What are the world’s largest economies? According to the International Monetary Fund, the following countries have the greatest nominal GDP in the world:
What accounts for India’s low GDP?
There are two things that stand out. The Indian economy began to revive in March 2013 more than a year before the current government took office after a period of contraction following the Global Financial Crisis.
But, more importantly, since the third quarter of 2016-17 (October to December), this recovery has transformed into a secular slowing of growth. While the RBI did not declare so, many experts believe the government’s move to demonetise 86 percent of India’s currency overnight on November 8, 2016, was the catalyst that sent the country’s GDP into a tailspin.
The GDP growth rate steadily fell from over 8% in FY17 to around 4% in FY20, just before Covid-19 hit the country, as the ripples of demonetisation and a poorly designed and hastily implemented Goods and Services Tax (GST) spread through an economy already struggling with massive bad loans in the banking system.
PM Modi voiced hope in January 2020, when GDP growth fell to a 42-year low (in terms of nominal GDP), saying: “The Indian economy’s high absorbent capacity demonstrates the strength of the country’s foundations and its ability to recover.”
The foundations of the Indian economy were already weak in January last year well before the outbreak as an examination of key factors shows. For example, in the recent past (Chart 2), India’s GDP growth trend mirrored an exponential development pattern “Even before Covid-19 came the market, there was a “inverted V.”
What accounts for Japan’s high GDP?
Japan has one of the world’s largest and most sophisticated economies. It boasts a highly educated and hardworking workforce, as well as a huge and affluent population, making it one of the world’s largest consumer marketplaces. From 1968 to 2010, Japan’s economy was the world’s second largest (after the United States), until China overtook it. Its GDP was expected to be USD 4.7 trillion in 2016, and its population of 126.9 million has a high quality of life, with a per capita GDP of slightly under USD 40,000 in 2015.
Japan was one of the first Asian countries to ascend the value chain from inexpensive textiles to advanced manufacturing and services, which now account for the bulk of Japan’s GDP and employment, thanks to its extraordinary economic recovery from the ashes of World War II. Agriculture and other primary industries account for under 1% of GDP.
Japan had one of the world’s strongest economic growth rates from the 1960s to the 1980s. This expansion was fueled by:
- Access to cutting-edge technologies and major research and development funding
- A vast domestic market of discriminating consumers has given Japanese companies a competitive advantage in terms of scale.
Manufacturing has been the most notable and well-known aspect of Japan’s economic development. Japan is now a global leader in the production of electrical and electronic goods, automobiles, ships, machine tools, optical and precision equipment, machinery, and chemicals. However, in recent years, Japan has given some manufacturing economic advantage to China, the Republic of Korea, and other manufacturing economies. To some extent, Japanese companies have offset this tendency by shifting manufacturing production to low-cost countries. Japan’s services industry, which includes financial services, now accounts for over 75% of the country’s GDP. The Tokyo Stock Exchange is one of the most important financial centers in the world.
With exports accounting for roughly 16% of GDP, international trade plays a key role in the Japanese economy. Vehicles, machinery, and manufactured items are among the most important exports. The United States (20.2%), China (17.5%), and the Republic of Korea (17.5%) were Japan’s top export destinations in 2015-16. (7 per cent). Export growth is sluggish, despite a cheaper yen as a result of stimulus measures.
Japan’s natural resources are limited, and its agriculture sector is strictly regulated. Mineral fuels, machinery, and food are among Japan’s most important imports. China (25.6%), the United States (10.9%), and Australia (10.9%) were the top three suppliers of these items in 2015. (5.6 per cent). Recent trade and foreign investment developments in Japan have shown a significantly stronger involvement with China, which in 2008 surpassed the United States as Japan’s largest trading partner.
Recent economic changes and trade liberalization, aiming at making the economy more open and flexible, will be critical in assisting Japan in dealing with its problems. Prime Minister Abe has pursued a reformist program, called ‘Abenomics,’ since his election victory in December 2012, adopting fiscal and monetary expansion as well as parts of structural reform that could liberalize the Japanese economy.
