Abstract

This paper identifies and analyzes the role of institutional factors in long-term growth in China and India from the institutional economics and international political economy perspective. This paper argues that the sustainability of economic growth mainly consists of the takeoff stage of growth, the quality of growth and the possibility of inclusive growth. By comparing these three aspects of the growth of China and India, table Now, discussing the key institutional factors behind the sustainability of growth, and analyzing the institutional arrangements differences between China and India, this paper found that the difference is institution determined that the different achievements of economic growth of China and India in the past few decades. These difference also will determine the Long -term growth in the future and the response and performance of china and India when facing challenges.

China has advantage over the India on the take-off stage of economic growth, and India is better when comes to maintaining and improving the quality of growth and the proformence of inclusive growth. The success of China's growth launch was attributable to that China has successfully mobilize resources via the government-led investment. The local government reform and decentralization led to the fierce economic competition, and rural reform liberated the surplus labor in rural areas. From the start, China has put surplus labors and capital closely, and thus drive the entire Chinese economy take off. However, China depends on factor -input to promote economic growth than India. The quality of growth in China has close relationship with the characteristics of China's growth launch. The Government-led institutional arrangements is helpful to the launch of economic growth but is lack of concern about the quality of growth, and also lack of basis for quality improvement to promote growth. In contrary, India which with a“weak”government has build a more active and competitive market system. At the same time, India also pay more attention to the protection of intellectual property rights, respect for private property rights and standards of the international system.

When economic growth still mainly depends on factors input (such as resources, capital and labor), China get institution advantage over India, and with the transformation of the growth mode, the institutional role on mobilizing resources became smaller; when the economic develop into the endogenous growth phase, India's advantages in the quality of growth such as technological innovation, intellectual property Rights, market mechanisms will be the key factors in increasing process. The steady improvement of productivity in India and gradually decrease of the efficiency of capital in China basically reflects this fact.

Key words: Insititution; Economic growth; China-India comparison; Inclusive growth; Quality of growth; Launch of growth