China and India’s Global Integration in the Process of Economic Development

  • Misbah Tanveer Choudhry
  • Enrico MarelliEmail author
  • Marcello Signorelli
Part of the Understanding China book series (UNCHI)


This chapter briefly reviews and discusses the distinctive features of economic development in China and India, by examining the different characteristics of their global integration into the world economy. First, by adopting a comparative approach the chapter highlights the points of convergence and divergence in the development patterns of the two Asian countries. Then, the analysis, focusing on the last decades, covers trade openness and trade specialisation. The degree of openness is analysed also relating it to economic growth. Specialisation is investigated through the computation of Balassa’s indices. The geographical orientation of exports and imports is also considered. A more specific analysis refers to the changing weight, over time, of internal demand vs. external demand, given the new policy strategies (clearer in the case of China) to rebalance aggregate demand in favour of the internal components. The chapter also examines FDI flows, by distinguishing the trends in both inflows and outflows. Finally, we also evaluate the performance of these economies on “ease of doing business” to attract more foreign investors and maximize the potential benefits of global integration. The “business-friendly” environment of these two economies will be assessed by analyzing different variables of business regulations, such as: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency and labor market regulations. We show, in particular, the progress achieved by the two countries and relate it to recent economic reforms.


Economic development Degree of openness Labour market regulation Convergence and divergence in the development patterns Regional collaboration 


