Since World War II, China has had a command economy administered under a
dictatorship, while India's democracy has introduced a highly regulated
economy. Despite obvious differences in their political systems, each
country endured remarkably similar economic problems with respect to
industry during the 1960s and 1970s. Both embarked in the 1980s on a
series of industrial reforms designed to improve technology and
efficiency in the use of resources, as well as to stimulate industrial
growth in the face of declining productivity. For economists, the two
countries offer an interesting test case for examining similar reform
programs launched from disparate political and economic systems. For
policy-makers concerned with the region's stability, a clear view of the
economic futures of these two major powers is paramount. Examining and
comparing the reform experiences of China and India up to the present,
George Rosen shows that although China enacted more sweeping reform
measures and produced more impressive local growth, it also experienced
more significant inflationary spurts. Two-thirds of each nation's
population was involved in agriculture at the start of the reform period
and nearly that many at the conclusion. Ultimately, the effects of the
past industrial reforms in both countries in terms of significantly
greater industrial employment or well-being of their populations were
limited. An important lesson in these findings, argues Rosen, is that
they actually reveal more about the political factors that limit and
shape economic policy reforms in a dictatorship or democracy than they
confirm the virtues of either capitalism or communism.
