What can India learn from the US, China, and Japan to raise its GDP to $5 Trillion?

June 14, 2019

India is aiming to a $ 5 trillion GDP nation within the coming five years. Narendra Modi and his ministers have categorically told this before the Loksabha election 2019 and reaffirmed this on June 10. In a meeting with top 100 bureaucrats including all departmental secretaries, Prime Minister Narendra Modi cleared his intention to drive India to a $5 trillion economy. India has to learn from the past experiences of several developed nations like the US, China, Japan, Germany, and Israel to achieve its target of $5 trillion GDP.  

Piyush Goyal, the then finance minister of India, in his interim budget speech, has declared the goal to achieve it by 2024. In addition, he had a target of $ 10 trillion GDP by 2032, the next eight years. BJP election manifesto has also supported the idea and documented a policy draft and road map for the same. Again, Prime Minister’s meeting with top bureaucrats on June 10, in the presence of his senior colleagues Amit Shah, Union Home Minister, Rajnath Singh, Union Defence Minister, N Sitaraman, Finance Minister and Jitendra Singh, PMO emphasized on the goal to drive India to a $5 trillion economy.  

Vardhaman Infotech, a world-class tech company,  congratulates the PM and his cabinet for taking such decision to raise GDP India to $5 trillion! We wish the realization of the same and pledge to contribute our best.

The historical situation of the US, Japan, and China, more than $5 trillion economies

The US, Japan, and China are the benchmarks of progress. Each of these three countries paved their path of progress in different ways between 19th to 21st centuries. The US is a #22 trillion, China, a $14.5 and Japan is a more than $5 trillion economy at present. They stand No. 1, 2, and 3 respectively in the world economies. I, therefore, have chosen these three economies as a benchmark for the GDP growth of India.

America: The US

First, I take the US that became independent from the colonial rule of Great Britain in 1776. The situation of America was totally different from that of Japan and China. It was a newly discovered country. Columbus and Amerigo Vespucci, Spanish commanders discovered and introduced the land to the modern world. The Europeans destroyed the native Red Indians and occupied the whole land, almost virgin. Hence, then America was a lonely place with a rare population and vast land. America has, continually, been setting examples of developing its economy from using barren lands, exploring mines to industrialization and innovations.   

Japan: a $5 Trillion Economy

Japan was a colonial power in Asia and a rich country until the Second World War. However, it had to restart its journey after Hiroshima and Nagasaki and the defeat in the Second World War. Japan is an example of revamping in the economic field. It created world-class companies to deliver quality products worldwide. Toyota, Mitsubishi, Suzuki, National Panasonic, and Sony are to name a few.

China: Outperformer in the Economic growth

China, historically, is similar to India that has got independence from the British rule in 1949. India became independent just two years before China i.e., in 1947. There are three prominent similarities between China and India first, both have a similar level of population, second, both have got independence in the late 1940s, and third, both were at similar economic level till 1960s.

What can India learn from America, the US to have a $5 trillion GDP in 5 years?

America, historically, leveraged from its huge natural resources. It focused on agriculture in its earlier years of development and converted barren lands and forests into arable farms. Then, it went for another labor-intensive area of mining and industrialization. It converted the discovery of steam engine in Great Britain to its advantage and exploited minerals and oil. Not stopping, it has invented electricity and electric engines to multiply the capacity. This, further, provided a booster to its industries. Geographical condition of the US kept it away from any invasion from any foreign countries, and it was an added convenience. America made enough progress in the 19th and the first half of the twentieth centuries. However, nothing could prevent America from a continual development in various fronts including the economy.

Statue of Liberty, Symbol of American Independence

Statue of Liberty, Symbol of American Independence                                                                                                                             Source-  Pixabay.com

Besides economic power, America, silently, started becoming a military power. The dramatic manifestation of the military supremacy came in Hiroshima and Nagasaki in the Second World War. It has ended the British era and the US established itself as a military superpower of the world. Since then, America leveraged both its military and economic powers to further strengthen its economy and to raise its GDP. The US has been continuing as number one in the world economy with a GDP of about 22 trillion dollars.  

The geopolitical situation, historically, is different for India and there is a vast difference in natural resources. However, India is leveraging from its vast population, human resource to pull up its economy to target a GDP of $5 trillion! 

