Transcript issues3
Issues in the Contemporary World Case Study 3 Preview • Focusing on the Issue • China and India • Exploring the Issue • Chinese Capitalism Takes Hold • Surge in Economic Growth • India’s Closed Economy • India Opens Its Doors • Barriers to Success Case Study 3 Issues in the Contemporary World Case Study 3 Preview, continued • Investigating the Issue Document 1 • Investigating the Issue Document 2 • Investigating the Issue Document 3 • Investigating the Issue Document 4 • Investigating the Issue Document 5 • Investigating the Issue Document 6 Case Study 3 Issues in the Contemporary World Case Study 3 Case Study 3 Building Economic Powerhouses China and India Focusing on the Issue • How are the giant emerging economies of India and China affecting the world? Issues in the Contemporary World Case Study 3 China and India • The question is not whether India and China will bump the United States from its position as the world’s largest economy. • The question is when and which country will get there first. • Two most populous nations have ambitious programs – Move from planned or semi-planned economies – Develop vibrant market economies • Different pathways with different challenges – China with one-party Communist dictatorship – India with thriving democracy and religious conflicts Issues in the Contemporary World Case Study 3 China and India • China began limited economic reforms in the late 1970s – Opened doors to private enterprise in 1990s – Wants to be world’s manufacturing capital • India opened its economy in the 1990s – Seized the opportunities of the telecommunications revolution • High-speed Internet connections provides opportunities for both – Connect large labor pools with potential employers and customers around the globe • Their vigorous moves on the world’s stage affect economic planning, markets, and wages in other countries – No one knows how scenario will play out – India and China share disputed border • The 21st century is new era of global economic interdependence Issues in the Contemporary World Case Study 3 Exploring the Issue • The rise of Asian economies began in the 1960s • Japan, South Korea, and other so-called “Asian tigers” – Industrialized at a breathtaking rate – Developed efficient, streamlined manufacturing processes – Were able to flood global markets with inexpensive export goods • Today’s “Asian tigers” India and China – May not yet match Japan’s GDP – Promising future based on rapid economic growth • China emphasizing traditional manufacturing industries • India focusing on service industries provided via the Internet – From tax preparation to computer technical support Issues in the Contemporary World Case Study 3 Exploring the Issue China’s Communist Economy • Maoist Communism • Tight government control of all aspects of the nation’s economy • Trying to move ancient agricultural economy into modern age • Massive industrialization efforts eventually stalled Lack of Private Enterprise • Government allowed virtually no private enterprise • The lack of freemarket incentives equaled low productivity and inefficiency • Japan and other “Asian tigers” roared—China’s living standards remained relatively low Issues in the Contemporary World Case Study 3 Chinese Capitalism Takes Hold Deng Xiaoping • Rose to power in 1978 and started China down new economic path with slow agricultural, industrial, and market reforms • Some free market sales, relaxed centralized economic planning, regional officials could make free-market decisions on some issues Foreign Investment • Was encouraged, but not on scale India later embraced • “Special economic zones” tested China’s limited capitalism • Impressive results, with farm output doubling and increase in industrial growth and investment Market Reforms and Strict Curbs • Late 1990s saw “socialist market economy” reforms • Population growth restricted to a rate of 13 per 1,000 people • Helped to ease poverty, but created controversy at home and abroad Issues in the Contemporary World Case Study 3 Surge in Economic Growth Growing Economy • Economic growth surged with reforms, now has second largest production economy • Since 1980 China has doubled its share of world trade every five years • In 2001 joined the World Trade Organization (WTO) • China attractive place for foreign investment and for offshoring—moving entire factories or other business enterprises abroad Attracting Investments • Must decide how far and how fast to implement reforms • Corruption and slow government decision-making hamper progress • Easing of business restrictions has led to rise in economic crimes, widespread inequality, and worrisome levels of pollution • China staying on path Issues in the Contemporary World Case Study 3 India’s Closed Economy Poverty • Since achieving independence in 1948, has struggled to overcome desperate, grinding poverty • Inspired by Mohandas K. Gandhi’s philosophy, India adopted a socialist economy Closed Economy • India’s government strove for economic self-sufficiency, with limits on imports and foreign investment • For more than four decades, India’s economy was largely closed Regulation • Government embarked on large-scale industrialization to limit dependence on foreign investment and imports • But heavy government regulation resulted in decades of inefficiency, overregulation, poor output, and quality goods Issues in the Contemporary World Case Study 