Lessons from China: A Strategic Economic Policy for India

The discourse over China's economic story has consistently challenged the sustainability of Chinese growth over the medium and long term and has even speculated on the potential disadvantages of ‘over investment’ or creation of surplus capacities in China. Recent research, however, has now shown that investment has, in fact, been the fundamental driver of Chinese growth and served as a vital channel for technology absorption, productivity growth, and structural change.1 Real gross domestic investment over the entire period—1980–2004—averaged a steady 37 per cent of real GDP2 (see Chart 6.1). Moreover, manufacturing, infrastructure, and real estate have been the drivers of fixed-asset ...

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