Law and Development in China and India: The Advantages and Disadvantages of Front-Loading the Costs of Political Reform

Abstract

At first glance, China and India seem to contradict the basic premise of the law and development movement that law plays a key causal role in economic growth. According to the standard view, China has enjoyed high growth rates despite weak legal institutions and the lack of rule of law, while India's growth rates have lagged far behind China's despite a reputation for rule of law and stronger legal institutions. Closer examination however reveals that the experiences of China and India are not as inconsistent with the prevailing wisdom regarding the relationship between law and development as often suggested. China and India also offer contrasting paths to development, with India being the world's largest developing country democracy, and China being the world's largest authoritarian regime. Direct comparisons between China and India are thus inevitable, albeit problematic. Data is often unreliable, available for different years or collected in different ways. There is also considerable regional variation within both countries. Moreover, each country does better in some respects than others. By selecting particular measures, one can present either a positive or negative image of either. Accordingly, across the board generalizations about the superiority of one or the other are dubious. Generalizations are difficult even within a particular area such as rule of law or economic development.Nevertheless, some general observations are possible: China does better in terms of economic measures, poverty reduction, and most measures of human development. India does better in terms of political freedoms and income equality. Both have poor environmental records, low public health spending and repress minorities with secessionist tendencies. Both do relatively well compared to the average country in their income class on good governance measures.The revisionist view sees India's democracy as a great asset in overcoming the middle-income blues. Conversely, although China is also experiencing the middle-income blues, it is following the path of other East Asian countries that were able to make the transition from middle to upper income countries, from weak institutions and rule of law to strong institutions and rule of law, and from authoritarianism to democracy. They did so by postponing democratization until a higher level of wealth was obtained and institutions had time to develop.At this point, the jury is still out as to whether China and India will join the ranks of upper income countries whose citizens enjoy rule of law, good governance and high standards of living and human development, and in China's case, democracy. Thus, it is too early to determine whether front-loading or postponing the costs of political reform will prove to have been the better approach.