This is a very complex process that
we're not going to explain in detail in this class.
But some elements are worth mentioning to, again,
understand the importance of these two countries.
India, as mentioned earlier, used to be a bigger manufacturing
power than Britain, in the times of the British Industrial Revolution.
Afterwards, fortunately for India, India became a British colony and
manufacturing efforts were discouraged by the British.
The British actually tried to de-industrialize India in order to turn it
into a market for British manufacturing output.
Now, what is the case of China?
China, we have this combination of isolationist policies by the Chinese
emperors that later on led to a series of defeats against Western powers.
In things like the Opium War in the 19th Century that led their Western
powers to dominate the Indian economy and control important segments of it.
Later on, China faced other complicated challenges such as,
well, World War II that had terrible effects in terms of destruction and
killing of a lot of people, which was followed by the Revolution that, again,
was a very bloody war that destroyed a lot of the potential of the Chinese economy.
By the 1960s,
we have a China that after going through processes like the Cultural Revolution,
we find a country that did not represent more than 2% of the world economy.
An economy that in the year of 1800 was 50% of the world economy
went down all the way to 2%, even though it had 25% of the world's population.
So this was something that remained like this until the decade of the 1970s.
During that period, the Chinese Communist Party embarked in a series of economic
reforms that shifted the communist model towards a market economy that encouraged
foreign direct investment, the creation of domestic private corporations in China,
which eventually led to our reemergence of China in the world scene.
So China was not important for a while, but it was a very short
period of time for the standards of Chinese history.
They count their history in terms of 5,000 years ago.
So this was just a small parentheses, and China is back.
Now what about India?
India, as I mentioned before,
was part of the British empire for a while, and
it got its independence in the year of 1948.
Later on, India adopted a highly protectionist model that
was characterized by its very rigid bureaucratic system
that discouraged the creation of new enterprises.
And at the same time,
the model discouraged the arrival of foreign multinationals.
By the early 1990s, the Indians shifted this model.
And adopted a more market-friendly economic system that opened doors to
foreign investors who could take advantage of several of the Indian advantages.
Mainly, the existence of a highly educated labor force
that worked for lower prices than the western labor force.
So this is something, well, in the case of India,
and the exploitation or the use of cheap labor in China and other resources
existing in China, led to these two countries to reemerge in the world scene.
And this is why we have them present again.
But the point here is, it is not that they're learning
how to behave or how to operate in the world economy.
These two countries are just back and they're, again,
major protagonists in the global economy.