Developing Countries in Asia: A Comparison of Economy and Health Growth

Posted: January 4th, 2023

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Developing Countries in Asia: A Comparison of Economy and Health Growth

The analysis largely compares the connection between economic growth and development and health of the people in the developing nations located in Asia namely China, Thailand, and India. The three countries are more appropriate in this case because of their similar historical background, and because the economy develops in all these three countries at a very fast pace, and record high yearly GDP growth rate. The three points the report evaluates in depth, include human capital, investment, and trade, and mainly looks at how these factors promote growth based on the advantage each country has. The study while exploring the investment in these three countries will consider investment rate and the saving rate as different entities because the more money people save the little they invest. The study while exploring the trade in the three countries looks at trade at the national level and between the nations. The findings of the study provides vital lessons and insight that could help to make decisions and policies that would promote the growth of human capital, investment, and trade in China, Thailand, and India.

The Sources used in the Report 

The study relies on various sources of data to come up with reliable data. The World Bank Group website serves as one of the vital sources in the analysis. The website offers critical insight onto the nature of human capital in all the three countries (China, Thailand, and India), and gives a lot of statistical information to support the various concepts. More essentially, the website offers helpful data to understand the nature of trade within and without the three countries, and all these factors make it a suitable source in completing the project. The other source that offers helpful data about the human capital, investment, and trade in the three Asian countries is Trading Economics’ website. The website gives numerous tables and charts to summarize the data it gives about factors influencing the economy and health. Also important in this study is United Nations Development Programme’s website that offers valuable data on human capital in the three countries under investigation. The study makes use of the Central Intelligence Agency’ s website to acquire data on household saving rate in China and the two other countries, as well as uses a journal article to understand the nature of local and international trade in China and India.

Human Capital in China, Thailand, and India

China’s human capital has improved has made tremendous improvement over the past 30 years, but still a big gap exists with that of developed nations. One of the factors that cause the Chinese human capital to increase is the growth witnessed in early childhood development, particularly between 1980 and 2010 when the rate increased from 6%-11% (United Nations Development Programme). The average life expectancy in the country also increased from 66 years to 73 years during the same period, while the average number of years students attended schooling expanded from 3.78 to 7.56 years (The World Bank Group). Furthermore, the rate of stunting growth dropped among children under 5 years from 33.1% to 9.8%, whereas the rate of anemia among children below 24 months went down from 38.6% to 20.9% (The World Bank Group). The achievements are crucial, but still inadequate to support the needs for elevating the economic and industrial restricting in the country’s future. The rate of human capital growth in urban and rural China, however, shows some contrast (United Nations Development Programme). A study carried out by the China Development Research Foundation discovered that the prevalence of stunting growth among children aged 6 to 11 months in 2010 was almost 3.4 times the national rate in the rural areas (The World Bank Group). The case was even severe in Yunnan province in Xundian County where the stunting rate was 5.6 times higher than the national average rate (The World Bank Group). The Chinese government has in the recent past saw the need to improve human capital, and has increased its investment in various areas, including student nutrition, health care, early childhood development, and education among other crucial areas.

Despite the global slowdown and increased trade tensions, the economy of Thailand is projected to increase by 3.8% in 2019 and 3.9% in 2020, based on a report released by the World Bank. The Thai government acknowledges that investing in human capital and instituting economic reforms is essential for the nation to become a high-income country with the same chances for all citizens. The World Bank performed a Human Capital Index in the region that measures the level of productivity for the next generation of employees relative to the full capabilities if all health and education outcomes were improved (The World Bank Group). Whereas Thailand gets above average score compared to other ASEAN nations, and other upper-middle income nation, there is space for advancement. Predications indicate that a child born today in Thailand may only attain 60% of potential, in terms of lifetime income and productivity (United Nations Development Programme). One of the biggest challenges in the country is unequal quality of education, with less developed areas witnessing more challenges (The World Bank Group). The growth of human capital in Thailand remains a problem because the schools in less developed areas, and even in some urban places still have inadequate educational materials and the infrastructure is also insufficient, with the 12.4 years of compulsory schooling expected for every child born today in the country only completing about 8.6 years, therefore, creating a gap of 3.8 years (The World Bank Group). Furthermore, the development of human capital in the country experiences significant constraints due to the issue of road injuries and non-communicable diseases that have affected the rate of adult survival in Thailand, which is almost lower than half of the global average rate (The World Bank Group).

Birgit Hansl who serves as the World Bank Country Manager for Thailand believes that sustaining the quality and pace of structural changes will be essential for lowering poverty and improving the country’s long-term growth pace above 4% in the face of demographic constraints caused by fast aging. Hansl feels that it is crucial to invest on human capital to build a better future for all Thai citizens (The World Bank Group). Hansl has the feeling that it is essential to put emphasis on human capital to create a better future for everyone, but this may only be possible by improving health and education (The World Bank Group). It is crucial to address the constraints faced by small schools where nearly 1 million poor children are currently receiving education that do not reach appropriate standards. The government can focus on advancing school-based management and increase the effectiveness of public education expenditures (The World Bank Group). It may also be helpful to promote healthier outcomes, especially by paying attention to reducing and preventing risk factors, if Thailand is to increase the rate of survival among adults.

