China, India will continue to lead world growth: Chidambaram

Finance minister P Chidambaram told a forum at Harvard University, Massachusetts, on Tuesday that India and China will continue to be the drivers of world growth in the coming months, with China growing at 8-8.5 per cent in 2013-14 and India at 6.1-6.7 per cent.

Chidambaram, in his talk at the South Asian Institute and Mahendra Humanities Center at Harvard University, focussed on the phenomenal rise of the once-poor countries, particularly in Asia.

He said between 2013 and 2014 the ASEAN-4 (Indonesia, Malaysia, the Philippines and Thailand) are also projected to grow at more than 5.5 per cent.

China is reported to have already overtaken the United States in economic size (measured by real per capita GDP in purchasing power parity terms) by 2012-13, Chidambaram pointed out.

''The rise of once-upon-a-time poor countries has been the central economic story of our time,'' he said.

But he added that more than the growth, it is the pace of the growth that tells a fascinating story. It took Britain 150 years after the Industrial Revolution to double its economic output per person.

The United States, the emerging market of its time, took 50 years to do so in its period of fast development. When China and India began their period of high growth in recent decades, they took 12 and 16 years respectively to double per capita GDP.

And while Britain and United States embarked on their economic take-off with a population of 10 million, China and India started out with a population of a billion or so each.

''So in terms of force, as a McKinsey report on emerging markets suggests, the two leading emerging economies in the East are experiencing roughly 10 times the economic acceleration of the Industrial Revolution at 100 times the scale,'' he said.

Doling out more statistics, he said in 2012, at market exchange rates, emerging economies accounted for 38 per cent of the world GDP and 61 per cent of world growth. The transformation in world trade has been of a similar magnitude.

At purchasing power parity, emerging markets accounted for 80 per cent of world growth, with China accounting for 35 per cent and India accounting for 10 per cent.

''If you are a businessperson looking for growth and new markets, you have to look East (and perhaps South,'' he said.

(See full text of the speech of P Chidambaram: The Rise of the East: Implications for the Global Economy at Harvard University)