Developmental Path—A Snapshot View

Jawaharlal Nehru had once observed: "These new and revolutionary changes in China and India, even though they differ in content, symbolise the new spirit of Asia and new vitality which is finding expression in the countries in Asia."

Despite their political differences, India, Pakistan and China began their development journeys in strikingly similar ways and at nearly the same time. India and Pakistan gained independence in 1947, and the People's Republic of China was founded in 1949. All three chose planned development: India launched its first Five Year Plan for 1951–56, Pakistan its first (now called the Medium Term Development Plan) in 1956, and China its first in 1953. Pakistan has since been working on its 12th plan (2018–23) and China on its 14th (2021–25), while India followed the Five Year Plan model until March 2017. India and Pakistan both built large public sectors and raised public spending on social development, and until the 1980s all three had comparable growth rates and per capita incomes.

China's path

• After the People's Republic was established under one-party rule, land, enterprises and all critical sectors were brought under government control.
• The Great Leap Forward of 1958 pushed rapid, mass industrialisation, even encouraging people to set up backyard industries; in rural areas, communes were formed in which land was farmed collectively. By 1958 about 26,000 communes covered almost the entire farm population.
• The campaign ran into serious trouble. A severe drought killed roughly 30 million people, and when relations with Russia soured, Soviet technical experts were withdrawn.
• In 1965 Mao launched the Great Proletarian Cultural Revolution (1966–76), sending students and professionals to learn and work in the countryside.
• China's present fast growth traces to the reforms of 1978, introduced in phases. The first phase reformed agriculture, foreign trade and investment: commune land was split into small plots allocated (for use, not ownership) to individual households, who kept whatever income remained after paying set taxes.
• The later phase reformed industry. Private firms and locally owned township and village enterprises were allowed to produce goods, and State Owned Enterprises (the equivalent of India's public sector units) were exposed to competition.
• Reform also used dual pricing: farmers and industrial units bought and sold fixed quantities of inputs and outputs at government-set prices, and traded the rest at market prices. As output grew, the market-traded share rose. To draw in foreign investors, special economic zones were created.

Pakistan's path

• Pakistan, like India, follows a mixed economy with public and private sectors side by side.
• In the late 1950s and 1960s it used a regulated framework for import-substitution industrialisation, combining tariff protection for consumer-goods manufacturing with direct controls on competing imports. …