Photo: Bloomberg
Photo: Bloomberg

How low is per capita investment in India?

Both India and China have a very long way to go before we reach developed country levels of per capita investment

An important measure of economic growth is the amount of investment in a country. More than total investment, it is per capita investment that is a measure of the development of an economy.

The UN Conference on Trade and Development, in its report for 2016, has a table that shows average per capita investment in several economies over various periods. Investment here is taken as gross fixed capital formation. A part of that table has been reproduced here. “An acceleration of investment helps developing countries reach a critical mass of activities in certain industrial sectors which then contributes to steady technological advances and diversification," says the report.

Note how low per capita investment is in India, although average annual investment during 2010-14 is more than three and a half times higher than what it was during the nineties. Although India’s rate of growth of per capita investment is high, China’s has been much higher, as seen from the table. And both China and India have a very long way to go before we reach developed country levels of per capita investment.

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