America: An Innovation and technology-driven economy

It was the atom bomb that changed the destiny of Great War II and established America as a superpower. American leadership could understand the strength of innovation and technology with the atomic attack on Japan in 1945. The country continued with innovation and technology-driven economy and created a massive infrastructure conducive to research and analysis. A massive infrastructure of universities, institutions, foundations for research also has a by-product for the American economy. We know, Education contributes about 17 percent to the US economy.

 Harvard school of business, Harvard University, US

Harvard school of business, Harvard University                  Source- Pixabay.com

Remember the 2008 recession? Real estate bubble burst put America into economic crisis when major banks and financial institutes likes of Lehman Brothers, Meryl Lynch, and Morgan Stanley went almost bankrupt. Who came as savior of the economy besides bailout plan of $700 billion? It was technology. New tech giants like Google, Facebook and Apple came forward to hold and improve the US economy. Further, we have seen corporations like Amazon leveraging technology (artificial intelligence and big data) in the global retail sector and Uber in ridesharing. At present, blockchain technology and artificial intelligence are providing America an edge over other countries.

Research and innovation-driven economy need a continual supply of talented manpower. Truly, America invests in talent and attracts talent from around the world. Moreover, world-class universities and institutes aid to maintain and grow the talent pool.

What can India learn from the US

Here is what India can learn from the US! India has failed to retain its talent. Talent flight is a major cause of concern for the Indian economy. I have seen fellow Indians, usually boasting on people like Sundar Pichai, Indra Nooyi or Ajeet Jain, CEOs of large American corporations- Google, PepsiCo/ Amazon or Hathaway. It’s a pity! Every Indian has to ask the question- why are not these extraordinary talents heading an Indian Company? And why none of the Indian company is among the first fifty in the global list? India has a maximum number of English speaking science and technology professionals in the world. However, the top ranking professionals fly away to the US or a few other countries. Indian industries just get a residue!

Indian Lunar Mission Chandrayaan-2

Indian Lunar Mission- Chandrayaan-2-ISRO                                                                                                      Source- The Indian Express

The country has to work on a war scale to retain its talent pool by creating infrastructure and ecosystem. It has to overhaul its education system and remuneration structure that encourage excellence over the all-pervading mediocrity.

What can India learn from Japan to reach a $5 trillion GDP in 5 years?

In earlier paragraphs, I have discussed the historical and current situations of the American economy. However, Japan is traditionally different. It is an oriental economy driven by its culture of modesty converse to the aggressive western or American theory. We have discussed that the US economy was blessed with huge natural resources and it is continuing as an innovation-driven economy. On the other hand, Japan is a small country with few natural resources and drives itself with management and perfection.

Video: How did Japan get rich

Japan: A perfection driven economy

The country, historically, copied the American and European quality products and manufactures these in a mass scale with perfection. These efforts made Japan number three in the world economy in nominal GDP, currently above $5 trillion.

The cheap and quality consumer products of Japan flooded the US and the European markets wiping out local manufacturers from 1970s through 2000. Only, it was only the entrance of China that challenged Japanese supremacy in these consumer markets.

Japan Manufacturing Industry

Manufacturing Industry in Japan                                                                                                                    Source- Pixabay.com

Japan is a small country and has little agricultural land. However, they used technology and modernize their agriculture. I have seen large numbers of greenhouses in Japanese farms. Yield in Japan is about 6 tons per hectare double the world average of 3 tons. This one sentence is enough to tell the whole story of Japanese agriculture.

Japanese are extremely patriot; duty bound, workaholics, and has a passion for perfection. I have seen, during my visit to Japan, working Japanese people like robots. A recent study shows that only one out of twenty Japanese workers took parental leave granted to them. This is only an example! Hence, Indians have to learn a lot from the Japanese to pull up their GDP to $5 trillion in five years.

What can India learn from Japan?

Japanese, as stated before, are dedicated and workaholic and have a passion for perfection.  Indian workers can learn these attributes from the Japanese. Moreover, they are self-disciplined. They, rarely, involve in a crime or act against the state. Mostly, the Japanese don’t create any nuisance or law and order problem. Their honesty is beyond doubt in most cases. These are the virtues what Indians have to learn from Japanese people.

