Calling the economic growth of India and China during the past 25 years a "remarkable development," Nobel Prize-winning economist Gary Becker examined the progress of these two countries in a talk January 19 titled "India and China: A Tale of Two Giants." Attributing the transformations of these countries to hard work and traditional means, he noted that, as a result, one-third of the world's population moved out of desperate poverty to a more decent standard of living.
Becker is the Rose-Marie and Jack R. Anderson Senior Fellow at the Hoover Institution and University Professor of Economics and Sociology at the University of Chicago. He won the Nobel Memorial Prize for Economic Science in 1992. He received the National Medal of Science in 2000 for his work in social policy. Recognized for his expertise in human capital, economics of the family, and economic analysis of crime, discrimination, and population, Becker's current research focuses on habits and addictions, formation of preferences, human capital, and population growth.
In his talk, Becker discussed how the countries achieved these gains, challenges that remain, and possible consequences. Reforms in China began in the late 1970s, he said. First, changes were made in agriculture that proved successful, which led the Chinese to take further steps. In India reforms began in 1991, motivated in part by China, which is its competitor.
He pointed out that there are still serious problems in both countries. "It's easy to grow when you start low," Becker said. "They still have a long way to go before they join rich countries." China has poor economic and capitalistic infrastructures, weak private property rights and ranks 100 out of 160 countries in the Economic Freedom Index. India, he said, has inflexible markets and ranks even lower on the Economic Freedom Index.
Possible negative consequences of continued growth he mentioned are that other smaller developing countries will be hurt and that intellectual development may be hampered unless China supports international property laws. Development of these countries, he said, could lead to the opening of markets for U.S. goods.
"By simple reforms that economists have been advocating for a long time" Becker said, "these countries have succeeded in improving living conditions."
Becker, a featured monthly columnist for BusinessWeek magazine, recently began a web log with the Honorable Richard Posner at http://www.becker-posner-blog.com/. The author of numerous books, including the seminal work Human Capital (Columbia University Press, 1964; 3d edition, 1993), which was awarded the prestigious W.S.Woytinskty Award in 1964, Becker's most recent publications include (with Guity Nashat) The Economics of Life (McGraw Hill, 1997) and Accounting for Tastes (Harvard University Press, 1996).