07 October 2007 - INDIA TO SUSTAIN ECONOMIC GROWTH, CHINA COULD FALTER - NATO PA HEARS

Mr V.N. Balasubramanyam, a lecturer at the United Kingdom ’s Lancaster University, told a meeting of the NATO Parliamentary Assembly demand for India ’s products was likely to be sustained and the country could even achieve a breakthrough in the exports of services and science-based products such as chemical and pharmaceuticals.

“The model of growth and development which has evolved since the year 1991 – what can be termed as the elitist model –mostly because of the legacy from the past, is one which is likely to endow India with substantial and stable markets,” he told a meeting of Assembly’s Economics Committee.

He argued that this was in contrast to China which he labelled the “brute force model”.

“The Chinese economy has responded to inputs of huge amounts of capital and labour, the capital provided by the Chinese Diaspora and growth of domestic savings of 40 percent of GDP,” he said.

He said China had a large pool of labour with a secondary level of education which was a factor in the growth of production and exports of labour intensive manufactures.

“This sort of growth… is likely to face not only increasing competition from other developing countries such as Vietnam in Asia and Brazil and Mexico in Latin America, but also run into demand ceilings. In contrast, India is endowed with a substantial pool of labour with tertiary level education,” Mr Balasubramanyam, told the meeting.

He said this endowment of highly trained people enabled India to utilise the foreign investment it receives much more effectively than China. “For this reason it can be argued that India, in fact, does not need as large a volume of foreign direct investment as China,” he said.

The NATO Parliamentary Assembly, which brings together some 248 delegates from 26 Nato member states, is currently holdings its annual session in Reykjavik in Iceland.