The Comparative Study Of Change In Industrial Structure And The Impact On Economic Growth Between China And India

Since the financial crisis in 2008,the economy of each country was affected to different degrees,resulting in a severe recession of the global economy.Despite major countries took financial rescues timely and increased fiscal stimulus,the global recovery over the past 11 years has been slow.Fortunately,emerging economies,as the bright spots of the world economic recovery,have gradually become one of the most conspicuous actors on the world economic stage.Not only have they become the engine of the global economic recovery,but also they have maken the sound of the emerging powers in the adjustment of the international economic and political order.According to the report about the development of emerging economies in2017,emerging economies contributed 60% to world economic growth in 2016,ensuring steady growth of the world economy.China and India,the two biggest developing countries in the emerging economies,have done the best of all,leading the shift of heart of world economic growth from Europe to Asia at an ever faster rate.On the other hand,the economic prospects of economies around the world are increasingly dependent on continued demand from the two Asian giants,whose growth potential and development space are crucial to global growth.In this sense,the economic growth of China and India deserves the world’s attention.However,the world’s attention to China and India is not only because of the similarity of the two countries’ rapid economic growth in recent years,but also because of the huge differences in their development models.The two countries with similar national conditions at the beginning differ in their economic growth paths,which is mainly reflected in the change process of their respective industrial structure.China has achieved economic growth through rapid export-oriented industrialization and is known as the “factory of the world”.India’s growth experience,by contrast,does not shows the signs of rapid industrialisation and has bypassed it to follow a growth path dominated by services,known as the “world office”.Despite the differences between China and India’s economic growth pattern,but both countries seize the development opportunity of the globalization,both enjoy the structure dividend of the industrial structure changes,as future global integration of production chain,structure bonus effect will be weakened,and how to realize the upgrading of industrial structure between the two countries to promote economic growth is a huge challenge for the two countries.Based on the previous research results,there are few literatures comparing the industrial structure change and its impact on economic growth between China and India.However,from the perspective of practical development,the two countries’ development models and prospects for future economic development will have an immeasurable impact on world economic development.And,more importantly,the two countries are now in the period of economic transformation and pay equal attention to economic development,changing the industrial structure of the two economies are very important,because it have a broader impact on employment and productivity.How to realize the quantitative growth to factor the efficiency type growth,to ensure the high quality of economic growth,which is of great significance.For other developing countries in the world,the growth practices of big developing countries have certain reference value,and some lessons can be learned from this study.This paper firstly compares the initial conditions of the industrial structure of China and India,the changes of the industrial structure before and after the reform and the current situation,and finds that there are great differences in the changes of the industrial structure of China and India.Since the founding of the People’s Republic of China 70 years ago,the initial government-led selective industrial policy has gradually shifted to a functional industrial policy,making China the only country with all industrial categories under the UN industrial classification.After the liberalization and privatization reform in 1991,India embarked on the market-oriented economic growth model,and its industrial upgrading was mainly driven by the capital flow under the market mechanism.China’s industrial-led model has provided conditions for the steady growth of its economic aggregate.Therefore,China has been called the country that created the miracle of economic growth by academics and international organizations,and has been praised as the "China model".But there are also many costs of economic structural imbalance.India’s services-led model has allowed the economy to grow at an unprecedented medium-to-high rate,averaging more than 6% a year for the past two decades.India’s structural changes favour the fast-growing services sector but have been far less successful in creating jobs,which is why India’s economic growth is called "no job growth",manufacturing has barely grown and the economy has structural flaws that are hard to fix.Next,by comparing the upgrading and rationalizing of the industrial structure of two countries,I found that the rationalization of industrial structure in India is slower than in China,while theupgradingof India’s industrial structure is highly speed,which attribute to the favorable opportunityof the development of the global information technology seized by India,especially the fast development of service outsourcing industry.Again,through the shift-share method,I compared the intra-sector effect,capital transfer effect and labor transfer effect of China and India.The results show that the intra-sector effect plays a leading role in the industrial structure change effect of the two countries.In other words,the improvement of labor productivity in each sector of the two countries contributes the most to the economy.In terms of capital transfer effect,China’s capital transfer effect is lower than India’s in most years,indicating that India’s capital utilization efficiency is slightly higher than China’s,while China’s labor transfer effect is larger than India’s,indicating that China’s labor flow barrier is lower than India’s.Finally,the paper uses EVIEWS statistical software to make a regression analysis of the relationship between the output structure and economic growth in China and India.The conclusion shows that every 1% growth of the service industry in India can promote the economic growth by about 0.35 percentage points,while China only drives the economic growth by 0.22 percentage points.Every one percentage point increase in China’s intermediate product manufacturing industry will lead to an economic growth of about 0.41 percentage points,while India will only lead to an economic growth of 0.18 percentage points,which fully demonstrates China’s industrial-driven economic growth model and India’s service-driven economic growth model.In generalizing,China’s industrial structure is changing more aggressively and on a wider scale than India’s.There are very important differences in growth patterns,some of which are closely related to the timing and magnitude of structural changes.Because the service industry in the national economy has the role of the “glue”,lagging development in the service sector of China will affect the development of other related industriesand the overall industrial structure adjustment process,also hindered the transfer of labor force to the service sector,thus accelerating the development of service industry in China is not only an important part of our country’s industrial structure optimization,is also the key to improve the comprehensive competitiveness of China.