Comparing the economic performance of two countries can be quite a tough task. While comparing the economies of these two countries, certain aspects need to be kept in mind. There are some major differences between the economies of these two countries. Some of these differences have led to stirs of sentiments and debates amongst the citizens of the two countries. Many people are of the view that, comparing the performance of two countries is not an easy task, especially when the country in question has been ruling for decades or so. Yet, when all the facts are analyzed and put together, it becomes very easy for us to understand the difference between the economies of these two countries.
First and foremost, the productivity of the workforce in India is way lower than that of China. It is no secret that the working condition in the working environments of most of the third world nations is far from perfect. This means that while the people are working hard to make ends meet, they are hardly able to extract a reasonable amount of profit from their jobs.
However, India has managed to transform itself from a poor nation, into a first-world economic power. It has emerged as one of the largest consumer market in the world, thanks to the liberalization policies implemented by the government of the country. At the same time, it has managed to reduce its foreign debt significantly. These factors have resulted in the reduction of the fiscal pressure and the pressures associated with low economic growth.
Another important fact that we should keep in mind while trying to understand how to compare economic growth of two countries is the level of taxation that is paid by them to the government. Most of the developing countries pay extremely low taxes to the government, even to the detriment of the people living in those countries. Many of these countries have experienced economic breakdown in the recent past, thanks to the absence of necessary public spending. Therefore, a proper understanding of how the tax structures work in a country is very important. Moreover, it is extremely important for us to understand that a country cannot grow at the same pace that we are growing; otherwise, we are going to be trapped in a vicious cycle of ever-increasing levels of taxation and slower economic growth.
There is another important fact that we should compare economic growth rates of various countries. This can be done by looking at the level of government spending. The more the government spends on various projects, the higher will be the rate of economic development. This is a very crucial factor, which we should not ignore at all.
Looking at the overall performance of the countries, it would appear that there is a positive correlation between the size of the economy and the level of government spending. However, the economic growth rate of the respective countries also plays an important role. A larger economy has more potential than a smaller one. Thus, the size of the economy of a nation is not the sole determinant for its economic development, but there are other factors too that can affect the growth rate. One such factor is . . . . . . the level of consumption spend.