Indicators in China and India

Lead-researcher

Joan van Heijster

China and India have become powerful countries in the global economy. But their enormous transformation during the past decades makes it hard to grasp the evolving shape of their economies.  Most of the time GDP is used as the lens through which we make judgements about their development trajectories. The formulas and measurements that OECD countries use for GDP are ambiguous already; in the case of China and India, it is even less clear what gets measured in this indicator, and why.

To be sure, both countries have signed up to many international standards, for example the System of National Accounts. But as so often, the devil is in the detail, and real measurement decisions are made at the national level. So how do these countries measure their economies? And what are the political dynamics behind the choices they have made in this respect?

GDP - Reflecting Chinese economic reform?

China and India have much to offer as stand-alone cases. China has a long tradition of heavy government intervention in the economy, which survives despite gradual and highly selective liberalization. It is an open question to what extent government steering is also visible in the formulas underlying GDP measurement. In other words, are China’s economic reform priorities reflected in GDP measurement?

 

Is Chinese economic steering also visible in macroeconomic indicators?

The highly politicized nature of GDP targets in China has spurred a debate on the plausibility of Chinese GDP and growth figures. However, it is not clear whether the role of GDP within the Chinese economic governance system has influenced GDP’s measurement practices. If what gets measured is what gets valued in an economy, it is important to also analyze the role of users of GDP statistics.

India's rich statistical tradition

India, for its part, has a long tradition of eminent statisticians notably including Prasanta Chandra Mahalanobis, one of the two “developing country” representatives at the Nuclear Statistical Commission (the forerunner of the United Nations Statistical Office that first met in 1946), and the only one to play a leading role in subsequent years. Indeed, the development of statistics in India long precedes colonial times and, as a branch of applied mathematics, is well documented. In contrast, there is a dearth of scholarship on how India has historically measured its economy.

What is striking is the fact that India was a frontrunner among developing countries and started measuring GDP already in the 1950s, even though the characteristics of its economy did not match the inherent outlook of GDP, a concept formed in and by Western economies. How has this conceptual mismatch influenced Indian GDP measurement? But also, how has the economic liberalization of the past decades filtered through India's complex political system into its GDP statistics?

In addition to their value as stand-alone cases, China and India make an exciting comparison. To what degree have their liberalization trajectories led them to similar outcomes on GDP measurement? Have national idiosyncrasies disappeared, or have they been strengthened?

Map measures in India and China

The goal of this sub-project is threefold. First, it will map the evolution of GDP measurement formulas in China after the reform and opening up policy of 1978, and India during the post-war period. In this largely descriptive endeavor, this subproject can draw on the insights from the other subprojects, which can provide pointers to the most contentious issues and important moments of international harmonization.

In a second step, this project tests to what degree the dynamics found in the other subprojects - for example on the influence of expert groups or stakeholders like unions - also hold in China and India and if not, what explains these differences. In a third step, we can then gauge the influence of idiosyncratic factors per country.