Globalization has brought both benefits and harms to China and India. While it boosted GDP growth and reduced poverty, it also increased inequality and regional disparities. In both countries, the incomes of the wealthy grew much more than the poor, and urban areas saw more development than rural areas. Globalization contributed to exploitation of workers and environmental degradation as well. However, government policies could help address these issues by supporting small farmers and industries, improving rural infrastructure and services, and enacting stronger labor and environmental regulations.

1. Saumya Sudhir
December 22, 2015
ECON 347- Political Economy of the G-20
Instructor: Jens Christiansen
Globalization: a double-edged sword
ABSTRACT
The acceleration in globalization in China and India in the twentieth century did more harm
than good for these countries. Although it may have boosted exports and productivity, and led
to the opening and integration of global markets, the negative consequences unleashed in the
process have had lasting impacts on the economy and society of the two nations. Some ill
effects discussed in this paper include inequality and regional disparities, labor exploitation,
and environmental degradation. Inequality has increased in both countries due to shifts in the
nature of production and the concentration of wealth and profits. In many cases, income
inequalities are accompanied by regional disparities, which result in dismally low rural
incomes, gaps in rural education and health care, rural-urban migration, and in the worst
cases, farmer suicides. Groups who are already vulnerable due to poverty and regional
disparities become especially prone to exploitation by employers. However, ameliorative
measures have been suggested, including increasing government involvement, particularly in
addressing inequalities and environmental degradation, and encouraging linkages between
foreign investors and indigenous industry.
INTRODUCTION
Nabila, a high-school student in Dhaka, switches off her Taiwanese computer, changes into
a dress made in Thailand, slips on her Italian leather shoes, picks up her Chinese-
manufactured smartphone, and heads out to meet a friend at a McDonalds nearby. Defined by

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the World Bank as the “growing interdependence of countries resulting from the increasing
integration of trade, finance, people, and ideas in one global marketplace,” it is evident that
globalization has left almost no nation untouched. Developed nations now outsource a
plethora of services to developing nations, and developing nations import state-of-the-art
foreign technology and technical expertise from abroad. Globalization has undoubtedly
resulted in an explosion of opportunities for consumers such as Nabila, producers, and
workers worldwide. However, the underlying question that has emerged in the process is: is
globalization necessarily good?
Globalization has taken on a new meaning in the past 35 years, as reflected by the upsurge
of international trade, outsourcing, and foreign investment. The process of globalization
accelerated in the 1980s and 1990s partially due to the liberalization of trade and capital
markets, which promoted the competitiveness of exports through the reduction of tariffs,
quotas, infant industry protection, and other trade restrictions. Technological advances also
played a role, by making made cross-border trade and the fragmentation of production
processes more cost-efficient and practical. Furthermore, institutional supports for economic
cooperation and integration – the World Bank, International Monetary Fund (IMF), General
Agreement on Tariffs and Trade (GATT), and later, the World Trade Organization (WTO) –
contributed to the process of globalization (“Globalization and International Trade Policies”).
China and India have a lot in common. They are both growing at phenomenal rates and
have the second- and fourth-highest Gross Domestic Products (GDP) in Purchasing Power
Parity (PPP) terms, respectively (CIA World Factbook 2015). Both came into existence as
nation states around the same time: the People’s Republic of China was established in 1949,
and India gained independence from British colonial rule in 1947. In initial decades, both had

