Can India Replace China and US as Leading Economic Superpower?
Commentary
India is very much a country on the up.
Although the South Asian country gained independence from Britain in 1947, its economy only started to make substantial improvements in the 1990s after a number of economic reforms were introduced. In addition to strengthening the banking sector and modernizing the stock markets, these reforms opened the Indian economy to inordinate amounts of foreign investment.
By 2015, India was home to the most rapidly growing major economy in the world.
By 2075, the Indian economy is expected to outperform the U.S. economy.
Before then, considering current trends in China, with the after-effects of brutal COVID-19 lockdowns still resonating, high rates of unemployment among its youth, and a property bubble that looks ready to burst, one wonders if India could do the once unthinkable and overtake the Chinese economy.
According to analysts at Morgan Stanley, in as little as four years from now, India could become the third-largest economy, surpassing both Japan and Germany. By 2030, driven by shrewd investments in technology and the energy sector, the analysts expect India to have the world’s third-largest stock market by the decade’s end.
Economic development is intimately associated with quality education, a fact not lost on the Indian government, it seems. India’s recent proposal to allow foreign institutions to establish campuses in the country is, as the South China Morning Post first reported, part of Prime Minister Narendra Modi’s broader effort to transform India into an education hub of genuine merit, one capable of competing with both the United States and China.
Modi’s focus on improving education comes as India gets ready to become the world’s most populous country, a title famously held by China. Some prominent commentators suggest that India’s overtaking of China is more than just symbolic—it signifies a significant shift in the tides of power.
A Changing of the (Economic) Guard
As Geoffrey Garrett, a political scientist and the current dean of the University of Southern California Marshall School of Business, previously noted, China is on track to become the “first country in history to be old before it’s rich.” Although China’s GDP is impressive, its GDP per capita is anything but ($12,556).
As its population ages and shrinks, China’s economy will inevitably feel the effects. By 2050, noted Garrett, China’s “dependency ratio” will go from 35 percent to 70 percent. For the uninitiated, the “dependency ratio” refers to those younger than 15 or older than 64 who rely on the working-age population (those ages 15–64) for support. Considering China already has a weak social welfare system, a health system in drastic need of repair, and is losing an average of 5 million reproductive-aged women each year, it’s very difficult to see how it will cope as the population becomes older, sicker, less productive, and more dependent on the Chinese Communist Party (CCP) for support.
The demographic makeup of India is strikingly different. More than one-fourth of its population is under the age of 15, and less than an eighth is over the age of 60. The French philosopher Auguste Comte famously referred to demography as destiny. Although the statement was and still is a slight exaggeration, a healthy demography is certainly necessary for a healthy economy and a healthy future. In India, rather critically, the dependency ratio continues to fall. It currently stands at 48 percent and is expected to be in the low 40s by 2050. The United States, on the other hand, can expect to have a ratio of a rather staggering 66 percent. By 2050, the median age in China will be 50, 42.3 years old in the United States, and only 37.5 years in India.
As our lives become even more intertwined with technology, the future will be won by the nations with the best scientific minds. India is a country renowned for creating brilliant scientists. Many of those brilliant scientists studied in the United States, then went on to pursue employment opportunities in the United States, thus benefiting the American economy in the process.
Now, though, with Modi’s push to make India a global education hub capable of competing with the United States, there is a high chance that India will retain a greater number of these brilliant scientists, thus benefiting the Indian economy in the process. When we examine scientific and technological trends, India is already performing admirably. However, with these new educational reforms and a young, vibrant population, we should expect to see something of a science and technology revolution in India over the next two to three decades.
Finally, unlike China, where even the mention of the word “democracy” could land a person in prison, India is a country that appears to value the idea of open elections. India is, after all, considered the world’s largest democracy. Infinite progress is impossible, but the limitations on progress are many times more evident in a country like China, where tyranny reigns supreme. Such a method of governance is not compatible with sustained economic growth. In the long run, what ends up bringing down China may very well help India rise to the top of the economic mountain.
Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.
