India becomes the new global economic growth pole, surpassing China

According to a study by Harvard University, India has emerged as the economic growth pole and has surpassed China in the same. It is also expected that India will continue to maintain a lead in the coming decade due to a variety of reasons. The study was carried out at the Center for International Development growth projections. It is a university wide center that works to increase the understanding of the development changes and to provide viable solutions to eradicate global poverty. According to the study, India will be on the top of the list of the fastest growing economies by 2025, with an average annual growth of 7.7 per cent. 

China was leading the economic pole of global growth, which has now moved towards its neighboring country India, and it is expected to stay for the next decade. This study attributed India’s rapid growth prospects and the fact that it is in a strong position to diversify into new avenues, given the capabilities accumulated by it. India has made inroads by diversifying its export base which includes more complex sectors like chemicals, vehicles as well as electronics. The major economies, which are highly reliable on oil, are experiencing pitfalls due to complete reliance on one resource whereas India, Indonesia and Vietnam have attained new capabilities that allow for a diverse and complex production which predicts faster growth in the coming years.

The study mentions that economic growth does not follow one pattern. The countries like India, Turkey, Indonesia, Uganda and Bulgaria, which are considered to be fastest growing, are diverse in all aspects- political, institutional, geographic as well as demographic dimensions. They all share a focus on expanding the capabilities of the workforce that gives them a strong position to diversify into new products and products of greater complexity.

The projections divide the countries into three categories, first, the countries with less productive capabilities to easily diversify into related products. Second, the countries with enough capabilities that makes diversification and growth easier. These include India, Turkey and Indonesia. Third, the advanced countries which include Germany, Japan and the US that are already producing all the existing products. Their progress will need pushing the technological frontier towards the invention of new products, which means slower growth.

The new projections mention that the growth across emerging markets will continue to outpace that of advanced economies and the growth projections are based on each country’s economic complexity. It thus captures the sophistication of the productive capabilities that are a part of the exports and the diversity of the products. It also considers the ease with which the country could further diversify its products by expanding the available capabilities.