SST3771-ABED: 6.1.5 Emerging Global Economies

Previously you looked at the mixed economies of Canada and Sweden, two liberal democracies that historically have been free both economically and politically. Citizens and their elected governments have established economic systems that balance economic freedom with government involvement for the common good of all people.

Canada and Sweden are both industrialized nations. Their economies have been strong for decades, and although not everyone in these two countries is rich, the standard of living is high and people have many opportunities to prosper.

But what about the poor nations of the world? What economic system is best suited to raise them out of poverty? Economists call nations such as India and China "emerging economies". Their economic power has yet to reach its potential. With huge populations and strong education systems, the two nations are showing that formerly poor nations can rise up with the help of both economic freedom and government intervention.

The quotation on the poster is from former Chinese premier Li Peng who called for the reform of the Chinese economy. The image is from an Indian author and activist, Rita Banerji, who has established a movement to oppose the genocide of Indian girls. Li Peng saw capitalism as the way forward for the Chinese, while Ms Banerji's photo demonstrates powerfully that capitalism in India has not led to economic success for all sectors of society.

China's Economic Approach

As a communist nation, China took a very different approach than the Soviet Union in reforming its economic system. The nation knew that it was not keeping up with other, more industrialized nations, but it could not afford to modernize. Millions of people lived in abject poverty. Under Deng Xiaoping, reform began at the bottom and worked its way up. Called "Socialism with Chinese characteristics" these reforms began in 1978 and moved China from being a poor agricultural nation to the world's fastest growing economy over the next 30 years. 53% of the people of China lived in poverty in 1978, while by 2001 only 6% were in that situation. Another name for this type of economic system is market socialism.

The change from command economy to a more market-oriented economy was gradual and occurred in small steps. Individual farmers were permitted to produce and sell their products on a small scale; this led to an immediate increase in production and a reduction in poverty. Townships and municipalities were allowed to set up their own industrial operations. Special Economic Zones were established in which foreign investment was permitted.

On the negative side, although the principle of economic equality is a fundamental aspect of a communist state, the new-found economic freedom in China has led to a huge gap between rich and poor.

This 1960s American cartoon was drawn long before China moved away from its agrarian roots to begin economic rebuilding. It shows former Chinese leader Mao Zedong standing in front of a group of starving people who face coffins reading "Victims of Hunger in Red China." The caption reads "By Government Decree Every Member of the Commune is Entitled to a Private Plot." It uses irony to show the only private property a communist Chinese person could expect to own was his own grave.

"By Government Degree Every Member of the Commune is Entitled To A Private Lot" by Edmund Valtman, Courtesy United States Library of Congress.

India's Economy

Economists predict that by 2010, India will be one of the leading economies of the world. Unlike China, India is a democracy. A huge and highly populated country, India is made up of many religious and ethnic groups. India was a colony of Great Britain until 1947. During British rule, railway networks, schools, and a system of governance characterized by bureaucratic regulations were established. After it regained its sovereignty until the early 1990s, it practised democratic socialism with high levels of protectionism, public ownership, and continued economic regulation. Its economy grew slowly, and millions lived in extreme poverty. Since then, its economy has moved towards greater reliance on the market and is now the second-fastest growing economy in the world. India has made huge gains in providing all children with education, and it has made the right to an education fundamental in its constitution.

However, per capita income in India is 139th in the world. Those who live and work on farms (over half the population) are still mostly very poor and uneducated. Millions have moved to urban centres, hoping to improve their lives but often without success. Child labour continues to be a problem. In many parts of India, women still do not have equal rights to men. Cultural norms value boys over girls: female fetuses are often aborted, and female infanticide is a major issue.

Emerging Economies and Equality of Opportunity

Although both India and China are experiencing phenomenal economic growth, success is experienced by the educated middle and upper classes. Those people who work in the fields, as most Chinese and Indian people do, are being left behind. The 2001 World Resources Indicator report shows that 2 million of the most wretchedly poor people of the world live in 51 countries, with almost half of these people in India and China. Economic success has also led to environmental degradation.

Read "China and India: 21st Century Economic Miracles" on pages 428 to 430 of your text Perspectives on Ideology.

As you read, take notes on the following:

How similar are the economic systems of China and India, considering their political systems are very different?
To what extent has economic liberalism led to benefits for the average citizen in China and India, and to what extent has it led to further problems?
To what extent do these emerging global economies threaten the economic systems of the developed world?