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relatively insulated economies, with a strong emphasis on planning and the development of
industrial capacity. Most importantly, both nations opened up their economies to international
trade in the final decades of the 20th
century.
In China, Deng Xiaoping took control of the government in 1978, two years after Chairman
Mao Zedong’s death. His vision of a “New China” emphasized the opening up of the
economy to the global market. His reform agenda entailed changes in trade, industry, and
agriculture. China joined the GATT, and complied with its stipulations regarding domestic
reforms and the reduction of tariffs and trade restrictions. With respect to industry, the
government gave local officials greater responsibility and autonomy and permitted small
industries to enter the arenas of services and light manufacturing. In agriculture, there was a
switch to a household system of responsibility, wherein households could contract land and
machinery from collective organizations. The government also established four Special
Economic Zones (SEZs) – with particular incentive policies for Foreign Direct Investment
(FDI) – across China (Srinivasan 2013). Today, China’s main exports are electromechanical
and labor-intensive products.
In India, overprotection of domestic industry resulted in a decline in trade, growth, and
foreign reserves, and the accumulation of a massive fiscal deficit by 1991. Prime Minister
Narasimha Rao and then-Finance Minister Manmohan Singh implemented a series of New
Economic Policies (NEPs) founded on the pillars of liberalization, privatization, and
globalization (LPG). These principles followed from the Neoliberal ideas that had emerged in
the 1980s, particularly under Margaret Thatcher and Ronald Reagan. According to them,
government intervention weakened the economy, and it was essential to push back the domain
of the state. As a result, India began a series of reforms intended to make the economy more

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market-based, including reducing tariffs and taxes, lowering interest rates, and privatizing
government monopolies, in an effort to deregulate markets and provide incentives for foreign
investment. To encourage trade with external partners, India signed the GATT and became
part of the WTO (Guru 2015). India presently dominates the market for Information
Technology (IT) services, and pharmaceuticals, and among its biggest foreign investors are
General Electric, Intel, Cisco, IBM, and Dell (Harris 2005).
Globalization has, undoubtedly, brought gains to China and India. China’s GDP has risen
from under $150 billion in 1978 to $10 trillion in 2014, growing on average by 10 percent
annually since 1978 (See Appendix 1). The growth in China’s per capita GDP is even more
impressive: it rose from $155 in 1978 to $7,600 in 2014. Moreover, poverty rates fell from 31
percent to 3 percent between 1978 and 2000, and over 500 million people have been brought
out of poverty since 1978 (World Bank Development Indicators). It is important to keep in
mind that globalization has not been correlated with a reduction in poverty universally, as the
experiences of several Latin American countries indicate (See Appendix 2). China’s average
life expectancy increased concomitantly with its reduction in poverty since 1978 (from 66 to
75 years) (Huwart and Verdier 2013). China’s share in world merchandise exports increased
from 1 percent in 1982 to 12 percent in 2014 (“World Trade Organization – Trade Profiles”).
It is currently the largest exporter of high-tech goods and labor-intensive products (such as
garments, shoes, clocks, and bikes). China is the most important trade partner of Brazil, India,
and South Africa, and the largest trade power in the world (Gao 2003).
India has also seen immense growth. The GDP (in current US$) grew from $275 billion in
1991 to $2 trillion in 2014, while per capita GDP grew from $309 to almost $1,600 in the
same period (“How the Indian Economy Changed in 1991-2011”; World Bank Development

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Indicators). FDI increased from $0.13 billion to $27 billion, between 1991 and 2014, as there
has also been a surge in outsourcing to India, IT services, multilateral trade agreements, and
foreign investment in pharmaceutical, petroleum, and manufacturing industries (“Factsheet on
Foreign Direct Investment”; Chatterjee 2014).
However, the rosy picture painted by these figures should not lead us astray; globalization
has far-reaching negative consequences that need to be addressed.
NEGATIVE EFFECTS OF GLOBALIZATION
Globalization has had negative impacts in China and India. Both have suffered similarly in
the areas of inequality and regional disparities, labor exploitation, and environmental
degradation.
INEQUALITY AND REGIONAL DISPARITIES
Global poverty levels and the poverty rate in China and India have declined since 1978 and
1991 respectively, but inequality has increased in both nations. China’s Gini index between
1980 and 2012 increased from 30 to 55 (See Appendix 3). Before the opening up of the
economy, the richest 10 percent earned less than 20 percent of the income, but by 2005, they
earned almost 50 percent. These figures are especially shocking when compared to the share
of the bottom 10 percent, who earned just 1.4 percent of total income (Wen 2005;
“Globalization and Inequality”). This indicates that despite new, labor-intensive production
technologies in China – which ideally would have increased incomes – overall, inequality has
worsened.

