Filmed by Rod Fitzgerland. Produced by Vanessa Kortekaas. Edited by Felline Reyes. Graphics by Steve Bernard.
Over the past 40 years, China and India have been the most dynamic economies of any size in the world. China is growing much faster than India-- in terms of GDP per head, about twice as fast. Nonetheless, both have done remarkably well. Over this period, China's GDP per head has risen from about 5% of US levels to about 26%. And over the same period, India's has doubled from about 4%, 5% to about 11%. So these are the two great, dynamic economies of the world. India is lagging behind, but both are rising and growing dynamically.
People tend to think of China as, far and away, the most open and-- more open and integrated of the two giant economies. That's no longer true, surprisingly. The ratio of trade to GDP in China has actually been falling since the financial crisis, and today, it is no higher than India's. Meanwhile, India's ratio of trade to GDP has risen dramatically since the liberalisation in the early 1990s. The same is true of capital flows relative to GDP, openness to foreign direct investment. India's economy today is far more open and integrated into the world economy than most people realise.
If we look at the years ahead, we have to recognise these two countries are going to be gigantic, unless something goes very seriously wrong. It's overwhelmingly likely China will be much the biggest economy in the world, and India will be the second biggest by the middle of the century. With their enormous populations, they don't need to do that well economically to achieve that, but there are going to be remarkably big challenges ahead. One of the biggest is whether the world economy will be able to accommodate their dynamic growth, and the backlash against globalisation we're now seeing does raise real questions about the future.