One more addition, “Small things make perfection but perfection is not a small thing,” it’s an old proverb. Japanese, naturally, have adopted this and took it to a level of one is to a billion level of perfection. That has built credibility to Japanese products and India has to learn to adopt this quality to be a manufacturing hub. The success of “Make in India” is dependent on this.  

India is witnessing a high tide of nationalism in the Modi regime and it can be converted into a national spirit to boost its GDP growth. Similarly, a hard-working mentality, as we have seen in Narendra Modi, can drive India to flourish its economy. India had a dreamModi 2.0 has shown the desire. Now, the people of India have to work with dedication, as Japanese, to reach to the destination of a $5 trillion GDP.

What can India learn from China, its neighbor to have a $5 trillion GDP by 2024?

As we have discussed earlier China has many similarities with India. In fact, India had a close cultural and trading relationship with China for thousands of years. It was only in 1962 when the two countries lost trust in each other. Suddenly, China attacked and backstabbed in1962 when India was not prepared for war. Since then, there is a trust deficit between the two countries. However, there is no harm in learning lessons from China’s outstanding development in the economic front. China had maintained an astonishing growth rate highest in the world for decades. Everybody now knows the story about how China has pulled its economy to have the second largest GDP, $14.5 trillion, in the world. Obviously, India can reach to its target $5 trillion GDP by 2024 learning from China.

China had similarities with India and most dissimilarities with the US and Japan. China like India was under colonial rule until 1949, unlike America and Japan. It had an underdeveloped economy and a vast population to feed. It was fighting with poverty, under education, and lack of infrastructure. However, it had one positive in its favor, a strong administration. Noted economist Gurucharan Das argues that administrative reforms, not the economic, have driven China to such a large economy. He urges Modi 2.0 for administrative reform and strong governance.

Historically, China mainland was ruled under an empire that caused strong administration. Whereas, India at most times in history, was divided into small kingdoms that caused weak administration. Again, India remained as a cultural entity than a political one and the strength of India lies in its culture and society. Now, political unity and strong governance that delivers is required to boost its economy, suggests Das.

China: A manufacturing driven economy

Video: Shenzhen, the future city, China

China has driven its economy milking the potentials of manufacturing. Now, everybody knows that China is the manufacturing hub of the world. A reform, specifically, needs mention that helped to boost the Chinese economy. Most of the countries have an obsession with their land and they don’t allow their land selling to a foreign national. Unlike India and Thailand, China opened the door and allowed foreigners to purchase land in China. Foreign investors infused a huge amount of money in buying lands in the country. IT helped boost its economy.  

China had a huge population. Most of them were poor and uneducated. There were also problems of unemployment, hunger, and healthcare, everything associated with underdevelopment and poverty. The government had a responsibility to feed the population first.

First, China has a strict one-child policy to restrict population growth. It changed its education policy and established large numbers of industrial training institutes with larger numbers of courses. Eventually, the students graduated from there became the workforce, backbone behind the manufacturing industries.

China has put all its government muscle lifting the manufacturing units with infrastructure development, easing the laws, and of course, subsidies.

Cheap but skilled labor in China attracted manufacturing industries from all over the world and they invested heavily in the country. All major global brands are now manufacturing in China. This helped China to be a global manufacturing hub and the biggest exporters of consumer and industrial goods in the world.


Video: China is beating the US in Innovation

China had a strict state policy and did not allow tech companies like Google or Facebook despite international pressure. Instead, it created its own. Now, China is increasing its capacity in advanced technologies such as blockchain, artificial intelligence, and robotics.

What can India learn from China

India has missed the manufacturing bus despite its huge population and workforce. The manufacturing sector in India contributes only 26 percent to its GDP. India has not reformed its education system until 2014. However, Modi 1.0 had emphasized on “Skill India” to create a skilled workforce. He made “Make in India” a flagship program of the Indian government. Better late than never. India has to learn from China about how to reform its laws and to provide facilities including infrastructure, loans, etc. Amendments in labor laws, land acquisitions, etc are required and awaited.

President Triumph, recently, started a trade war with China using the tariff weapon. Also, labor in China is becoming expensive and China is losing cheap labor advantage. India can leverage these to strengthen its “Make in India” program.  



Written by Jyoti Kothari

June 14, 2019


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