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It has also been said that China’s path to WTO accession contributed to growing inequality,
because its stipulations required China to engage in stringent reforms that interfered with the
government’s autonomy in setting standards for labor and the environment. These included
eliminating import quotas, reducing tariffs, and increasing imports by 2006, which hurt small
farmers and widened the gaps between the income of the lowest and highest earners.
According to Dale Wen,
“When China joined WTO in 2001, cheap, highly subsidized agricultural commodities from
industrial nations flooded into the country, posing a further challenge to the already ailing
rural sector. As a result of decollectivization and participation in the global trade arena,
millions from rural regions migrated to cities and manufacturing centers.” (Wen 2005)
Sugarcane farmers in particular faced competition from cheap imported sugarcane, and
gained much lower profits on their produce than before: a difference as drastic as earning 190
Yuan per ton in 2003, down from 250 Yuan per ton in 2002 (Wen 2005). There was an overall
decline in rural incomes, and this engendered small farmers more vulnerable to price
fluctuations.
The percentage of foreign ownership in telecom and insurance industries (previously
constrained by the government) increased to 50 percent. To aggravate the situation, China
now had to comply with a ‘national treatment’ clause, which stipulates that foreign investors
be treated as equal to domestic investors – this often puts the economy under undue pressure
from foreign investors.
Income inequalities in India have also skyrocketed since the reform period. It witnessed
unemployment levels during the 1990s and 2000s that were disproportionately high given its
prevailing level of economic growth (Pal and Ghosh, 2007). In 1993, India’s Gini coefficient
was close to that of developed countries, but at last count, this figure had risen to 38 (See
Appendix 4). The earnings of the top 10 percent of wage earners are currently twelve times

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higher than the earnings of the bottom 10 percent, whereas in the early 1990s, they were only
six times higher (“India's income inequality has doubled in 20 years”).
Discriminatory global trade practices are largely to blame for inequality in India. Under
WTO guidelines, developing nations are required to free up restrictions on trade. However,
developed nations such as the US can afford to give their farmers $18 million in agricultural
subsidies, unlike in India, where agricultural subsidies have been shrinking (Sengupta 2006).
This reduces the effective cost of agricultural production in developed countries, pushes
developing country produce out of international markets, and reduces the prices of agricultural
produce within developing countries.
Imports of genetically modified seeds produced by American pharmaceuticals such as
Novartis, Cargill, and Pioneer Seed, are also implicated in the increase in inequality in India.
These chemical technologies are expensive, and so even farmers who can afford the collateral
required for loans to finance such purchases often find themselves caught in a treacherous
debt trap. Broader reasons for the growing inequality seen in China and India include
externalities such as pollution, which drive people away from their place of residence, lead to
crop failure, and make it difficult for the poorest to maintain a decent standard of living.
Inequality in China and India has been reflected not just in terms of income but also in
regional disparities. For one, China’s rural education has deteriorated since the reform period.
While 70 percent of rural youth finished high school in 1976, less than 10 percent did so in the
late 1990s (Wen 2005). This alarming decline in educational attainment may point to a
deepening urban bias in China, as resources have been unduly concentrated in urban areas and
denied to rural areas. It may also be the case that the financial difficulties faced by small
farmers forces them to bring their children out of school and put them to work on farms.

