of the Chinese economy for the next 10 years
Jul 11, 2017, 16:47 IST
A new study by Harvard University has predicted high economic growth for India in the coming years as against the Chinese economy which, the study says, will witness a dramatic fall.
According to the study, with a growth rate of 7.72 percent, India will feature on top of the list of the fastest growing economies till 2025. Researchers believe, China still has a higher growing place at a rate of 4.4 percent annually for next coming decades, though slowdown relative to current growth, is significant.
“The economic pole of global growth has moved over the past few years from China to neighbouring India, where it is likely to stay over the coming decade,” according to growth projections from Harvard University’s Center for International Development (CID).
The only other country to grow faster would be Uganda at 7.73%. Another significant observation this report has made is that growth in emerging markets will continue to outpace that of advanced economies, though not uniformly.
The prediction for continued boom in the Indian economy has been attributed to India’s potential to diversify into newer areas of production and export. It has been diversifying its export base to include products from other sectors like chemicals, vehicles, and certain electronics.
“The major oil economies are experiencing the pitfalls of their reliance on one resource,” said Ricardo Hausmann, director of CID, professor at the Harvard Kennedy School, and the lead researcher of The Atlas of Economic Complexity.
“India, Indonesia, and Vietnam have accumulated new capabilities that allow for more diverse and more complex production that predicts faster growth in the coming years,” Hausmann added.
The projections divide countries into three basic categories — First, the countries with too few productive capabilities to easily diversify into related products. Second, the countries that have enough capabilities that make diversification and growth easier, which include India, Indonesia and Turkey. Third, the advanced countries such as Japan, Germany and the US that already produce nearly all existing products, so that progress will require pushing the world’s technological frontier by inventing new products, a process that implies slower growth.
The growth projections are based on measures of each country’s economic complexity, which captures the diversity and sophistication of the productive capabilities embedded in its exports and the ease with which it could further diversify by expanding those capabilities.
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According to the study, with a growth rate of 7.72 percent, India will feature on top of the list of the fastest growing economies till 2025. Researchers believe, China still has a higher growing place at a rate of 4.4 percent annually for next coming decades, though slowdown relative to current growth, is significant.
“The economic pole of global growth has moved over the past few years from China to neighbouring India, where it is likely to stay over the coming decade,” according to growth projections from Harvard University’s Center for International Development (CID).
The only other country to grow faster would be Uganda at 7.73%. Another significant observation this report has made is that growth in emerging markets will continue to outpace that of advanced economies, though not uniformly.
The prediction for continued boom in the Indian economy has been attributed to India’s potential to diversify into newer areas of production and export. It has been diversifying its export base to include products from other sectors like chemicals, vehicles, and certain electronics.
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“India, Indonesia, and Vietnam have accumulated new capabilities that allow for more diverse and more complex production that predicts faster growth in the coming years,” Hausmann added.
The projections divide countries into three basic categories — First, the countries with too few productive capabilities to easily diversify into related products. Second, the countries that have enough capabilities that make diversification and growth easier, which include India, Indonesia and Turkey. Third, the advanced countries such as Japan, Germany and the US that already produce nearly all existing products, so that progress will require pushing the world’s technological frontier by inventing new products, a process that implies slower growth.
The growth projections are based on measures of each country’s economic complexity, which captures the diversity and sophistication of the productive capabilities embedded in its exports and the ease with which it could further diversify by expanding those capabilities.