Whereas China has spent the past few decades developing a formidable manufacturing industry, India has specialized in service industries, such as call centers. While India has certainly gained a lot of wealth as a result of its service sector, the future of a country without a developed manufacturing industry is far from certain.
A strong manufacturing industry has featured in the development of almost every country since the industrial revolution. The process of development usually involves industrialization, followed by diversification of the production structure and a reducing dependence on agriculture. A few countries, such as Oman and Botswana, have been able to grow economically without a significant manufacturing industry. However, these countries have valuable natural resources. They also have tiny populations, unlike India, which is the second most populous country in the world, with its population of more than 1.2 billion people, outnumbered only by that of China.
China's manufacturing industry has been key to its recent rapid economic development. A huge number of Chinese workers have now joined the middle class and started to consume a wide range of goods. In fact, China's manufacturing industry is now the largest in the world, according to the Manufacturers Alliance for Productivity and Innovation, which released data in 2014 that showed China now accounts for 22.4 percent of global manufacturing activity. In comparison, the United States, which is in second place, accounts for only 17.4 percent.
The majority of developed countries have a strong manufacturing industry. Japan and Germany, two countries that consistently rank highly in terms of wealth and development, both have very intensive and productive manufacturing sectors. In contrast, the world's poorest nations have little to no manufacturing.
One of the biggest benefits of manufacturing is that it creates large numbers of jobs. According to the International Labour Organisation, countries with a large proportion of people employed in manufacturing are able to provide more stable incomes to their citizens. In contrast, countries with smaller manufacturing sectors have more people employed in vulnerable positions.
Global manufacturing is also growing, unlike the service sector, which has stagnated at 20 percent of global trade since the 1990s. India currently imports huge volumes of goods, and the surplus in its service sector only covers 20 percent of the goods trade deficit. This situation could lead to problems for India in the future, as it is not sustainable.
However, the future for India could be bright. India's prime minister Narendra Modi has announced plans to expand the country's manufacturing industry. These plans include investing massively in infrastructure to support the growth in manufacturing that needs to occur. If India can successfully grow its manufacturing industry, it could experience similar success to China, which is now a global economic giant.
Photo courtesy of PANPOTE at FreeDigitalPhotos.net
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