8. 8
Also linked to the urban bias is the vast disparity between incomes of rural and urban
populations in China. In 2012, the annual average per capita disposable income in rural China
was less than a third of the average per capita disposable income in urban areas – a difference
that did not exist in 1978 (See Appendix 5a). Additionally, the wages of rural workers in
China have not increased concomitantly with the skyrocketing prices of rice, pork, and other
food items, and consequently, they spend a higher proportion of their income on food than
their urban counterparts (See Appendix 5b) (Tobin 2011).
This gaping hole in rural health facilities is best exemplified by the lack of rural health
monitoring. As explained by Dale Wen,
“The [total number of hospital beds] has fallen in rural areas and stayed the same or
decreased on a per capita basis in seven poor provinces (Guizhou, Tibet, Qinghai, Hubei,
Hunan, Jiangxi, and Xinjiang). Between 1993 and 2000, government total healthcare
spending on rural health care fell from 34.9 percent to 22.5 percent. Consequently, rural
public health infrastructure has deteriorated considerably.” (Wen 2005)
Moreover, in the past four decades, the number of rural doctors and nurses in China has fallen
dramatically (from 1.5 million to one million, and from 3.28 million to only 270,000
respectively) and health insurance covers only 10 percent of the rural population, (whereas it
covers 50 percent of the urban population) (“China’s Public Services Privatization and
Poverty Reduction”). Not surprisingly, malnutrition among rural Chinese children under the
age of five increased between the 1980s and 1990s (Khan and Riskin 2005).
In India, despite the fact that almost 70 percent of the population lives in rural areas, there
is a distinct urban bias in economic growth (World Bank 2015). Since India’s independence in
1947, policymakers have largely ignored agriculture and instead favored industry, with as
little as 23.3 percent of the government budget devoted to agriculture in the 1960s, in spite of
the fact that agriculture contributed to over 60 percent of India’s GDP at the time (Cypher

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2014). The economic reforms of the 1990s only intensified this bias, and the percentage of
budgetary outlays devoted to the rural economy has declined over the years, currently resting
at 18.5 percent (Jha and Acharya 2015). The NEPs exposed small farmers to global scale
production prices, and immediately made them more vulnerable and less competitive.
Although the NEPs have resulted in greater access to new technologies and markets, most
rural populations cannot afford the former and are consequently distanced from the latter.
Small farmers have yet to see an increase in agricultural prices, credit facilities, irrigation,
insurance against unfavorable climates and pests, and of course, more affordable technologies
(Sengupta 2006). The positives of economies of scale that emerged in urban areas from
liberalization-led industrial growth have not reached rural areas in terms of improved medical
facilities, housing, road and transport infrastructure, or systemic support to the smaller scale
rural business model.
Tarun Khanna, in Billions of Entrepreneurs: How China and India are Reshaping their
Futures and Yours, sums up the plight of rural India:
“Policymakers have neglected Indian villages in the decades since the nation’s independence: 89
percent of rural households do not own telephones; 52 percent do not have any domestic power
connection. The average brownout in India is three hours per day during non-monsoon months, 17
hours daily during the monsoon. The average village is 2 kilometers away from an all-weather
road, and 20 percent of rural habitations have partial or no access to a safe drinking-water supply.”
(Khanna 2008)
Thus, ineffective governance and corruption has clearly impeded rural populations’ access to
necessities like electricity, education, sanitation, drinking water, and infrastructure.
Not surprisingly, there are vast discrepancies in the growth rates of different Indian states -
some have seen substantial success since the reforms, whereas others have lagged far behind.
According to Maps of India, “States like Assam, Uttar Pradesh, Madhya Pradesh and Bihar

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saw a growth rate less than 5 percent in [the] pre and post reform period. Andhra Pradesh,
Tamil Nadu, Gujarat, Karnataka, [and] Haryana saw a growth rate less than 5 percent during
1980-93, which improved considerably during 1993-2006” (“Globalization, Income
Inequalities and Regional Disparities in India”).
One effect of the urban bias is the mass migration of rural Indian workers into the cities.
Lacking education and funds, they are often forced to live in slums, joining the 400 million
strong informal sector working as laborers, domestic workers, hawkers, street vendors, etc.
(Cypher 2014).
There is another consequence of the neglect of India’s rural communities that is much more
disastrous. More than 200,000 farmer suicides have occurred in India since the late 1990s. As
discussed previously, discriminatory trade practices result in the lack of an economic buffer
for poor farmers, because when crop prices fall, their incomes decline, and they are forced to
take loans, trapping them in a vicious cycle and debt trap. The adoption of new agricultural
technologies as a result of trade liberalization entails an immense financial investment,
thereby leading many farmers to ruin. According to Jagdish Bhagwati:
“There are states in India where cotton seeds have been absorbed and which are really
prosperous. So you have to ask, why is it that [farmer suicides] are breaking out?” he asked.
“What's happening is very much like the subprime mortgages in the United States, where a
whole bunch of salesmen went out and sold mortgages to people who couldn't afford them.”
(Lerner 2010)
A case study on farmer suicides by Srijit Mishra brings several issues to the fore. It was
found that more than 50 percent of farmers who commit suicide own less than five acres of
land, 86.5 percent are indebted, and 40 percent have suffered at least one crop failure. These
data suggest that the desperation faced by farmers can be attributed to a combination of
poverty (induced by high competition and high costs of production), indebtedness (due to

