INEQUALITY, POVERTY REDUCTION AND QUALITY OF DEVELOPMENT IN CHINA AND INDIA: LESSONS LEARNED

ABSTRACT

The People’s Republic of China (PRC) and India attained unprecedented growth and economic development resulting in remarkable poverty reduction and human development in the last three decades but continue to struggle with high-income inequality. These two economies share several common characteristics, prospects and challenges. However, their approaches and trends in growth and development have been distinctly different. This paper examines the differences between the PRC and India in the trends and patterns of development as well as their performance in addressing three major development challenges—namely, quality of growth and development;poverty reduction and income inequality. This topic is particularly relevant with the ongoing COVID-19 pandemic which has devasted economies worldwide since January 2020 and will move millions of people below the poverty line. In lieu of this crisis, it is very important to examine if the lessons learned from PRC and India can be useful for other developing economies that are struggling to improve their economic development and quality of growth. Using econometric analyses, this paper explores the determinants of poverty reduction. It also empirically analyzes the relation between income inequality and its major determinants, particularly growth rate of real GDP for the PRC, India and major southeast Asian economies. Copyright © Biswanath Bhattacharyay and Madhurima (Rima) Bhattacharyay.