Japan’s population is rapidly aging, reducing the size of the workforce and tax revenues while increasing demands on health and social spending. Reforming the labor market to increase participation is one of the strategies being attempted to combat this trend. Prime Minister Shinzo Abe’s ‘Three Arrows’ economic revitalisation strategy of monetary easing, ‘flexible’ fiscal policy, and structural reform propelled Japan’s growth to new heights in 2013.
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In 2050, who will be the world’s ruler?
And, to no one’s surprise, China will be the world’s most powerful economy by 2050. PwC, on the other hand, did not arrive at this conclusion. From the World Bank to the United Nations, Goldman Sachs to the European Union, a slew of organizations, financial institutions, and governments have predicted this for quite some time.
China will not be able to grow if it continues to be as isolated as it has been for years. Instead, Beijing will expand by allowing international companies such as General Motors and Tesla Motors access to its markets. Since entering a trade war with the United States in 2017, President Xi Jinping has supported market-oriented reforms, allowing for more foreign direct investment.
Despite geopolitical tensions and trade issues, the authors of the study are optimistic that China would remain dominant in 30 years.
Is Pakistan poorer than India?
With a GDP of $2,709 billion dollars in 2020, India’s GDP will be about ten times that of Pakistan’s $263 billion dollars. The disparity is larger in nominal terms (almost ten times) than in ppp terms (8.3 times). In nominal terms, India is the world’s fifth largest economy, while in ppp terms, it is the third largest. Pakistan has a nominal ranking of 48 and a PPP ranking of 24. Maharashtra, India’s most economically powerful state, has a GDP of $398 billion, far exceeding Pakistan’s. Tamil Nadu, India’s second-largest economy ($247 billion), is relatively close. The gap between these two countries was at its narrowest in 1993, when India’s nominal GDP was 5.39 times that of Pakistan, and at its widest in 1973. (13.4x).
In terms of gdp per capita, the two countries have been neck and neck. For only five years between 1960 and 2006, India was wealthier than Pakistan. In 1970, Pakistan’s GDP per capita was 1.54 times that of India. Since 2009, the margin has widened in India’s favor. On an exchange rate basis, India’s per capita income was 1.56 times more than Pakistan’s in 2020, with an all-time high of 1.63x in 2019. The previous year, Pakistan was wealthier than India. Both countries rank near the bottom of the world in terms of GDP per capita. India is ranked 147 (nominal) and 130 (absolute) (PPP). Pakistan is ranked 160 (nominal) and 144 in the world (PPP). There are 28 Indian states/UTs that are wealthier than Pakistan.
In 2020, India’s gdp growth rate (-7.97) will be lower than Pakistan’s (-0.39) after 19 years. India’s GDP growth rate reaches a high of 9.63 percent in 1988 and a low of -5.24 percent in 1979. Pakistan’s inflation rate peaked at 11.35 percent in 1970 and peaked at 0.47 percent in 1971. Pakistan expanded by more than 10% in three years from 1961 to 2017, while India never did. India’s GDP growth rate has been negative for four years, whereas Pakistan’s growth rate has never been negative.
According to the CIA Fackbook, India’s GDP composition in 2017 was as follows: agriculture (15.4%), industry (23%), and services (23%). (61.5 percent ). Agriculture (24.7 percent), Industry (19.1 percent), and Services account for the majority of Pakistan’s GDP in 2017. (56.3 percent ).
Is India more impoverished than Africa?
Acute poverty is prevalent in eight Indian states, including Bihar, Uttar Pradesh, and West Bengal, according to a new UNDP measure termed the Multi-dimensional Poverty Index (MPI). They have more poor people than the 26 poorest African countries put together.
The Oxford Poverty and Human Development Initiative, with UNDP financing, created and used a new measure called the Multidimensional Poverty Index. The indicator reflects the nature and scope of poverty at several levels, ranging from the household to regional, national, and worldwide levels.
