Compare the economic systems in Japan, China and India

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All three countries could be accurately described as "mixed economies", but that's kind of a cop-out because it applies to almost everyone. Even countries with extreme levels of privatization (such as the US) still have a strong government; even countries with extreme levels of nationalization (such as Cuba) usually still...

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All three countries could be accurately described as "mixed economies", but that's kind of a cop-out because it applies to almost everyone. Even countries with extreme levels of privatization (such as the US) still have a strong government; even countries with extreme levels of nationalization (such as Cuba) usually still have private businesses. There are some very important differences between China, India, and Japan.

All three of these Asian countries have very large populations and very large economies.

Japan has the smallest population, but still by no means small: China has a population of 1.375 billion, India a population of 1.272 billion, and Japan a population of 127 million.

India has the smallest GDP, but again still quite large: The nominal GDP of China is $13.95 trillion, the nominal GDP of Japan is $4.21 trillion and the nominal GDP of India is $2.40 trillion.

The first thing you should be able to see from this comparison is that in per-capita terms, Japan is by far the richest; China is also a good deal richer than India.

During the mid 20th century, Japan underwent extremely rapid growth, rising from a per-capita GDP comparable to India in the 1940s to one comparable to Europe today. China is currently in a similar period of rapid growth, and if they can sustain it they may too attain a First World standard of living as Japan did.

India, on the other hand, has not grown very much at all until quite recently. For most of the 20th century their per-capita income was basically stagnant. Only in the last 10 years or so has India finally begun to see rapid economic growth.

Japan has a stronger free-market orientation than either India or China, but they do have substantial government intervention in their markets, primarily through the form of government-subsidized conglomerates, remnants of the old zaibatsu system that prevailed before the US occupation after WW2. Still, it would be apt to describe Japan as a social democracy or capitalist welfare state, similar to most countries in Europe. While their economic growth has been stagnant recently (much like Europe!), they are a free society with a high standard of living.

China is still in many ways a Communist country, with an authoritarian government that maintains substantial control over society and the economy. Recent reforms have expanded certain freedoms for businesses (likely contributing to their recent economic growth), but the government maintains strict control over social policy and corruption is rampant. Media (including the Internet) is censored, and the population is under nearly constant surveillance.

India sort of has the opposite problem: Their government is clearly much too weak. They have been unable to provide adequate infrastructure to most of the population---most places do not have reliable water or electricity, and a recent attempt to put a toilet in every home (something we in the First World take for granted!) failed quite dismally. Regulatory enforcement is weak, and informal employment ranging from odd jobs and cash businesses at the better end all the way down to illegal drugs and even human trafficking at the worse end are a very large segment of the economy, accounting for as much as 30% of national income. While unemployment is not all that high (not that many people are actively seeking formal employment), employment is quite low, especially for women (people simply don't have jobs and aren't trying to get them). India also has quite high corruption, but instead of being a powerful corrupt elite as it is in China, it's more of a widespread general grey/black market that still provides a large portion of economic services. India's government is actually quite democratic, with a multiparty system that is in some ways more representative of public opinion than that of the United States. But that government is so incompetent and underfunded that they are incapable of properly enforcing regulations and collecting taxes on the scale that India needs. India actually has a lot of very strict regulations that are probably unnecessary or even harmful; but in real terms hardly any of them are reliably enforced, because nothing is. Running a business in full compliance of regulations in India is almost impossible; but instead businesses run outside of compliance and know which officials to bribe.

China looks like they are doing better right now, but honestly I think the long-run outcome in India will probably be better. Their strong democracy will sooner or later let them establish a competent government, and they'll start raising their standard of living as Japan did. China isn't having too much problem with economic growth, but their authoritarian government shows no sign of weakening, and if anything grows more draconian against personal liberty and freedom of expression. India has bad economic policy but a free government, and the latter can eventually fix the former; but China has good economic policy and oppressive government, and there's very little evidence that the former does anything about the latter. China is probably on a trajectory to be more like Saudi Arabia, where a powerful authoritarian government presides over a society at a high standard of living.

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