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India vs China: The Human Capital Disparity

It has been widely accepted that India, with its democratic government, will become the next economic powerhouse while the authoritarian Chinese dictatorship will struggle to control its economy. Guess what? This has not been the case in reality.

The large human capital disparity between the two countries is the cause of the US government's error in isolating and detaching from China with the expectation that India will take its place.

As they started to open up their economies, the 1980s represented a significant turning point for both China and India. But China's strategic emphasis on advancing human capital, promoting gender equality, and boosting productivity has made it into an economic superpower, leaving India in the dust and in the struggle for supremacy.

The major difference between China's success and India's poor performance is the amount of money invested in human capital. China invested in growing its population, raising educational and health standards, and advancing gender equality top priority. India, in contrast, underinvested in its human capital, which had an impact on its economic development.

China's improved life expectancy, better nutrition, and higher rates of education, particularly for women, as emphasised in a World Bank report. As a result of these investments in human capital, China's economy advanced, with steady productivity growth and increasing female worker participation. Within a generation, the World Bank forecast a significant rise in China's level of life, which did occur.

China's persistent investment in human capital and gender equality has made a substantial contribution to the growth of its total factor productivity (TFP). TFP is a comprehensive index of resource-use effectiveness, and China's TFP significantly outperformed India's. Today, China is more productive than India is, showing a more effective use of resources and a competitive advantage in international markets.

The mismatch in educational systems between China and India emphasises the lack of human capital even more. The top 100 universities in the world are all Chinese institutions, which excel in disciplines like computer science, mathematics, and research. However, no Indian university has managed to land a spot in the top 100.

China has established itself as a global leader in research thanks to its amazing advancements, particularly in disciplines like chemistry, engineering, materials science, and artificial intelligence. Chinese researchers are increasingly producing high-caliber patents, which reinforces their supremacy in the field.

China has a viable future because of its investments in human capital and gender equality, whereas India runs the danger of being overly optimistic due to its emphasis on flashy infrastructure without addressing the underlying human capital divide.

India's underinvestment in its human capital has led to its inability to catch up with China's growth trajectory. To achieve economic success, India must redirect its focus towards investing in human capital, education, and gender equality, enabling it to become a more competitive player in the global economy


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