According to its designers, there are more poor people in eight Indian states (421 million in Bihar, Chattisgarh, Jharkhand, MP, Orissa, Rajasthan, UP, and West Bengal) than there are in the 26 poorest African countries combined (410 million).
Since 1997, the Human Poverty Index has been included in the Annual Human Development Reports, however the MPI has replaced it.
From education to health outcomes to assets and services, the MPI evaluates a variety of essential characteristics or deprivations at the household level. When these indicators are considered combined, they provide a more complete picture of acute poverty than basic income metrics.
India is home to 1/3 of the world’s poor. It also has a higher percentage of people living on less than $2 per day than even Sub-Saharan Africa.
75.6 percent of the population, or 828 million people, live on less than $2 a day.
42% of the population is poor, according to the new international poverty level.
Indians account for 33% of the world’s poor, or 14 billion people. The situation in Sub-Saharan Africa, the world’s poorest region, is improving.
With a monthly per capita consumer spend of Rs 447, 41.8 percent of the rural population makes ends meet.
They barely spend Rs 447 on basic necessities such as food, gasoline, light, and clothing.
According to current estimates from the Planning Commission, India’s poverty rate fell from 35.97 percent in 1993-94 to 27.54 percent in 2004-05.
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Is India or Bangladesh wealthier?
Several indications show that Bangladesh is gaining ground on Pakistan, particularly on the social and economic fronts. Bangladesh’s inspirational target level of development success in the future would most likely be nations like Thailand, Malaysia, and Indonesia, and there is still a lot more work to be done to reach that level of development.
Many notable economic analysts, periodicals, and forums link Bangladesh’s current situation to that of India. India is not only Bangladesh’s closest neighbor and greatest economic partner, but it has also emerged as the country with the most similarities to Bangladesh.
Or perhaps a more appropriate way to put it would be to state that Bangladesh has progressed so quickly and achieved so much that it can now legitimately be compared to India in terms of economics and social development.
Is India, then, Bangladesh’s new rival? Yes, from certain views and economic perspectives, but no, in terms of many other comparisons.
Furthermore, this comparison is not so simple and has a number of subtleties and nuanced elements.
Several articles published in highly reputable Indian origin publications over the last year or so have provided an economic and social comparison between India and Bangladesh, and all of these articles have one thing in common: they conclude that Bangladesh currently outperforms India on many key economic indicators and social objectives.
This was not the case even five years ago, but it appears to be becoming a more common scenario in recent years. However, on a practical and honest basis, India remains far more dominant and strong than Bangladesh, although this is mostly due to India’s massive physical size, population, and natural resources.
Income and GDP
In theory, India has fallen behind Bangladesh in terms of per capita income, since Bangladesh just declared a per capita income of $2,227 for the 2020-2021 fiscal year, up about 10% from $2,064 in the previous fiscal year.
According to the most recent government data, India’s per capita income is $1,947, owing to a drop in India’s economic growth caused by the Covid-19 pandemic.
It is crucial to note that while Bangladesh’s economy has experienced rapid GDP growth since 2004, this rate did not significantly alter the relative status of the two economies between the mid-2000s and the mid-2010s because India’s economy grew faster.
However, India’s growth rate has slowed dramatically in the second part of the decade, while Bangladesh’s has accelerated even faster. Bangladesh’s quicker development rate is due in part to significant improvements in several social and political indicators such as health, sanitation, financial inclusion, and women’s political representation.
Countries are typically compared in economic terms based on their GDP growth rate or absolute GDP. On all measures, India’s economy has done better than Bangladesh’s for the most part since independence.
India’s economy has always been over 10 times the size of Bangladesh’s in terms of GDP growth rates and absolute GDP, and it has risen faster every year. According to recent International Monetary Fund projections, India will likely grow faster again soon, putting it ahead of Bangladesh. However, due to Bangladesh’s slower population growth and comparatively faster economic growth, the two countries are expected to be very close in terms of per capita income comparisons.