The main reason for poor human capital growth in India is inefficient education structures. Poor education mechanisms make India the same as China and Thailand in terms of the main factor affecting proper growth of human capital. Compared with other Indian-inhabited countries such as Sri Lanka, Bhutan, Bangladesh, Nepal, Pakistan, and Afghanistan, India only scores 66% whereas Sri Lanka scores 75% with the least performing country (Afghanistan) scoring 64%.

The World Bank

Investment in China, Thailand, and India

The investment rate in China, Thailand and India shows some considerable variations, which requires critical analysis into the nature of investment in the three regions. The capital investment in the People’s Republic of China and other nations is determined based on the buying or acquisition of new plant and equipment by corporations or the state, as percentage of the GDP (Trading Economics). The gross domestic investment also called the gross capital formation comprises of outlays on additions to the fixed assets together with net changes in the amount of inventories. The fixed assets in China comprise of land improvements (drains, fences, ditches and many others), equipment purchases, machinery, plant, and the construction of infrastructure such as hospitals, schools, railways, roads, offices, commercial and industrial buildings, and residential places (Trading Economics). The investment rate in China scored the lowest in 1962 when the country attained only 15.32% and the highest in 2011 when the nation scored 47.82%. The average value for capital investment in China from 1960 to 2017 was 36.46% (The World Bank Group). Similarly, the capital investment in Thailand is estimated in terms of the purchases of new equipment and plants by corporations, as percentage of the GDP. The private investment in the country increased 1.71% on October from 0.51% in September 2019 (Trading Economics). The private investment in Thailand averaged 0.63% from 2000 until 2019, hitting an all time high of 20.20% in October of 2012, and the lowest amount of -17.61% in April 2017 (Trading Economics). The chart below offers much detail onto the investment rate in Thailand for 2019;

Trading Economics

The World Bank offers data for India’s capital investment as a percentage of GDP from 1960 to 2018. The data shows India’s average value during the period was 24.92% with the lowest point of 13.97% in 1968 and a maximum height of 41.96% in 2007 (The World Bank Group). Evaluating the capital investment in India reveals that the country recorded low investment in the 1960s through the 1970s because of inadequate policies to address the issues that prevent adequate investment in various areas (The World Bank Group). Significant transformations since 2004, however, caused investment to increase considerably. The investment rate, nevertheless, dropped slightly from 2012 to 2016 with the country recording 38.35%, 34.02%, 34.01%, 33.12%, and 30.21% in 2012, 2013, 2014, 2015, and 2016 respectively (Trading Economics). So far, the investment rate in China seems to be the highest followed by India, and then Thailand.

Similarly, the saving rate in China, Thailand and India shows some variations, which calls for more evaluation and analysis. A comparison of the national saving rate around the globe in 2017 reveals that China leads many other developed nations. Whereas the U.S. (the country with the highest GDP globally) had a national saving rate of 18.8%, and the rate for the world as a whole was 26.5%. China on the other hand, recorded 45.9 % saving of the GDP, which is more than double that of America (Trading Economics). The 45.9% rate achieved in 2017 is actually a drop from 2008 when the country achieved 52%. It is also vital to mention that the household savings in the country has been increasing since the early 1990s and reached the highest point of 25% in 2010 and moderated considerably in the recent years (Trading Economics). Globally, the household savings have been lowering from 14.1% of GDP in 1980 to about 7% nowadays (Trading Economics). The trend has caused great distinction between China and the rest of the globe.

China’s saving rate in 2017 compared to other countries – Trading Economics

The household saving rate increased in China from 9% in 2015 to 10.20% in 2016. The personal savings in the country averaged 9.76% from 1994 until 2016, attaining an all time high of 16.12% in 1999 and a low of 5.51% in 2005 (Central Intelligence Agency). The saving rate was even higher in 2017 when Thailand scored 11.2%. The situation in India, however, is quite different with the country currently experiencing a falling trend in household and individual saving. Currently, the household saving in India stands at 17.2% whereas the overall savings rate declined to 30.1% from 34.7% over the five-year term ending 2016-2017 (Central Intelligence Agency). It happens that the household saving lowered from 16.3% in the financial year 2018 from 23.7% in the financial year 2012 (Central Intelligence Agency).

The differences in growth in investment in China, Thailand, and India are as a result of various interactive factors. The saving rate in China is remarkably high in a typical year. The main reason for the high saving rate is the country does not consume a lot of domestically generated goods or imports. Another reason why the Chinese invest highly yearly is the investment receives funding from the high saving rates (Central Intelligence Agency). Furthermore, the saving rate in China is considerably high because the Chinese government has not run large budget surpluses or deficits, so the mixture of corporate and household saving is what pushes China’s saving rate to be high.