  1. Agrawal, P. (2005). Foreign direct investment in South Asia: Impact on economic growth and local investment. In Multinationals and foreign investment in economic development (pp. 94–118). London: Palgrave Macmillan.CrossRefGoogle Scholar
  2. Banerjee, D. (2012). Economic and human development in contemporary India. Cronyism and fragility. New York: Routledge.Google Scholar
  3. Basu, S. R. (2009). Comparing China and India: Is the dividend of economic reforms polarized? European Journal of Comparative Economics, 6(1), 57–99.Google Scholar
  4. Bensidoun, I., Lemoine, F., & Unal, D. (2009). The integration of China and India into the world economy: A comparison. European Journal of Comparative Economics, 6(1), 131–155.Google Scholar
  5. Beretta, S., Berkofsky, A., & Zhang, L. (Eds.). (2017). Understanding China today. An exploration of politics, economics, society, and international relations. Cham: Springer.Google Scholar
  6. Caporale, G. M., Sova, A., & Sova, R. (2015). Trade flows and trade specialisation: The case of China. China Economic Review, 34, 261–273.CrossRefGoogle Scholar
  7. Chakraborty, C., & Nunnenkamp, P. (2008). Economic reforms, FDI, and economic growth in India: A sector level analysis. World Development, 36(7), 1192–1212.CrossRefGoogle Scholar
  8. Choudhry, M. T., Marelli, E., & Signorelli, M. (2017). Global integration and economic growth in emerging countries: The case of BRICS and NEXT-11. Presented at the Second World Congress of Comparative Economics (2nd WCCE), HSE, St. Petersburg, Russia, June 15–17.Google Scholar
  9. Davidson, P. (2019, January 11). China, India close gap with U.S. as world’s top economy. USA Today.Google Scholar
  10. De, U. K., Pal, M., & Bharati, P. (Eds.). (2017). Inequality, poverty and development in India. Focus on the north eastern region. Singapore: Springer.Google Scholar
  11. Dev, S. M., & Babu, P. G. (Eds.). (2016). Development in India. Micro and macro perspectives. New Delhi: Springer.Google Scholar
  12. Ghosh, J., Havlik, P., Ribeiro, M. P., & Urban, W. (2009). Models of BRIC’s economic development and challenges for EU competitiveness. Vienna Institute for International economic studies, research reports 359Google Scholar
  13. Herrendorf, B., & Teixeira, A. (2011). Barriers to entry and development. International Economic Review, 52(2), 573–602.CrossRefGoogle Scholar
  14. Holscher, J., Marelli, E., & Signorelli, M. (2010). China and India in the global economy. Economic Systems, 34(3), 212–217.CrossRefGoogle Scholar
  15. Hong, Y. (2016). The China path to economic transition and development. Singapore: Springer.CrossRefGoogle Scholar
  16. Hu, A., Yan, Y., & Wei, X. (2014). China 2030. Heidelberg: Springer.CrossRefGoogle Scholar
  17. IMF. (2019, January). World Economic Outlook update, January 2019: A weakening global expansion. Washington, DC: IMF.Google Scholar
  18. Kar, S., & Sen, K. (2016). The political economy of India’s growth episodes. London: Palgrave.CrossRefGoogle Scholar
  19. Liu, J., & Jiang, Z. (2018). The synergy theory on economic growth: Comparative study between china and developed countries. Singapore: Springer.CrossRefGoogle Scholar
  20. Liu, X., Burridgez, P., & Sinclair, P. J. N. (2002). Relationships between economic growth, foreign direct investment and trade: Evidence from China. Applied Economics, 34, 1433–1440.CrossRefGoogle Scholar
  21. Mamgain, R. P. (Ed.). (2019). Growth, disparities and inclusive development in India. Perspectives from the Indian State of Uttar Pradesh. Singapore: Springer.Google Scholar
  22. Marelli, E., & Signorelli, M. (2011). China and India: Openness, trade and effects on economic growth. European Journal of Comparative Economics, 8(1), 129–154.Google Scholar
  23. Marelli, E., & Signorelli, M. (2017). Europe and the Euro: Integration, crisis and policies. Palgrave MacMillan: London and New York.CrossRefGoogle Scholar
  24. Mercan, M., Gocer, I., Bulut, S., & Dam, M. (2013). The effect of openness on economic growth for BRIC-T countries: Panel data analysis. Eurasian Journal of Business and Economics, 6(11), 1–14.Google Scholar
  25. Milner, C., Vencappa, D., & Wright, P. (2007). Trade policy and productivity growth in Indian manufacturing. The World Economy, 30(2), 249–266.CrossRefGoogle Scholar
  26. Mishra, A. K., Arunachalam, V., & Patnaik, D. (Eds.). (2018). Current issues in the economy and finance of India. Cham: Springer.Google Scholar
  27. Munemo, J. (2014). Business startup regulations and complementarity between foreign and domestic investment. Review of World Economics, 150(4), 745–761.CrossRefGoogle Scholar
  28. Narayanamoorthy, V. P., Sridharan, R., & K. (2009). Causal relationship between foreign direct investment and growth: Evidence from BRICS countries. International Business Research, 2(4), 198–203.Google Scholar
  29. Nayak, P. B. (Ed.). (2015). Economic development of India. London: Routledge.Google Scholar
  30. OECD. (2018). Economic outlook for Southeast Asia, China and India 2019. Paris: OECD.CrossRefGoogle Scholar
  31. Pradhan, J. P. (2002). Foreign direct investment and economic growth in India: A production function analysis. Indian Journal of Economics, 82, 581–586.Google Scholar
  32. Ramjerdi, H. P. (2007). Growth and productivity measures of China’s due to international trade: PRC’S experience 1970–1993. Asia Europe Journal, 5, 253–265.CrossRefGoogle Scholar
  33. Sahoo, D., & Mathiyazhagan, M. K. (2008). Economic growth in India: Does foreign direct investment inflow matter? The Singapore Economic Review, 48(2), 151–171.CrossRefGoogle Scholar
  34. Sengupta, J. K. (2005). India’s economic growth. A strategy for the new economy. New York: Palgrave.CrossRefGoogle Scholar
  35. Sun, H., & Parikh, A. (2001). Exports, inward foreign direct investment (FDI) and regional economic growth in China. Regional Studies, 35(3), 187–196.CrossRefGoogle Scholar
  36. Tang, S., Selvanathan, E. A., & Selvanathan, S. (2008). Foreign direct investment, domestic investment and economic growth in China: A time series analysis. The World Economy, 31(10), 1292–1309.CrossRefGoogle Scholar
  37. Tsujita, Y. (Ed.). (2014). Inclusive growth and development in India. Challenges for underdeveloped regions and the underclass. Basingstoke: Palgrave.Google Scholar
  38. UNCTAD. (2002). World investment report. Transnational corporation and export competitiveness. New York and Geneva: UNCTAD.Google Scholar
  39. Valli, V. (2015). The economic rise of China and India. Torino: Accademia University Press.Google Scholar
  40. Valli, V., & Saccone, D. (2009). Structural change and economic development in China and India. European Journal of Comparative Economics, 6(1), 101–129.Google Scholar
  41. Valli, V., & Saccone, D. (2015). Structural change, globalization and economic growth in China and India. The European Journal of Comparative Economics, 12, 2.Google Scholar
  42. Xu, G., & Wang, R. (2007). The effect of foreign direct investment on domestic capital formation, trade, and economic growth in a transition economy: Evidence from China. Global Economy Journal, 7(2), 1–21.CrossRefGoogle Scholar
  43. Yalta, A. Y. (2013). Revisiting the FDI-led growth hypothesis: The case of China. Economic Modelling, 31, 335–343.CrossRefGoogle Scholar
  44. Yao, S. (2006). On economic growth, FDI and exports in China. Applied Economics, 38(3), 339–351.CrossRefGoogle Scholar

Copyright information

© Springer Nature Switzerland AG 2020

Authors and Affiliations

  • Misbah Tanveer Choudhry
    • 1
  • Enrico Marelli
    • 2
    Email author
  • Marcello Signorelli
    • 3
  1. 1.Centre for Research on Economic Empowerment of South Asian WomenLutonUK
  2. 2.Department of Economics and ManagementUniversity of BresciaBresciaItaly
  3. 3.Department of EconomicsUniversity of PerugiaPerugiaItaly

Personalised recommendations