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China, India, and the future of the world economy: fierce competition or shared growth?

Betina Dimaranan, Elena Ianchovichina and Will Martin

No 4304, Policy Research Working Paper Series from The World Bank

Abstract: Although both China and India are labor-abundant and dependant on manufactures, their export mixes are very different. Only one product-refined petroleum-appears in the top 25 products for both countries, and services exports are roughly twice as important for India as for China, which is much better integrated into global production networks. Even assuming India also begins to integrate into global production chains and expands exports of manufactures, there seems to be opportunity for rapid growth in both countries. Accelerated growth through efficiency improvements in China and India, especially in their high-tech industries, will intensify competition in global markets leading to contraction of the manufacturing sectors in many countries. Improvement in the range and quality of exports from China and India has the potential to create substantial welfare benefits for the world, and for China and India, and to act as a powerful offset to the terms-of-trade losses otherwise associated with rapid export growth. However, without efforts to keep up with China and India, some countries may see further erosion of their export shares and high-tech manufacturing sectors.

Keywords: Economic Theory&Research; Trade Policy; Free Trade; Emerging Markets; Currencies and Exchange Rates (search for similar items in EconPapers)
Date: 2007-08-01
New Economics Papers: this item is included in nep-cna, nep-cwa, nep-dev and nep-int
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Citations: View citations in EconPapers (12)

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Related works:
Journal Article: How will growth in China and India affect the world economy? (2009) Downloads
Working Paper: China, India and the Future of the World Economy: Fierce Competition or Shared Growth? (2007) Downloads
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