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loans taken for investment in seeds, capital and machinery, and the high interest rates charged
by moneylenders in the informal sector), and the lack of financial and institutional support
(because of the lack of insurance for crops, and physical infrastructure) (Sengupta 2006).
Thus, since opening up to the world economy, China and India have been plagued by
systemic inequalities emerging from WTO stipulations, unfair trade practices, and expensive
imports. These inequalities have been magnified in regional disparities stemming from the
urban bias and from the ineffectual actions of corrupt political systems, and have resulted in
devastating circumstances for individual farmers and the agricultural sector as a whole.
LABOR EXPLOITATION
As we have seen, people who live in remote locations and/or on meager incomes face
seemingly insurmountable obstacles in accessing basic necessities, knowledge, and public
services. Additionally, their lower bargaining power makes them most vulnerable to being
exploited through unsafe working conditions, low pay, and longer working hours than are
acceptable. Labor exploitation is closely tied to the race to the bottom phenomenon, in which
countries compete with each other to attract investment by reducing costs through drastic cuts
in wages and living standards for workers. Meanwhile, production is shifted to the regions
where the wages are lowest and workers have the fewest rights (Financial Times 2015).
The overwhelming surge in trade brought about by globalization in recent years has been
led by labor-intensive manufacturing, leading industry stakeholders to move towards more
flexible models of labor markets to cope with the increased demand while maintaining
competitiveness (Kabeer 2004). When China and India adopted export-oriented trade
strategies in the 1980s and 1990s, they took advantage of their enormous labor force to
increase manufacturing. The aim was to counter their declining terms of trade through

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manufactured goods exports. Because they compete with each other and other nations in the
market for low-skill labor-intensive manufactured products, they have had to suppress wages,
reduce benefits, and devalue their currencies, thus engaging in the race to the bottom (Razmi
and Blecker 2008).
The rise of labor-intensive manufacturing in China and India has also led to a shift towards
more flexible working arrangements, which are in many cases more harmful than helpful to
workers. Current labor conditions in China and India can be summarized by Guy Standing’s
notion of the ‘Precariat,’ a new labor class forced to accept exploitative labor conditions for
lack of other alternatives. In his view, “full-time employment protected by various forms of
state regulation has given way to more diverse and less protected forms of work” (Kabeer
2004). Although Standing’s idea is framed around workers in the global North, it is equally
applicable to conditions in the global South (especially in China and India).
In 2014, for example, Apple was alleged to engage in worker exploitation at the Jabil
Circuit factory in Wuxi, China. According to China Labor Watch, workers are pressured into
working 11-hour shifts daily for six to seven days per week, especially during peak periods.
They are often coerced into accumulating 100 to 158 hours of overtime each month, (up to
four times higher than the overtime limit established by Chinese labor law). If a worker
successfully manages to be approved for leave (which is nearly impossible, even in the case of
illness) their wages are deducted. In addition, workers cannot resign until they receive the
permission of the line leader, which they rarely do. As a result, the worker has to quit without
any outstanding wages (“Apple’s Supplier Jabil Circuit Exploits Workers to Meet IPhone 6
Demands”).
Dale Wen’s comments further elucidate the labor situation in China:

