Out of Control Policy Blog

Does China have the edge on India?

Two articles in today's Wall Street Journal will be of interest to those watching China and India's race to be the next Global economic superpower. The first reports on the number of Silicon Valley companies that are divesting in India in the face of excalating labor costs. Companies are closing down software offices in Bangalore as they find India's economic competitiveness doesn't compensate for all the other costs, including lack of access and poor regulatory climate.

The second article discusses Chrysler's outsourcing of some of its manufacturing to China's Chery Corp. Chery focused primarily on making small cars for the domestic market, but has been focusing on developing a more competitive, high quality car. Now, Chrysler sees opportunity in Chery's global ambition to become a major world player in automobile manufacturing. Chery "has been moving to produce more sophisticated products," the WSJ reports, relying heavily on the expertise of Italian design firms, an Austrian engineering company and many of the world's leading auto-parts manufacturers."

In short, China is thinking globally. This attitude was palpable during my visit to China in May during a research trip looking into China's investment in transportatoin infrastructure.

India doesn't have the same outward orientation. The tech industry has created a nice wealth bubble for the nation, but policymakers have not extended the same type of opportunity, or encouraged the same level of global ambition, among its own major industries. The nation is still focused on protecting domestic industries from global competition. China, in contrast, has embraced it.

Samuel Staley is Research Fellow


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