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Emerging GiantsChina and India in the World Economy$
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Barry Eichengreen, Poonam Gupta, and Rajiv Kumar

Print publication date: 2010

Print ISBN-13: 9780199575077

Published to Oxford Scholarship Online: September 2010

DOI: 10.1093/acprof:oso/9780199575077.001.0001

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The Cost Competitiveness of Manufacturing in China and India

The Cost Competitiveness of Manufacturing in China and India

An Industry and Regional Perspective

Chapter:
(p.87) 4 The Cost Competitiveness of Manufacturing in China and India
Source:
Emerging Giants
Author(s):

Bart van Ark

Abdul Azeez Erumban

Vivian Chen

Utsav Kumar

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199575077.003.0004

This chapter focuses on comparisons of productivity, (unit) labor cost, and industry-level competitiveness for Chinese and Indian manufacturing. It finds that China has increased its labor productivity to a level above that of India, but due to a somewhat higher compensation level, China is still somewhat at a disadvantage in terms of unit labor cost in manufacturing. It finds rapid declines in unit labor cost across industries and provinces in China, but increases in many instances in India. This suggests that productivity and compensation growth have become much more aligned across regions in China whereas this is not (yet) the case in India. It relates these results to differences in the implementation of market reforms between the two countries and removal of barriers to resource mobility eradicating inefficient manufacturing activity.

Keywords:   cost competitiveness, manufacturing, India, China, labor productivity

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