China-India: population size matters, but it’s not all
India appears the economy most like China as it is the only one that can match it in terms of population size. But that’s where many of the similarities end – in most other population characteristics the two countries are very different.
This is the first piece in our series of Research Briefings comparing the Chinese and Indian economies. Click here to read the second piece.
What you will learn:
- Although the size and young age of India’s population offer enormous economic growth potential, we believe that unlocking it will take time and require progress on structural reforms.
- At 51%, India’s labour force participation rate is 25ppts lower than China’s. Consequently, its population headcount is only partly indicative of the number of individuals economically active.
- India’s average human capital levels also currently rank behind China and most of its regional peers.
- India’s workers are relatively less able or willing to migrate internally, causing labour mismatches and shortages. If reforms to facilitate migration prove successful, this would aid India’s manufacturing growth.
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