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     China + India = ?

                Pankaj Ghemawat

 Pankaj Ghemawat is a global                  relative to the 1990-2010 period, over   10 years that China did 10 years ago.
 strategist, professor and author             which it contributed 23% of global       But achieving sustainable double-digit
 and one of the new generation                GDP growth. And China’s growth           growth is quite challenging, to say
 management gurus throwing new                is now more focused on domestic          the least. On the other hand, there
 light on corporate behaviour. He             markets, which, in many cases, have      are some recent policy developments
 is currently Professor of Global             grown to be the largest in the world,    that are encouraging. Prime Minister
 Strategy as the IESE Business                and less on export markets than it       Modi’s “Make in India” policy is
 School.                                      used to be. Especially in this context,  officially agnostic about whether the
                                              it is interesting to look, as Thomas     makers should be Indian firms or
Despite the recent downgrades,                Hout and I have been doing for the       foreign ones. And the generalized
            emerging markets continue to      better part of a decade now, at how      sales tax reform is a milestone in
            account for the bulk of forecast  Chinese firms fare against advanced      dealing with grumbling of the sort
 growth for the world economy over            country multinationals in those          articulated by the former chairman
 the next few decades. And the two            sectors within China in which foreign    of Suzuki: that the kind of trade
 largest—China and India, which rank          competition really is allowed.           liberalization India needed the most
 first and third globally in terms of                                                  was internal rather than external.
 purchasing power parity measures             Perhaps the headline from the most
 of GDP, with the U.S. in between—            recent batch of data, as elaborated      In still-unpublished research--
 continue, in a purely arithmetic sense,      in our article in the March-April 2016   which I am happy to elaborate on in
 to play particularly large roles going       issue of Foreign Affairs, is how little  private—I look at how Indian firms
 forward.                                     changed in leadership patterns over      have been faring at home against the
                                              a period in which Chinese domestic       multinationals (i.e., do the patterns
 To start with China, the most recent         markets, on average, doubled in size.    discerned in China hold?) and the
 data confirm a slippage in its role          Advanced country multinationals did      lessons to be learned from Indian
                                              persistently well in sectors where       firms’ attempts to multinationalize
                                              product differentiation possibilities    themselves. n
                                              (through marketing, R&D etc.) are
                                              large, in line with standard academic
                                              theories of the multinational
                                              enterprise, with Chinese companies
                                              dominating in the others.

                                              Turning to India, rough calculations
                                              suggest a 10:10:10 rule: if India can
                                              grow at 10% or more, it will account
                                              for the same share of world GDP in

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