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“Unable to compete with advantages given to foreign-owned firms, SOEs [state-owned
enterprises] shed millions of workers and decreased social benefits. These new migrant workers
flooded into coastal regions and urban centers, desperate for jobs. With a surplus of workers, and
no competition from diminishing SOEs, industries have tightened their grip on workers and
sweatshops have become the norm. Especially in the coastal SEZs (special economic zones)—
where most foreign corporations do business—Chinese workers now have lower wages in terms of
purchasing power, fewer benefits, longer work hours, increasing work-related injuries, and other
associated problems compared to ten years ago.” (Wen 2005)
In India, the informalization of labor that accompanied globalization paved the way for
labor exploitation. Between 1990 and 1995, the Indian formal sector generated almost 20
percent of the employment in the garment export industry, and provided almost 30 percent of
the value-added. However, between 1995 and 2000, the employment generated by the formal
sector declined to under four percent, while value-added fell to two percent. On the other
hand, the employment generated by the informal sector increased from less than one percent
before the reforms to 15 percent after the reforms, while the value-added provided by the
informal sector more than doubled (from six percent to 15 percent). This informalization has
been seen particularly in the garment industry.
The Indian garment export industry started expanding considerably by the early 1980s, and
by 2014, the value of garment exports had increased to $15.7 billion, with India ranking 6th
among the world’s apparel exporters (Mezzadri 2009). The rise in exports was matched by a
rise in the number of workers who tied their livelihoods to the industry. In 1995, there were
approximately 1 million employees in the Indian garment industry, whereas in 2013, this
figure had risen to 8 million (at least for the formal sector) (Shetty 2004; Kane 2014). In the
capital, New Delhi, the boom in the garment industry has manifested itself in long shifts and
low wages (from $30 per month for the lower-skill workers, to $150 per month for master
tailors and cutters). Moreover, there are unstable short-term contracts for the hordes of

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migrant workers that cycle in and out of the city, in the hope of finding work in the garment
industry.
For more specialized tasks, child labor is widely used, as children get paid half of what
adults earn. In Bangalore, factories draw on the availability of women workers in assembly
line tasks. These factories provide even lower wages to their workers, with some paying their
most skilled employees just over $40 a month. As Alessandra Mezzadri points out, “In a
context where factory [labor] costs are the major share of the overall [labor] costs, the
availability of low factory wages is crucial for export firms” (Mezzadri 2009).
It can be seen from the above that low wages play a significant role in the competitiveness
of China and India in their quest for a stronghold in the global trade empire. Thus, the
contributions of foreign conglomerates to labor exploitation in China and India have further
exemplified the pernicious effects of globalization on the people living in these nations.
ENVIRONMENTAL DEGRADATION
Hans Rosling, prominent Swedish economist, has pointed out that in recent years, many
nations have achieved commendable economic success and have greatly improved the quality
of life for their citizens. However, there is one caveat, according to him: most of these
developments have been carried out at the expense of the environment. Rosling is not alone in
this observation. In the study entitled In search of pollution havens? Dirty industry in the
world economy: 1960 – 1995, Muthukumara Mani and David Wheeler discuss the pollution
haven hypothesis, which states that multinationals shift the production of polluting goods to
developing countries because of the lack of environment monitoring. Developing countries

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subsequently acquire a comparative advantage in those industries and “become a ‘haven’ for
the world’s polluting industries.”
The current state of the environment in China and India suggests that they are no exception
to this phenomenon. China’s national State Environmental Protection Administration has
reported that 40 percent of the arable land has become eroded, salinated, and degraded, mainly
due to the doubling of chemical fertilizer usage between 1978 and 1984. Moreover, 20 percent
of the land is contaminated by heavy metals such as cadmium, arsenic, and lead, and
extensive grazing and industrial agriculture have led to the desertification of approximately
27.9 percent of China’s total territory (“Desert Areas Grows in China”). A whopping 60
percent of river water has been stated to be unsafe for human contact, owing to the chemical
effluents and runoff from fields and the dumping of untreated industrial and municipal
wastewater into water sources (Gao 2003). China has also been named the world’s largest
greenhouse gas emitter, (producing 28 percent of global carbon dioxide emissions from fossil
fuels). Air pollution in China kills 1.6 billion people annually, (4,400 people daily) (Rohde
and Muller, 2014). What is more, China has faced enormous economic costs due to the high
PM2.5 concentration in the air (See Appendix 6a).
India is not far behind China in terms of greenhouse gas emissions, currently ranking third.
India is also home to 13 of the 20 cities with the most polluted air, so it is not surprising that
air pollution levels in India have resulted in 630,000 of all premature deaths in 2010 (“Report
2016 India”). Even though several Chinese and Indian cities have PM2.5 concentrations that
greatly exceed the World Health Organization’s (WHO) guidelines and national air standards,
far more cities in India witness this extent of pollution than do those in China (See Appendix
6b) (“Breathe Uneasy”).

