Wei, Yingqi and Balasubramanyam, Vudayagi (2015) A comparative analysis of China and India’s manufacturing sectors. Working Paper. Lancaster University, Department of Economics, Lancaster.
Abstract
China’s manufacturing sector led by labour intensive manufactures has grown much faster than that of India both in terms of production and exports. It is often argued that India’s manufacturing sector that is relatively capital intensive must now follow China’s example and promote labour intensive manufactures. This is said to be essential if India were to promote growth and employment that are both essential for reducing the relatively high levels of poverty in the country. This paper argues that it may not be feasible for India to follow China’s growth strategy based on exports of labour intensive manufactures. India may have missed the boat and in any case it has failed to implement a strategy for agriculture of the sort that China put in place to provide its manufacturing sector with low wages and low cost raw materials. India, however, should utilise its services sector, mostly the IT services, to promote its nascent non- farm manufacturing sector in the rural areas. There may be lessons here from China’s town and village enterprises TVEs) programme.