3 India Opens Its Doors Capitalism • In the 1990s India embraced capitalism, moved to a market economy • Increased privatization allowed, with limited private investment • More foreign companies were allowed to operate in India From Joint to Direct • Initially with joint ventures with Indian companies, by 2000s was direct foreign investment, particularly in telecommunications • Economy has grown at an impressive rate of 7 percent a year since 1991 Two factors • India a world leader in providing high-tech services to businesses worldwide • Large pool of highly skilled workers and large number of English speakers • Democratic government provides flexibility to meet the challenges ahead Issues in the Contemporary World Case Study 3 Barriers to Success Obstacles • India still faces formidable obstacles to economic success • High import tariffs and restrictions on direct foreign investment • Sparking national debate on how far to liberalize, or open up, the economy “Two Indias” • India’s huge population, most of whom still work on farms and in small, traditional businesses, can be an economic asset • The country is expected to become the most populous nation within the next 50 years • The rapid creation of vast wealth has further highlighted the “two Indias”: one largely rural and poor; the other urban and prosperous Issues in the Contemporary World Case Study 3 Investigating the Issue Document 1 In The World Is Flat, author Thomas Friedman argues: • India and China are leveling, or flattening, the economic playing field • Western industrialized countries are losing their advantages • Other developing countries risk falling farther behind Friedman lists reasons why China is unparalleled zone for offshoring: • Low-wage workers at the unskilled, semiskilled, and skilled levels • Huge appetite for factory, equipment, and knowledge jobs to keep its people employed • Massive and growing consumer market Other developed and developing countries competing with it have to make themselves attractive to offshoring • Who can provide the best tax breaks, education incentives, and subsidies, on top of their cheap labor Issues in the Contemporary World Case Study 3 Analyzing Document 1 Why, according to Friedman, does China pose a problem for developing countries like Mexico and Brazil? Issues in the Contemporary World Case Study 3 Investigating the Issue Document 2 As China industrializes and modernizes, its demand for energy is soaring, as shown in the graph. The increasing need causes concern about the possible effect on global energy prices and supplies. Issues in the Contemporary World Case Study 3 Analyzing Document 2 By roughly how much did China’s energy consumption increase between 1980 and 2005? Explain the gap between the two lines since about 1995. What effect could that have on the rest of the world? Issues in the Contemporary World Case Study 3 Investigating the Issue Document 3 In the early years of the twenty-first century, however, the United States ran up large budget and trade deficits. MORIN / The Miami Herald The U.S. has promoted free trade and capitalism around the world. CWS / CARTOONARTS INTERNATIONAL http://cartoonweb.com/ Issues in the Contemporary World Case Study 3 Analyzing Document 3 Who are the characters in this cartoon? What are they concerned about? How does the cartoonist depict China, and why? Issues in the Contemporary World Case Study 3 Investigating the Issue Document 4 Economic change is transforming India and China. In this article, the writer describes some of the changes observed during a visit and remarks on reactions to those changes. Issues in the Contemporary World Case Study 3 Analyzing Document 4 What kinds of changes does the writer identify? How do you think the writer feels about the changes? Issues in the Contemporary World Case Study 3 Investigating the Issue Document 5 INDIA’S GDP BY SECTOR, 2005 LABOR FORCE BY SECTOR, 1999 SOURCE: CIA WORLD FACTBOOK 2006 Today, a relatively small segment of India’s labor force generates the largest share of its income, as measured in gross domestic product (GDP). These pie graphs illustrate that fact. Issues in the Contemporary World Case Study 3 Analyzing Document 5 What proportion of India’s labor force produces the largest share of its wealth, as measured in GDP ? What do you think accounts for this fact? Issues in the Contemporary World Case Study 3 Investigating the Issue Document 6 The writer is a former governor of Hong Kong and former European Commissioner for External Relations. Noting the high stakes in the IndiaChina competition: “India now trains a million engineering graduates a year (against 100,000 each in America and Europe) and stands third in technical and scientific capacity—behind America and Japan but ahead of China.” In the geopolitical game of domination add India to the stand-off between America and China. Should businessmen and politicians place bets? • China’s authoritarian model of development • India’s democratic approach The question is given more edge if you accept (which I don’t) the old Chinese adage, “No mountain can accommodate two tigers.” —Chris Patten, “Mystery Candidate,” Financial Times, August 4, 2006 Issues in the Contemporary World Case Study 3 Analyzing Document 6 According to Patten, in what way is the competition more than an economic one? Rewrite the last sentence in your own words. What is Patten’s view of the issue?