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One instance of globalization damaging India’s natural resources is seen in the controversy
surrounding the Coca-Cola Company in India. Coca-Cola factories have been found to create
water shortages and contamination due to their unsustainable water-intensive technologies,
particularly in the desert state of Rajasthan. As a result, Coca-Cola has been forced to shut
down many of its plants, and it has launched water conservation programs in India and
abroad. These remedial measures, however, do not take away from the fact that the
livelihoods of the area locals, who depend on aquifers and village wells for their water needs,
are unnecessarily and sometimes irreparably harmed (Srivastava 2015).
All eyes were on China and India in the recent 21st meeting of the Conference of Parties
(COP21) in Paris. The COP21 successfully brought world leaders together to sign a legally
binding restriction for reducing average global temperatures to no more than 2 degrees above
pre-industrial levels (“COP21”). Given China and India’s status as high polluters, there was
immense pressure on them in this conference to clamp down on emissions. Policymakers from
the two nations have, however, frequently spoken of the ‘common but differentiated
responsibility (CBDR) principle derived from International Environmental Law and
formulated in the 1992 Rio Earth Summit:
“In view of the different contributions to global environmental degradation, States have common
but differentiated responsibilities. The developed countries acknowledge the responsibility that they
bear in the international pursuit of sustainable development in view of the pressures their societies
place on the global environment and of the technologies and financial resources they command.”
(“Common but Differentiated Responsibility”)
In the COP21, China and India continued to emphasize the importance of CBDR. Indian
Prime Minister Narendra Modi explained in his Op-Ed in the Financial Times, “The principle
of common but differentiated responsibilities should be the bedrock of our collective
enterprise. Anything else would be morally wrong.” Chinese president Xi Jinping spoke along

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the same lines: “Addressing climate change should not deny the legitimate needs of
developing countries to reduce poverty and improve living standards.” To this, President
Barack Obama said that the US [the second-largest carbon polluter] “not only recognizes our
role in creating this problem, we embrace our responsibility to do something about it” and
“you cannot forge a climate agreement without taking into consideration the level of
development.” However, he also asserted that the Paris deal “has to reflect serious and
ambitious action by all nations to curb their carbon pollution” (“Top carbon culprits”).
China and India are certainly taking steps towards environmental conservation. China has
stated that its carbon emissions will reach their highest level before 2030, and that it aims to
reduce carbon emissions by 45 percent by 2050, partly with the aid of a national carbon trade
system that will be established before 2017. China has also collaborated with the
Environmental Protection Agency to address pollution, waste management, emergency
preparedness and response, and contamination (“EPA Collaboration with China”). Indian
policymakers, however, have stated that India’s carbon emissions (in fact merely 1.7 tons per
capita in 2011 – a tenth of the emissions produced by the US) may indeed continue to grow in
the next few years. As a nation with 300 million people lacking electricity, India has a
justifiable need for greater energy resources in order to develop and grow (Doyle 2015).
China and India have also argued that climate change technologies are exorbitant, and that
the support of financial institutions and HICs would greatly enable them to adopt them.
Accordingly, previous COP meetings have established an annual contribution of $100 billion
by developed countries to enable developing countries such as China and India to fight
climate change. The COP21 led to an agreement that built upon this, with the US doubling its
commitment (“COP21”). Moreover, in 2013, China availed of a World Bank loan of $80