Size matters
Would India still be so much more dominant than Bangladesh if it were the same size, geographically, and in terms of people and resources as Bangladesh?
Based on how major financial, social, demographic, and economic variables are currently exhibited, the simple response could be “no.”
If India and Bangladesh were twins in terms of population, size, and resources, it would be clear that Bangladesh is the better-performing twin sister in the 2020s. This is further shown by the fact that, in 2020 and this has gotten everyone’s notice – the average Bangladeshi citizen’s per capita income was higher than the average Indian citizen’s per capita income.
So, the question is whether India and Bangladesh are comparable, and the answer is a complicated yes/no. The fact is that India has significantly more resources, capabilities, and strategic advantages than Bangladesh, owing to its larger geographic expanse and a population that is nowhere near as dense.
As a result, Bangladesh’s exceptionally high population density is continually at odds with its exceedingly limited resources. Bangladesh has no choice but to make the most effective and efficient use of its limited resources and territory.
This is a significant burden that India does not have to bear, giving it a significant competitive edge. For example, if one region of India is harmed by natural disasters or unforeseen events, it has a large pool of ready and available resources and the ability to pool them and manage them quickly and effectively.
Such incidences may or may not have a significant impact on the overall economic balance and standing of the country. Bangladesh, on the other hand, does not have that luxury because it lacks the enormous pool of readily available resources required to properly absorb a catastrophic calamity, and such sad events have befallen Bangladesh numerous times in the past.
Despite such setbacks, Bangladesh always manages to overcome and eventually thrive.
What can be done to mitigate and work with Bangladesh’s comparably tiny geographic size (especially contrasted to its massive population) so that the country may still go forward and become just as economically dominating, if not more so, than India?
Japan, Singapore, and South Korea are all much smaller than India, but despite their small geographic area, they have all had phenomenal economic growth and development. So, how might Bangladesh, like Japan, Singapore, and South Korea, one day completely and utterly overcome India?
For instance, consider India, which rose to prominence as a global economic powerhouse and a force to be reckoned with by upskilling its massive labor population and eventually attempting to become what is known as a knowledge-based economy.
Knowledge-driven economy
- Institutional institutions that encourage entrepreneurship and the application of knowledge
- A thriving innovation ecosystem that encompasses academics, business, and civil society
A knowledge-driven economy is defined by its products and services, which are propelled by knowledge-intensive rather than labor-intensive activities. The premise is that, rather than giving and employing low-skilled manual labor to generate money, such an economy uses knowledge and information to create goods and services.
A knowledge-based economy necessitates a competent labor force and a considerable portion of the population with excellent analytical ability and subject-matter expertise so that data can be manipulated and development can be achieved through research and invention.
In essence, a knowledge economy allows science and academia to be commercialized, which leads to research-based breakthroughs that are protected and backed by strong intellectual property regulations. The world economy has already changed to a knowledge economy in this information age, and if Bangladesh does not follow suit, it will be left far behind.
Because Bangladesh is still an agricultural and manual labor-intensive economy, and the level of skill of its labor force is not yet at the point where truly useful and viable informational analytics or unique technological innovations can be generated, India is far superior to Bangladesh in all of these aspects that define and make a knowledge-based economy.
India, on the other hand, today dominates the global technology industry and has achieved great progress in a variety of other knowledge- and skill-intensive industries, including medical, industrial production, business consulting services, and education.
The harsh reality is that Bangladesh is still a long way behind India in terms of knowledge-based economies. However, Bangladesh has the potential to become a knowledge-driven economy because it possesses the same core underlying elements as other knowledge-driven economies a huge young population ready to study, grow, and progress.
As a result, the concern now is how to promote better knowledge focus, skill acquisition, and technical competency among the young people.
