ABSTRACT
For more than five decades after the end of the Second World War, China and India remained largely marginal in influencing global economic issues. With the Cold War becoming history from the late 1980s and the world affirming faith in market- based economic principles as the most effective means for growth and prosperity, China and India faced serious dilemmas. Both had to figure out least-resistant ways of adapting to globalisation. They had to carefully manage domestic economic reforms for integrating efficiently into a world of global commerce that was rapidly shedding controls on cross-country movements of goods, services, capital, labour and technology. At the same time, they had to ensure that such integration did not accentuate domestic vulnerabilities, which underdevelopment and uneven development had produced and perpetuated in both countries. China was the better prepared of the two for handling globalisation, as it had embarked on a selective and calibrated process of opening up its economy from the early 1980s. The cessation of the Cold War and the deepening of globalisation made it imperative for China to pursue a more exhaustive and aggressive strategy for embedding into global trade and financial systems. India, on the other hand, was forced into precipitate action on reforming its economy in an outward-oriented manner after a serious BOP crisis in the early 1990s. Unlike China, however, India had the advantage of being associated with global trade and investment negotiations more closely. Nonetheless, it had to respond to the far-reaching changes taking place in the world economy. The responses, needless to say, were often tentative owing to difficulties in aligning domestic institutions and economic systems with their evolving global counterparts, and also owing to problems in making economic reforms and globalisation politically acceptable to domestic constituencies.
