China and India are the most rapidly growing economies of the world, even though whole world is facing an uphill task of tackling recession. Both countries poised an attractive growth rate. Most amazing fact of this growth-region that is made up of these two neighbouring country is that both are growing on different business models.
China has vast resources and huge population in rural area, therefore China has emerged as a manufacturing hub. India, on the other hand, has over time with English educated mass of middle class has emerged as the services hub.
With handsome return on investment by FDI showing in these two countries in a global slowdown scenario, a lot of investment is getting into these two nations, according to their expertise.
According to a hypothesis that for each 100 US Dollar invested, manufacturing sector generates 8 jobs while service sector generates 43 jobs. High level of mechanization has reduced jobs in manufacturing sector. This scenario helps India generating more jobs with per unit of FDI in comparison to manufacturing hub of China. This is further strengthened by the fact is India is a democracy unlike China that has single party system where human rights rarely captures the centre point of public discourse.On the other hand, china is attracting more FDI, because manufacturing sector is more capital intensive. Comparatively urban-employment generation in china is relatively less intense than that of India. Moreover there are poor salary structure, complex labor laws and union activities.
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