Guangdong vs Gujarat

Hot special economic zones. Booming industries. Busy ports. Rapid economic growth. Massive inflows of foreign direct investment. Yup, that's Guangdong Gujarat.

This week's Asia Times has a long study of the success of the Indian state of Gujarat (Wiki Gujarat):

The northwestern state of Gujarat - notorious for horrific communal violence in 2002 in which over a thousand people, mainly Muslims, were killed - has emerged as India's favored destination for investments. Its dazzling economic success is being highlighted by Chief Minister Narendra Modi in his election campaign as he makes a bid for a third straight term in office in upcoming assembly elections in the state.

According to a recent study by the Reserve Bank of India, the country's central bank, Gujarat stood first in the country with investments of US$17.8 billion in 2006-07 or 25.8% of India's total investment of $69 billion during the year.

The article is well worth a read, for it gives a glimpse of India, clicking along at 8-9% annually growthwise....

"Gujarat has emerged as India's special economic zone [SEZ]," Modi boasted in his speech at a recent meeting of the World Economic Forum at Dalian in China, referring to huge success that Gujarat has experienced in attracting domestic and foreign investment.

Gujarat's experience with setting up SEZs has been pretty smooth. Unlike in other parts of the country where land acquisition for SEZs has encountered massive protests, in Gujarat where 33 SEZ proposals have been approved since the state's SEZ Act was passed in 2004, the process has been largely trouble-free. Barring the case of Reliance's SEZ near Jamnagar, where farmers went to court, and some protest in Por near Vadodara, Gujarat has seen little protest over land acquisition.

This is because Gujarat's port-led development of SEZs involves setting up SEZs along its 1,600-kilometer-long coastline. SEZs are located on large tracts of fallow and saline land in Kutch and Saurashtra. This is arid land that had no takers earlier; but the SEZs now hold out the promise of economic activity and are welcomed by the locals.

The Mundra SEZ, for instance, is being built on land virtually unfit for human habitation and it has brightened economic prospects immensely. A plot here which might have fetched a price of $2,500-$5,000 a few years ago now sells at $250,000. Farmers are eager to sell their land. This is not the case in other parts of India where SEZ developers are eyeing rich agricultural land that farmers are reluctant to sell.

At the same time, Asia Times also reports that across the Strait, Guangdong is close to realizing its long-cherished goal of overtaking the Four Little Dragons, according to Chinese officials:

Guangdong Governor Huang Huahua declared last week at a public function that the province could overtake Taiwan this year and would continue to strive to catch up with South Korea.

Chinese media quoted Huang as saying that Guangdong's GDP was expected to reach more than US$390 billion for the whole of 2007, after registering a year-on-year growth of 14.7% from January to October.

According to official estimates, Taiwan's economy is expected to grow 5 % to more than $380 billion this year. In 1998, Guangdong's economy reached $103 billion and that of Singapore generated $82.8 billion. In 2003, the province's economy hit $191.4 billion, surpassing Hong Kong's $158.5 billion.

"From 1991 to 2006, Guangdong registered an average annual economic growth of 14.4%, which was not only more than four times the average annual growth in the world, but also higher than the average annual growth of 'the four little dragons' in the 1970s when they experienced rapid growth," Huang said.

"Guangdong generated an economy of 2.6 trillion yuan [US$351 billion] last year, increasing by 14.1% when compared with 2005. The figure doubled that in 2001 and accounted for one-eighth of the country's total," he said.

However, experts say it may not be easy for Guangdong to catch up with South Korea in a few years. In South Korea, the Ministry of Finance and Economy in July revised its GDP growth estimate for the whole of 2007 to 4.6% from 4.5%, due to strong export and domestic demand. In 2006, South Korea's GDP grew by 5% to $897.4 billion, due to popular demand for key export products such as mobile phones.

As readers of this blog know, I've long advocated closer Taiwan-India ties. China is not the only country in the world growing at booming rates, and there is no reason why Taiwan should not be trying to cash in on Indian growth as well. The government has recently been working to develop India ties -- as evidenced by the Taitronics expo there in September and the signing of trade agreements between the two nations.

[Taiwan] [India]