The following is an analysis on the economies of China and India. It will aim to draw a comparison between the two in relation to the hypothesis as stated below. In doing so, we will question and conclude the facts to assess the validity of this hypothesis.
"The road from Socialist/Command to market is a realistically achievable path".
The first major factor, in determining whether or not a country is moving towards a market economy depends on the degree of state intervention- How much of a role does the government play when it comes to making economic decisions? Naturally the type of government in action would give us this answer. The Republic of India is a federal democracy whilst Communist China runs under a single political party. India as a federal democracy, means that state governments, rather than the central government, lead the way in the reform process. China on the other hand, falls only under the one rule. When comparing the effectiveness of the two forms of government, one might argue that a transition under a communist regime (like China) would be best. If a whole nation played by the same rules and guidelines, there would be fewer problems. India's problem is that there are too many states, and different rules and restrictions in them. When comparing the effects of shifts in government intervention, these factors prove to be a disadvantage for India.
Prior to any economic movements, both economies had their public/private sectors dominated by state capitalism. Today, in both countries, state and private ownership exist simultaneously. In China, private ownership comprises of healthy township, private and foreign owned firms. There is an equal balance among these firms. India too has a non-state owned sector, yet due to poor resources, human capital and technology with India, there is little growth or support in these industries. It is foreign trade and investment which has helped to pick up India's bruised economy.
