Table 2: GDP and GDP Growth rates of India and the US
Table 3: Unemployment rates in India and the US
Table 4: Inflation rates in India and the US
Figure 1: India's GDP and GDP growth rates
Figure 2: United States' GDP and GDP growth rates
Figure 3: Unemployment rate in India
Figure 4: Unemployment rate in USA
Figure 5: Inflation rate in India
Figure 6: Inflation rate in USA
The economic profile of a country depicts the overall picture of the country’s economic health and also the policies adopted to bring social welfare to its people. It takes into account the level of economic development, the degree of market orientation, the unique areas of specialization, and the most important natural resources available in the country. It also includes major economic events and policy changes.
India is an emerging economy that has been propelled by the liberalization policies which have been instrumental in boosting demand as well as trade volume. The growth rate has averaged around 7% since 1997 and India was able to keep its economy growing at a healthy rate even during the 2007-2009 recession with around 5% growth rate in 2009. The Indian economy was hit in the latter part of the global recession and the real economic growth witnessed a sharp fall, followed by lower exports, lower capital outflow and corporate restructuring.
The economy of India is as diverse as it is large, with a number of major sectors including manufacturing industries, agriculture, textiles and handicrafts, and services. Agriculture is a major component of the Indian economy; over 66% of the Indian population earns its livelihood from this sector. At the same time, the service sector is greatly expanding and has started to assume an increasingly important role. The biggest boon to the economy has come in the shape of outsourcing. Its English speaking population has been instrumental in making India a preferred destination for information technology products as well as business process outsourcing. India has become a hub of outsourcing activities for some of the major economies of the world including the United Kingdom and the United States. Outsourcing to India has been primarily in the areas of technical support and customer services. Other sectors where India is expected to experience progressive growth rates include manufacturing, construction of ships, pharmaceuticals, aviation, biotechnology, tourism, nanotechnology, retailing and telecommunications.
The USA is the largest and most technically advanced economy in the world with the service sector accounting for more than 70% of the GDP. The USA is a market-oriented and capitalist economy where private firms and individuals make most of the decisions. As a consequence, firms in USA enjoy greater freedom and flexibility than its counterparts in other countries. But, at the same time US business firms face higher barriers to entry in other country’s market than its competitors face while entering US market. The USA enjoys comparative advantage in computers, advanced technological equipments, medical, military and aerospace.
The major problems in the US economy include inadequate investment in the economy, stagnation in the household income among the lower economic groups, rising costs of medical and pension, funding war campaigns in Afghanistan and Iraq, very high trade and fiscal deficits adding to the woes of the biggest economic crisis since the Great Depression of 1929. The crisis was caused by sub-prime mortgage, investment bank failures, falling real estate which sent the USA to economic recession by mid 2008. Consequently US market experienced a lower level of confidence, lower economic activity and higher unemployment rate. Also in 2008 with the soaring international crude oil price, inflation rose. As a fiscal policy measure USA announced fiscal stimulus package of $787 billion in January, 2009 to revive the economy to be used over the course of next 10 years. March 2010 saw President Obama announcing the historic Health Insurance Reform Bill to extend its coverage to more people by 2016.
The GDP composition by sector of India and the USA is shown in Figure 1 and 2 below:
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