Economics Essay Example: The Economic Rise of China and India

Summary I: Catching up After Half a Millennium.

In chapter 8 of The End Of Poverty, Jeffrey Sachs asserts that China undertook market-based reforms which consequently led to spectacular success thus fostering fastest economic growth rates. China was once in the lead in the economy but lost it by 1500. China's per capita income was 7.5 percent of that of Western Europe because it took off when China was still experiencing economic challenges. By 2000, China improved its per capita income relative to 20 percent of that of Western Europe (Sachs, 153). Arguably, China is eradicating absolute poverty and is reversing many years of relative decline. During the 16th century, China happened to be the world's superpower in technology. For instance, Europe used Chinese innovations such as compass, printing press and gunpowder to conquer Asia in 1500.

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The economic growth of China declined when ocean trade and exploration was halted by imperial courts since they termed it as a threat to nomadic incursions. To this extent, therefore, China could not enjoy technological leadership in construction and navigation in the sea waters. In the 19th century, China started experiencing economic and commercial development (Sachs, 175). Notably, China has been the most successful economy in the world which has seen a reduction of extreme poverty amongst its citizens.

Summary II: India's market reforms

In Chapter 9 of The End of Poverty, Jeffrey Sachs opines that India introduced market reforms back in 1991. When he was in his studies in the country, he realized that extreme poverty characterized the whole country from he saw women moving around with cows and monkey jumping from one rooftop to another (Sachs, 188). He believed with the new market reforms he was introducing would reduce extreme poverty just as it did to China. He talked about the direct foreign investments as a way of achieving economic growth in the country, but people in the meeting could doubt the reform. Another market reform opted by Nehru was a system of state controls through licensing businesses. For instance, market reforms saw large industrial units held back to assist the growth of small and technologically businesses. Nevertheless, lands in urban areas could not be converted into new industrial uses without permission from the government.

India's major economic breakthrough was witnessed between the 1960s and 1970s. During this decade, green revolution into the country was introduced to scientific plant breeders which relieved India from constant famine (Sachs, 201). The end of famine was realized because of market reforms which later led to economic growth thus eradicating extreme poverty among citizens.

Analysis

Ideally, the reading in the two chapters was very educative to me. They talked about extreme poverty in China and India and what caused the phenomenon as well as how it can be alleviated. Chapter eight was very interesting to me because it explores how China lost its lead in economic growth and how it caught up after a long period of economic decline. I also appreciate the ideas brought forth in chapter nine on market reforms as far as extreme poverty in India is concerned. In chapter eight, the most interesting part is when China being a technological superpower experienced an economic decline due to the negligence of foreign commerce and investments. It was good for the chapter to point out that restriction of overseas trade led to the economic decline of China. It is ironical for a country which had the control of technologies in the world to experience extreme poverty. Nevertheless, I'm disguised by 1839 attacking of China by Britain to promote narcotic trafficking.

According to Adam Smith, the idea of a country being rich but static did not bit logic because to me; a country should use its richness to do economic development to eradicate extreme poverty. For instance, extreme poverty in China caught me dumbfounded since a country cannot be rich and at the same time experience extreme poverty. I'm also interested in the ascension of Teng Hsiao-ping's to power because it's what made China start growing economically by opening it to other nation states for trading (Bardhan, 312). China caught up with economic growth by absolutely adopting technologies of the countries with high innovation abilities. I am happy to opine that when technologies are employed the income gap is consequently narrowed to developed countries. China caught up by using technologies of the leading countries thereby reducing extreme poverty. Modern technology makes an individual country to develop economically thus providing job opportunities for people thus improving their living standards.

Economic reforms mostly are responsible for the eradication of extreme poverty in China and India. Chinese economist had suggested economic reforms that would see China realize economic growth and development. On the other hand, an economic revolution in India was very instrumental in economic growth and development because it ensured food security through adopting science and technology that bred more food for the vast population. Another interesting feature in chapter eight is that the Teng Hsiao-ping's opened up many universities to teach important knowledge in enabling China to grow economically. The universities made students to realize their talents in certain fields in the economic sector. Higher learning led to improved living standards because the students could get employment after school. Additionally, the learned knowledge in the universities helped professionals to solve economic challenges that faced people during those times (Bardhan, 343). To this extent, therefore, eradication of extreme poverty was possible since education opened up minds of many people who ventured into business.

Moreover, economic revolution as opined in chapter nine provided an avenue for investors to do huge businesses in China and India. The differences in the economic structure between the two countries bred extreme poverty because it did not factor out the agricultural economy as the most important structure in any country. For instance, agriculture only comprised of 20 percent of the total economy meaning that the country could not raise sufficient food to feed the vast population (Bardhan, 385). Extreme poverty in China and India was brought about by overdependence of the industrial labor force and service sector. Ideally, if both countries could major in the agricultural sector, it would produce enough food for its people, and this would enable it to realize economic growth because resources are not directed to food.

In conclusion, both chapters have explored extreme poverty in India and China. Both chapters have advocated for the eradication of extreme poverty through the implementation of good policies and proper structure of the economy. The chapters have found out that extreme poverty is caused by overdependence on both service and industrial labor economy while subordinating agricultural economy. Countries without proper agricultural background tend to have derailed economic growth because people have little or nothing for investments. Extreme poverty can be eradicated through economic globalization.

Works Cited

Bardhan, Pranab K. Awakening giants, feet of clay: Assessing the economic rise of China and India. Princeton University Press, 2012.

Sachs, Jeffrey. The End of Poverty: Growing The World's Wealth In An Age Of Extremes. Penguin Press, 2005