The apparent solution is to place a greater emphasis on education, training, and skill development. The idea would be to encourage and inspire workers to move away from manual labor-intensive jobs and into higher-skilled and knowledge-based jobs.
Since India has reaped significant benefits by training its youth in technology-related fields, Bangladesh should be able to accomplish the same because it has the capability and resources to do so.
However, policymakers, legislators, and those in command must have a strong desire and drive to actively foster and promote a knowledge-based focus when it comes to future vocations, and such goals must then be instilled in the brains of the country’s adolescent population.
Furthermore, fundamental modifications to the country’s educational system would be required to actively enable and incentivize students to acquire the essential skills to update themselves.
Teachers and professors must also be continually trained and educated in order to stay current with the newest advancements in their fields in order to properly pass on that information and expertise to their pupils. Practical skills, rather than academic knowledge, should be emphasized, and originality and invention should be celebrated.
This is so that no one can quickly replicate or steal something that someone else has spent a lot of time and effort developing and creating. If intellectual property rights are not completely safeguarded and guaranteed, firms and individuals would lack the drive to research, develop, and come up with new inventions and technologies, and a knowledge-based economy will never be realized.
Bangladesh’s challenges
The fact that Bangladesh has reached a point in its development cycle where it is being compared to India is surely commendable. Considerable obstacles remain, however, and continue to erect significant barriers to Bangladesh becoming a true competitor to India.
One cause for concern is that Bangladesh’s poverty rate remains much higher than India’s. Poverty is anticipated to rise even more in the short term, according to the World Bank, with daily and self-employed workers in the non-agricultural sector and salaried workers in the manufacturing sector suffering the most.
Furthermore, Bangladesh continues to lag behind India in terms of basic education, resulting in a worse ranking in the Human Development Index.
A truly sustainable developed economy cannot be achieved while still experiencing high rates of poverty and a lack of educational advancement, pointing again to the importance of focusing more on a knowledge-based economy, which has the incredible potential to alleviate poverty while also improving education and literacy.
Bangladesh now falls behind other comparator nations in several measures for “ease of doing business,” and this is due to a lack of reforms and the government’s willingness to take steps to improve the situation.
Furthermore, Bangladesh’s ability to enhance its ease of doing business indices is nearly impossible due to widespread corruption when dealing with any government regulator or authority. Demanding payments from officials has become the norm, even for the tiniest of tasks.
Furthermore, as many important business leaders have often and loudly stated, running a business in Bangladesh remains extremely difficult. For example, some businesses require many licenses and permits from various regulatory organizations, which is incredibly time-consuming and inconvenient.
It’s almost as if the entire system has been designed to make it as difficult as possible for relevant authorities to accept bribes at every level. Bangladesh is unlikely to fall below 100 on the World Bank’s ease of doing business index anytime soon as a result of this.
Despite the fact that the Bangladesh Investment Development Authority was established with the express purpose of making it easier to do business in Bangladesh, it has so far been unable to control, coordinate, and collaborate with other regulatory bodies in order to achieve its goal of becoming a one-stop service center.
If the situation is to be improved, the Bangladesh Investment Development Authority should be given more authority and power to truly make a difference and to be able to override and control the entire process so that aspiring entrepreneurs do not have to spend so much time, money, and effort simply to be regulatory compliant.
If such difficulties are not addressed and resolved in the near future, Bangladesh will continue to fall behind and lose to its competitors, who are also aggressively competing for foreign investment, and who already rank far higher on the ease of doing business index than Bangladesh.
In this ranking, India currently ranks 63rd, whereas Bangladesh ranks 168th, which is extremely shameful.
Bangladesh’s resource
Bangladesh’s most valuable asset and resource is its people, and this is one natural resource that the country has in abundance. Since a result, one of the most essential objectives must be the development of its employees, as it is the ultimate key to future success.
Bangladesh’s continuous progress and expansion must not only be sustainable, but it must also be knowledge-based, as this is the most logical and practical path to becoming a fully developed country.