THE Elephant and the Dragon is an enticing comparative study between the world’s two fastest growing economies: India and China. In the 17th century, both India and China made up for more than half the world’s economic output exporting silk, porcelain, furniture, spices overland via the Silk Road or via ship on the Spice Route. As a result of wars and protectionism, India and China isolated themselves from the rest of the world but they are currently regaining their status in the global economy. In 2030 India will surpass Japan to become the world’s third-largest economy after the United States and China. And some experts even believe that India’s economy will overtake China’s for demographic reasons. China’s population is starting to age while India’s working force is brimming with youth.
According to the author, Robyn Meredith, the meteoric economic development of India and China is about much more than jobs moving overseas: “It is about a major shift in post-Cold War geopolitics, about quenching a growing thirst for oil, and about massive environmental change.” This book basically aims to help readers understand how our world is being transformed by the rise of India and China.
China began shifting its government-planned economy toward a market economy in 1978 whereas India initiated its first economic reforms under Rajiv Gandhi in 1985. Although India is still far ahead, it has been said that if China is winning the sprint, India will win the marathon. China’s remarkable development is due to its authoritarian political system whereas India’s growth is slowed down by its democratic system. Before a law is voted, the government must persuade political parties, interest groups, local businesses, a process which can sometimes take years.
China and India also developed in opposite ways. While China attracted foreign companies to set up factories, India became a center for offshoring that is moving white-collar work overseas. India’s experience with offshoring began in 1999 when the Y2K computer fear compelled American companies to transfer an overload of computer coding work to India. The Indian technicians did an excellent job and the corporate world suddenly discovered a mega source of cheap programmers. The IT sector is currently employing over 1.3 million Indians.
The growing trend toward offshoring is causing a plethora of job losses in the West as businesses are looking for ways to save money and increase profits. Consequently, Westerners should expect to change jobs more often and focus on the careers that cannot be moved offshore. Moreover, companies who are obsessed with the next quarter’s results should brainstorm on long term strategies and concentrate on basic research. Innovation is the only way Western companies can stay ahead.
The synergetic combination of cheap labor, information’s technology and modern infrastructure is profoundly affecting the way business is done. “The way the world does business has changed because what Americans and Europeans buy on store shelves is flowing down a new kind of assembly line, one that stretches back and forth between disparate countries around the world… The new system, call it a disassembly line, is the result of companies rushing to break up their products into specialized subassemblies to drive down costs, ratchet up quality, and reduce the time it takes to get the product to market” explains Robyn Meredith. Consequently, as specialized parts are being produced in India and assembled in China, both countries are playing a complementary role. Besides manufacturing cheaper products, they have become a huge prospective market for western consumer goods. In China, the communist policies which suppressed Chinese traditions, have led the young Chinese consumers to crave for anything Western.
Middle classes in India also have more money to spend and because of their country’s colonial past, they share many tastes with Great Britain.
As Indian and Chinese economies are booming, elites in
both countries no longer think they have to leave in order to earn a high income. However the stunning economic growth is not benefiting everyone: In China and India, the gap between rich and poor is widening. In 2004, Atal Bihari Vajpayee who presided over a prosperous economy, faced a crushing defeat when a majority of poor people disagreed with his slogan: “India Shining”. They felt completely left out and voiced their anger and frustrations. India’s democratic capitalism cannot succeed if it does not promote an equitable growth. India is definitely progressing but economic changes are not happening as fast as in China. The Times of India’s columnist, Gurcharan Das, compares India to an elephant “that has begun to lumber and move ahead”. On the other hand, China’s state capitalism has benefited from an authoritarian regime which imposed economic reforms. Political experts, however, think that China’s political regime might not be as stable as it seems. It is far more likely to face problems such as internal conflicts if the rich coastal provinces aim for a political and economic autonomy.
China and India have been dubbed respectively the factory and the knowledge center of the world. Their stupendous economic growth opens endless business opportunities. Western societies should be emulated by these two countries ability to transform their economy and the world. They should be ready to face a changing world, especially where economy is concerned. They should focus strongly on reestablishing their competitiveness and most of all they should have the capacity to reinvent themselves.
In “The Elephant and the Dragon”, Robyn Meredith gives us an exciting account of the amazing rise of China and India and how this is affecting practically all global businesses and consumers. She has succeeded in writing a thrilling economic story which highlights the dramatic shifts in global commerce.