Openness and Economic Growth: A Comparison of China and India Performance Since the End of the Cold War and an Analytical Framework

　　Abstract: This article explores the effects of openness on the economy, comparing the economies of India and China in the PostCold War period from three different angles, and on the basis of this comparison, proposes a framework for such types of analysis. The three angles considered are: economic growth performance, openness, and growth responsiveness to openness. A preliminary analysis shows that the economies of both countries experienced high speed growth in the PostCold War era, and even though India’s economic growth has been slower than China’s, it has been more stable than China. Additionally, the gap between the two countries in terms of Gross National Income (GNI) per Capita is much smaller than the gap in GDP. In terms of the degree of openness, China has obviously outperformed India in terms of foreign trade and in attracting foreign direct investment (FDI), however India is in the lead with respect to service industry exports and the utilization of foreign capital in the service industry. As for the relationship between openness and growth, while it is possible to use mainstream economic models to predict this relationship, such models should be adjusted to account for the specific contexts of China and India. Author: Zhao Wei is a Professor in the College of Economics at Zhejiang University