The New Economist blog has quoted an intriguing story today from the Financial Times by MIT's Yasheng Huang about the differences in economic growth styles between China and India, and the lessons to be learned are on China's side.

Whereas China's growth has been due mainly to a massive increase in accumulated resources, resulting from their continued investments of approximately 50% of GDP in domestic plant and equipment, India's growth is a result of increasing efficiency. Furthermore, the world-class manufacturing facilities which China is known for are not due to internal Chinese development: they come from other people's money acquired through foreign direct investment. India, on the other hand, is best known for its homegrown products and companies, such as Infosys, which are the result of an entrepreneurial business environment that bodes well for the country's future.

The article goes on to explain that the different strategies and economic histories of India and China indicate potentially very different prospects for each, and that India will outperform China in the coming decades unless China undertakes "bold institutional reforms."

Here is another article on the article by Mark Thoma.