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Week One Writing Assignment Andrew Shelly
The Rise of China and India: Economic Theories
Andrew Shelly
American Military University
Business 601
02/08/2015

Abstract
I will discuss the theories of "absolute advantage" and "government policies" and how they support the economic rise of China and India. As of 2014, the Gross Domestic Product (GDP) rankings of China and India were #2 and #10, respectively, according to the International Monetary Fund (IMF) world economic outlook. The United States is currently ranked as #1. According to the same study, when GDP was based on Purchasing Power Parity (PPP), China was ranked at #1 and India at #3, with the U.S. ranked at #2 (Kolesnikov, 2014). It is clear that the economies of China and India are notable up-and-comers on the world economic stage. I believe that the theories of "absolute advantage" and "government policy" can show how China and India have risen in recent history. A single trip to Wal-Mart can show the power of China 's economy. The tags on most of the retail items in the store have the familiar "Made in China" stamp. By simply watching the news over the past decade, Americans know that the reason the U.S. imports so much of its merchandise from China is because Chinese companies can pay their workers far less to manufacture goods than American companies can. One example comes from Lotus Mountain, China. A textile worker named Lu Huikun made ski jackets for an American company for approximately $0.31 per hour (Finley, 2000). An American company could never get away with paying that low a wage given the federal and state governments ' strict enforcement of minimum wage laws. Chinese laws are not so strictly enforced. While there are minimum wage laws in China, local governments often refrain from punishing offending companies in order to promote economic growth and investment from foreign firms (Deng, Quheng, Li, Shi, 2012) Labor unions are also less effective in China. Unions have minimal authority and come under some state


References: Kolesnikov, I. (n.d.). World GDP Ranking 2014 | Data and Charts - knoema.com. Retrieved February 9, 2015, from http://knoema.com/nwnfkne/world-gdp-ranking-2014-data-and-charts Finley, B. (2000, November 26). Made in China Low-wage workers fuel world economy.The Denver Post. Retrieved February 8, 2015, from http://yw6vq3kb9d.search.serialssolutions.com/?ctx_ver=Z39.88-2004&ctx_enc=info:ofi/enc:UTF-8&rfr_id=info:sid/summon.serialssolutions.com&rft_val_fmt=info:ofi/fmt:kev:mtx:journal&rft.genre=article&rft.atitle=Made in China Low-wage workers fuel world economy&rft.jtitle=Denver Post&rft.au=Bruce Finley Denver Post International Affairs Writer&rft.date=2000-11-26&rft.pub=Denver Post&rft.issn=1930-2193&rft.spage=A.01&rft.externalDocID=64764513¶mdict=en-US Deng, Q., & Li, S. (2012). Low-paid workers in urban china. International Labour Review, 151(3), 157-171. Retrieved from http://search.proquest.com/docview/1223514326?accountid=8289 Keertana. (2013, February 18). Why India 's workforce has such great potential - The Times of India. Retrieved February 9, 2015, from http://timesofindia.indiatimes.com/nri/contributors/contributions/keertana-/Why-Indias-workforce-has-such-great-potential/articleshow/18553909.cms Boesler, M. (2013, August 19). Here 's How America 's Minimum Wage Stacks Up Against Countries Like India, Russia, Greece, And France. Retrieved February 8, 2015, from http://www.businessinsider.com/a-look-at-minimum-wages-around-the-world-2013-8 Service Sector in India. (2014, November 1). Retrieved February 9, 2015, from http://www.ibef.org/industry/services.aspx
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