Causes fast economic expansion in india and china

Since 21st century, China’s national economy has maintained a growth rate around 10%, which is called a miracle in the history of the world market (Cai, 2007). India’s market has also made amazing progress. During 2002 to 2006, the economic growth rate reached 7.8%. Because the 12 months 2003 2004, the Indian economy has shown continuous rapid development: from 2003 to 2007, India’s average gross annual economical growth rate reached 7.5%, 8.5%, 9.4% and 9.6% (Mohan, 2008). As a way to analysis the sources of such fast economic development in both countries, this essay will firstly introduce the basic framework of open system proposed by Daniel Katz and Robert L. Kahn and how understanding of this theory can instruct the expansion of economic advancement. Subsequently, this essay will examine the key elements that spelling the increasingly rise of overall economy in China and India, like the population change, the expenditure on fixed resources, the technology creation and the institutional improvement, based on the open program theory. Finally, the essay will give a conclusion of the overall analysis.

The open system theory

Daniel Katz and Robert L. Kahn (1978) proposed a theory composition of open-systems theory including: inputs, transformation, outputs and recycling. Inputs have capital, recycleables, and employees. Likewise, some intangible influences, such as for example personal rewards, satisfaction, recognition, or status. Services or products are created through the transformation process using employee, recycleables by facilities such as for example machine and computer. The products or services are sent to consumers. Through the recycling, the profit obtained becomes the type again to buy recycleables or pay employees. Additionally, there are some subsystems which is critical to the creation of organization. Understand the business can be an open system apart from a closed system can be quite a great help for any organization to build up through change the external environment such as for example improvement of the training level, technology, services or structure systems.

Key elements for the economic development in China and India

Rarick, A good. C., Nickerson, We. and Olan, M. (2007, pp. 19-22) imagined that the emergence of monetary in China and India is certainly as the low labor cost, on the other hand, there are several key elements spelling the economical booming of China and India how to write a psychology research paper. Over the past 10 years, China and India’s market has undergone tremendous transformation, which is mainly determined by enhancement of input and transformation of an open system like the growth of human how to write an interview essay being capital (labor), basic production capacity (noted as the amount of fixed asset investment) and technical and institutional factors.

1. The reduction of the population. Personnel are the main input of the wide open system. Wealth of inhabitants resources ensures the economic development of China and India’s large demand for labor. Nevertheless, over-population will burden the monetary and social development. To ensure the financial development of China, early on in 1978, family planning was taken as a simple national insurance plan of China. Over the past decade, China’s economic growth has been enjoying the dividends of the populace, but population growth continues to decline (Zhang, 2008). India has the same concerns in the treating population problem, the family planning made population development level of India downward.

2. The increased expenditure in fixed property. Transformation in the open system plays transfer suggestions to output, through all sorts of equipment and tools. Hence, the fixed resources as the tools and equipment should be placed on a lot emphasis to ensure the normal operation of a business. Understating this point, China and India heightened the investments in set asset. Fixed asset investment is the primary method of reproduction of sociable fixed possessions. Through the construction and purchase of fixed possessions, the national economy continue to adopt advanced technology and devices, establish new departments, and further modify the regional distribution of financial structure and productivity to improve the financial strength (Chen, 2009). Purchase in fixed assets reflects the production potential progress of a country in large extent, so the investment changes in resolved resources can reflect in the partnership of productivity and financial growth. Over the past decade, total expenditure in fixed assets in China were 10% increase per year to maintain the state of positive growth, and GDP also showed a great correlation, about 10% increase each year. India’s overall economy has maintained a 10% twelve-monthly growth trend, the alterations altogether fixed asset investment kept positive growth around 10% per year.

3. The expansion of technology. As a significant input, technology is a crucial factor which decides the competitiveness of an organization. In the last decade, under the instruction of "science and technology will be productive forces", by firmly taking the introduction notion of merging absorption and independent analysis and development, technological innovation capability of China’s culture and sensible results obtained significant improvement. Popularization of China’s It all technology and products in a few aspects and some areas have caught up and even more than developed countries. Technology development strategy transferred from the early intro of technology to the main goal of the original innovation. Adhering to the ideas of included innovation and secondary creativity, many domestic enterprises have taken great progress in creativity, and some companies changed the business enterprise model from low-cost, low value-added "Manufactured in China" to the high prices, high value-added "global manufacturing" strategy, and achieved good monetary results. As can be seen, technical progress provided a great deal of ability for China’s sustained monetary expansion. For India, each federal government of India have attached great importance to the technical development, the government has developed a series of policies to promote scientific and technological improvement and established extensive technology management system. In the last decade, advances in science and technology achievements in India have attracted worldwide attention. The amount of internationalization of India’s cutting-edge personnel training, software development, international program outsourcing and bio-treatments has improved; the national resources investments give attention to in space, nuclear energy and remote sensing. It and biotechnology is becoming India’s two knowledge-based sectors. For instance, Indian Central Federal government formulated a national drug policy, and these medicines policy played an important role to advertise the Indian pharmaceutical sector. Currently, the Indian pharmaceutical industry accounts for 8% share of global development, and the output worth of share is 1.8%. India’s financial development in the past decade shows the expansion of India’s technology strength has played a significant role in promoting financial growth (Pradhan, 2006).

4. Institutional improvement. Organizations, laws and regulations are proponents in the open system, which possess great effect on the development of a business. In other words, bettering or reforming these things can develop the financial development. In the brand new century, China submit the scientific development concept to guide financial development, and took a number of new Institutional development around scientific production. China’s economical system, the changing approach to the ongoing adjustment of the globe economy and domestic monetary situation, effectively promoted the emancipation and production of effective forces. China’s financial system reform is among the fundamental driving a car forces of economic development. India released a "liberalization, marketization, globalization and privatization" as the characteristics of the new economic policy, that’s, relaxing the limitations on private economic creation, accelerating the reform of state-owned economy, changing from a planned to market, implementing market monetary development model. India has started a comprehensive economical reform, reform involved international trade system, industrial policy, and finance areas. The group of institutional change due to the implementation of this line became the important promoter to enhance India’s economy continues to change for the better.


A good understanding and request of open system could be greatly ideal for the development of overall economy. Considering the exterior environment influences and each sector of the open up system can markedly affect the whole open system and additional exert a direct effect on the economic advancement, China and India upgraded a lot in the suggestions and transformation sectors of an available system. Aside from the labor source, that is, the low cost labor forces stated in Rarick, A good. C., Nickerson, I just. and Olan, M. (2007, pp. 19-22), as product of the Rarick’s exploration, the key factors that make the astonishing economic creation of China and India will be analyzed and proposed, made up of: the reduction of population, the increased purchase in fixed assets, the great advancement of technology and the institutional improvement and reformation. The abovementioned factors in addition to the labor source are critical to ensure the economic expansion in China and India, making them at the top list of countries with most fast economic growth rate.