As India embarks on the Viksit Bharat journey to become a developed nation by 2047, it has five countries to look up to―China, Japan, Germany, Singapore and South Korea. The road to becoming a developed nation essentially means transformation in the economy to bring overall development.
China might have been a tricky neighbour, but there are many things that India can learn from it. The recent Economic Survey pointed out that it may not be possible to replicate or replace China in the manufacturing sector, but India can look at getting Chinese FDI as part of the China plus one strategy. This strategy involves finding alternatives to China in other emerging economies like India, where one can find cheap labour and accommodative trade policies.
China stands out due to its massive investment in infrastructure and the manufacturing sector. This gave a proportionate boost to labour productivity. China’s investment in infrastructure ranged between 10 per cent and 20 per cent of its GDP. Despite India trebling its expenditure on infrastructure in the past three years, it remains 3.3 per cent of the GDP, at Rs11.11 lakh crore. India needs to create an enabling environment to attract more FDI from across the globe as China appears to have slowed down and the west, especially the US, is looking for alternatives. With a workforce availability of 112 crore by 2047, India should focus on enhancing their skills.
Japan, Germany and South Korea also did ‘miracles’ to transform their economies after the wars. Japan underwent a massive transformation in the 1950s and 1960s with its rapid economic growth. It came about as the country focused on industrialisation despite the lack of natural resources. The Japanese ‘work ethic’ and female labour participation of more than 70 per cent have been its major contributing factors. India currently has 37 per cent female labour force participation and hopes to take it to 70 per cent by 2047.
Similarly, Germany’s economic trajectory changed between the 1950s and 1970s. After Wirtschaftswunder or ‘economic miracle’, Germany has remained one of the largest and most competitive economies owing to its “strong manufacturing base and technological prowess”, notes a paper by NITI Aayog.
The ‘Miracle on the Han River’ took place in South Korea as it emerged from being a war-torn, agrarian country in ruins in the 1950s to an economic powerhouse. The high-income country is now home to some of the world’s leading tech and automobile companies. It focussed on export oriented free-market economy to take a leap forward. The country further gained momentum with the 1988 Olympic Games.
The NITI Aayog also looked at the Singapore model as the country transformed from being an impoverished one to a highly developed one through the 1960s and 1970s. The country shifted from being predominantly an entrepôt (port city) economy to a rapidly industrialising and export-oriented one.
“These are nations which knew the importance of a turning point and used that occasion to become economic giants,” says the NITI Aayog paper. “India too is at the cusp of such an opportunity which, if seized and acted upon, can transform the nation to become a Viksit Bharat.”