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million to “help control desertification and land degradation and protect farmland and
infrastructure for the benefit of around three million people in the Ningxia Hui Autonomous
Region” (“China: 3 Million People in Ningxia to Benefit from Desertification Control”).
Hence, large-scale production for export purposes has been implicated in the deterioration
of environmental conditions in China and India. The consequences have been evident in the
rise of pollution-related illnesses, as well as in tensions between developed developing
countries regarding climate change. In order to combat environmental degradation, it is
imperative that China and India receive support from other nations and organizations, or
mobilize their own resources.
CONCLUSIONS
It is safe to say that the acceleration of globalization in the 1980s did more harm than good
for China and India, especially in terms of inequality and regional disparities, labor
exploitation, and environmental degradation. It is essential that greater attention be focused on
developing strategies to address these challenges.
One idea is to use an antidote to globalization. If increased international cooperation and
integration has deteriorated the economy and society of China and India, then perhaps
stronger government action can rectify the problem. Further investment in public services,
poverty alleviation programs, and initiatives for the redistribution of wealth, (such as taxing
large businesses and giving subsidies to smaller ones), may do well to narrow the vast divide
between the haves and the have-nots. More stringent enforcement of existing labor standards
and regulations is also crucial to mitigate the exploitation of workers. Finally, the assertive
implementation of ecological conservation policies and a creative use of fiscal policy (perhaps

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taxing emissions or incentivizing greener fuels through tax cuts and subsidies) can ameliorate
existing environmental conditions.
Conversely, some scholars believe in fighting globalization with globalization. The
problems of inefficient allocation of resources and inequalities can be remedied through
further foreign investment, provided it is channeled into areas that need it most. Khanna
asserts that if foreign firms invest in connecting urban and rural markets, rural India can
become better integrated into the process of globalization. As an example, he discusses the
potential success of the collaboration between Bharti Enterprises (an indigenous corporation)
and the multinational, Wal-Mart, in linking small agriculturalists to large urban markets in a
way that could reduce wastage as well as prices (Khanna 2008).
This paper has examined the effects of globalization in China and India, two emerging
economies that share a border and opened their doors to the global economy in a similar time
period. A comparison of the effects of globalization in China and India and those in emerging
countries with different initial conditions – Mexico, Indonesia, and Turkey, to name a few –
may yield fascinating results that could lead to future growth efforts.

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APPENDICES:
Appendix 1: GDP GROWTH FROM 1978 TO 2012
China’s GDP has risen from under $150 billion in 1978 to $10 trillion in 2014, growing on average
by 10 percent annually since 1978

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Appendix 2: GLOBALIZATION IN LATIN AMERICA VS CHINA
Globalization has not always been correlated with a reduction in poverty, as the experience of several
Latin America shows us

25. 25
Appendix 3: CHINA’S GINI 1980-2021
China’s Gini index between 1980 and 2012 increased from 30 to 55

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Appendix 4: INDIA’S GINI 1990s-2000s
In the 1993, India’s Gini coefficient was close to that of developed countries, but at last count, this
figure had risen to 38
Source: https://www.quandl.com/collections/demography/gini-index-by-country

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Appendix 5a: DISPOSABLE INCOME IN RURAL AND URBAN CHINA FROM 1978
TO 2012
In 2012, the annual average per capita disposable income in rural areas was less than a third of the
average per capita disposable income in urban areas – a difference that did not exist in 1978
Appendix 5b: PROPORTION OF RURAL AND URBAN INCOME SPENT ON FOOD
The wages of rural workers in China have not increased concomitantly with the skyrocketing of the
price of rice, pork, and other food items, and they spend a higher proportion of their income on food
than their urban counterparts

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Appendix 6a: HIGH PM2.5 CONCENTRATION IN CHINA
China has faced enormous economic costs due to high PM2.5 concentration

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Appendix 6b: HIGH PM2.5 CONCENTRATION IN CHINA AND INDIA
Several Chinese and Indian cities have PM2.5 concentrations that fail to meet World Health
Organization’s (WHO) guidelines and national air standards