CESifo Economic Studies Conference on Understanding the Chinese Economy 10 – 11 June 2005 - PowerPoint PPT Presentation

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CESifo Economic Studies Conference on Understanding the Chinese Economy 10 – 11 June 2005
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CESifo Economic Studies Conference on Understanding the Chinese Economy 10 – 11 June 2005

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  1. CESifo Economic Studies Conference on Understanding the Chinese Economy 10 – 11 June 2005 CESifo Conference Centre, Munich India China: Diverging to Converge Surjit S. Bhalla

  2. India - China: Diverging to Converge CESifo Economic Studies Conference on Understanding the Chinese Economy: ifo Institute, Munich, Germany June 10-11, 2005 Surjit S. Bhalla* *O[x]us Research & Investments, New Delhi Email: ssbhalla@gmail.com

  3. India - China: Diverging to Converge CESifo Economic Studies Conference on Understanding the Chinese Economy: ifo Institute, Munich, Germany June 10-11, 2005 Surjit S. Bhalla* *O[x]us Research & Investments, New Delhi Email: ssbhalla@gmail.com

  4. India - China: Diverging to Converge CESifo Economic Studies Conference on Understanding the Chinese Economy: ifo Institute, Munich, Germany June 10-11, 2005 Surjit S. Bhalla* *O[x]us Research & Investments, New Delhi Email: ssbhalla@gmail.com

  5. Objectives • Compare China and India performance on a variety of indicators – past, present, and future

  6. Growth Performance…India, China

  7. Growth and Undervaluation

  8. TFPG…India, China

  9. Investment/GDP…India, China

  10. Industrial Production…India, China

  11. Interest Rates…India, China

  12. Inflation…India, China

  13. Saving…India, China

  14. Governance Indicators…India, China

  15. Governance Indicators…India, China

  16. Governance Indicators…India, China

  17. Corporate Tax Rates…India, China

  18. Foreign Direct Investment…India, China

  19. Foreign Direct Investment…India, China

  20. Undervaluation of Currencies… • Undervaluation is defined as the ratio of per capita GDP in current US dollars to per capita GDP in current international PPP dollars.

  21. …Undervaluation of Currencies

  22. …Undervaluation of Currencies

  23. …Undervaluation of Currencies

  24. Growth Model…India and China • The growth model uses the following variables for the period 1980 – 2003; data arranged in five-year periods. • Log Initial Per Capita Income, Log Initial Years of Education, Latitude (proxy for Geography), Log Change in Undervaluation, and Share of Investment in GDP are the independent variables.

  25. Living Standards…India, China • Poverty Levels • Infant Mortality • Fertility Rate • Dependency Ratio • Education Attainment, All • Education Attainment, Females

  26. Poverty Levels…India, China

  27. Poverty Levels…India, China

  28. Poverty Levels…India, China

  29. Poverty Levels…India, China • Poverty levels in India and China in the year 2003 are the same.

  30. Infant Mortality Levels…India, China

  31. Infant Mortality Decline…India, China

  32. Fertility Rates…India, China

  33. Dependency Ratio…India, China

  34. Education Attainment…India, China

  35. Education Attainment Female…India, China

  36. Conclusion • Undervaluation of exchange rate is a very important theoretical and empirical contributor to the Chinese growth performance. • Each 10 percent appreciation of the yuan would lower China’s growth rate by 1.4 percent per annum. • India growth rate is expected to be higher than China by 2010. • Poverty levels ($ a day poverty line) are the same in India and China (circa 2003).