Many Indians wonder why the saving rate has fallen across the country and the interest rate remain so high. The main reason as it appears is the consumption in the private sector, which has been the key driver for growth and advancement in the economy, has been lowering, and the saving rate which is very essential in determining the rate of investment in the economy is also dropping (Central Intelligence Agency). The other reason for the low saving rates in the country is people are spending more on commodities that do not translate into demand for goods and items (Central Intelligence Agency). Many Indians happen to spend more services that cost more than before. Consequently, spending in non-food expenditure in both urban and rural areas has increased.

Trade in China, Thailand, and India

Several factors contribute towards the difference in growth in the trade in China, Thailand, and India. Trade has increasingly become a vital aspect of the Chinese economy, and remains a vital tool for economic modernization. Locally, urban shops, peddling, and the periodic market remain to be the leading avenues for trade (Bosworth and Collins 51). China employs a decentralized approach, which permits local authorities to develop regulations that define trading practices in the respective regions, and as it appears the technique yields many benefits. Internationally, the Chinese export to the U.S., Hong Kong, Japan, Germany, South Korea, the UK, Taiwan, and the Netherlands among other countries (Bosworth and Collins 53). The U.S.-China trade war seems to have considerable effects on international trade in China where the exports fell 3.1% in September from last year, while imports dropped 8.6% during the same time (Central Intelligence Agency). The surplus of Chinese trade grew to $ 43.03 billion in October 2019 from $32.97 billion in the same period last year. The chart below offers more synthesis;

China’s balance of trade – Trading Economics

The exports from China, however, declined by 0.9% year-on-year to $212.93 billion in October 2019, while this was the third month of annual fall in international sales, amid falling international demand and continuing trade war with America. The general sales for products such as steel, coal, coke, and unwrought aluminum dropped slightly. The chart below offers more concrete overview of the Chinese exports;

China’s export – Trading Economics

Local trade in Thailand does not seem to be doing bad considering that production for domestic market has continued to improve coupled with the growth in various sectors such as electronic appliances, foods and beverages, and construction materials. The exports to the U.S. amounted to $31.9 billion in 2018 and the imports to Thailand hit $12.6 billion in the same year (Central Intelligence Agency). Thailand today ranks 9^th largest export country among the Asian nations after China, Japan, and Hong Kong among others. So far, the different policies in the three countries determine the nature of local and international trade.

India, on its part, allows local jurisdictions to determine local trading activities. Internationally, India trades with Asian and non-Asian nations, and is a signatory to international trade agreements such as the World Trade Organization (WTO), the South Asian Association for Regional Cooperation (SAARC) , and the  Asia-Pacific Trade Agreement (APTA) (The World Bank Group). The introduction of the Foreign Trade Policy (FTP) in India changed the nature of international trade in the country, and the government now focuses on refining its trade regulations to comply with global standards (The World Bank Group). The three Asian countries understand the effectiveness of proper policies in promoting trade and are working hard to create legislations that would improve interaction with the outside world.

Summary and Interpretation

The evaluation presents vital insight that could help the three countries improve the various areas that receive considerable attention in this report. The report illustrates how poor education in some parts of the three Asian countries contribute towards some drop in human capital, and that improving in this area could present an opportunity strengthen human capital. The governments in the three countries should take bold steps towards introducing changes that would promote educational practices and resources in the region. The national leaders, for example, can increase financial allocation to these Asian countries as well as create policies that ensure equal distribution of resources. The leaders and all stakeholders while working on the improvement should remember that human capital is a major driver of inclusive and sustainable economic growth, and that investing in education and health should receive adequate attention. More importantly, the national leaders and all relevant stakeholders in the three countries should not forget that the human capital index offers a direct line between advancing outcome in education and health, economic growth, and productivity, and this should be a driver for countries to take urgent measures in investing more on people. Regarding investment, the two other nations (Thailand and India) may emulate China that continues to witness increased investment. Other than acquiring more state assets, the Thai and Indian government may adopt the Chinese approach where people do not spend much on less essential needs. Drafting policies that create appealing interest policies may also help to improve saving practices in Thailand and India where the rate of investment remains considerably low. More importantly, China, Thailand, and India should create policies that aim at refining the nature of domestic and international trade.

Works Cited

Bosworth, Barry and Collins Susan. “Accounting for Growth: Comparing China and India.” Journal of Economic Perspectives, vol. 22, no. 1, 2008, 45-66.

Central Intelligence Agency. “The World Factbook.” Central Intelligence Agency, 2019, https://www.cia.gov/library/publications/the-world-factbook/. Accessed on 4 December, 2019.

The World Bank Group. “The World Bank Group.” The World Bank Group, 2019, www.worldbank.org/. Accessed on 4 December, 2019.

Trading Economics. “Trading Economics.” Trading Economics, 2019,

tradingeconomics.com/. Accessed on 4 December, 2019.

United Nations Development Programme. “Human Development Data.” United Nations Development Programme, 2019,

www.hdr.undp.org/en/data. Accessed on 4 December, 2019.