The Diverging Patterns of Profitability, Investment and Growth of China and India During 1980–2003

SummaryThis paper documents the diverging patterns of capital accumulation, profit rates, investment rates, capital productivity, and technological progress of China and India between 1980 and 2003. The two Asian economies have followed very different growth patterns and, today, they face different challenges. India’s is how to accelerate growth, while China’s policy makers debate between the need to maintain a high growth rate to generate employment and the imperative to reduce it to cool the economy. India must address impediments to investment. China must deal with the question of whether investment can continue being the main source of growth.