China and India are more important than ever within the global economy. With the US starting to slowdown, these countries will now be the global growth engines for the rest of the world. But, the importance of these countries even within the United States because of their job impact on the domestic economy. The outsourcing of jobs is a major domestic policy issue especially if the unemployment rate is rising. While there has been discussion of outsourcing and talk of trade restrictions, there have not been any specific policy actions to reduce the flows in human capital. Finally, the international fiancé implications from savings imbalance are significant especially with respect to China.
So how do you get to know the economics of these countries and the key economic issues? One of the best books on the topic is The Elephant and Dragon: The Rise of India and China and What It Means for All of Us by Robyn Meredith, a well-respected business writer. She makes a balanced presentation on the positive and negatives of the global impact of these countries on the United States and the rest of the world. Meredith does not argue solely for free trade not does she suggest that barriers need to be in place to stop globalization.
China and India are not the same. Their government policies are different and the areas of growth by each have been different. China has become the manufacturer of the world while India has transformed itself into an IT service center. China has been able to build the infrastructure to produce gains in manufacturing. India has not matched this capital expenditure. These are complex countries that cannot be easily described in the same manner.
The continued decline in the dollar and the slowing of the economy is going to make relationships with these countries all the more vital for overall global growth.
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