Move over China, Harvard says India is the new global growth engine

India has emerged as the economic pole of global growth by surpassing China and is expected to maintain its lead over the coming decade, says a new study by Harvard University.

According to the Harvard University's Center for International Development (CID) growth projections, India will feature on top of the list of the fastest growing economies till 2025 with an average annual growth of 7.7 per cent, for a variety of reasons.

"The economic pole of global growth has moved over the past few years from China to neighbouring India, where it is likely to stay over the coming decade," the CID research suggested.

The study attributed India's rapid growth prospects to the fact that it is particularly well positioned to continue diversifying into new areas, given the capabilities accumulated to date.

"India has made inroads in diversifying its export base to include more complex sectors, such as chemicals, vehicles, and certain electronics," the growth projection pointed out.

"The major oil economies are experiencing the pitfalls of their reliance on one resource. India, Indonesia and Vietnam have accumulated new capabilities that allow for more diverse and more complex production that predicts faster growth in the coming years," it added.

Stating that economic growth fails to follow one easy pattern, the study said, "The countries that are expected to be the fastest growing - India, Turkey, Indonesia, Uganda, and Bulgaria - are diverse in all political, institutional, geographic and demographic dimensions."

"What they share is a focus on expanding the capabilities of their workforce that leaves them well positioned to diversify into new products and products of increasingly greater complexity," the new growth projections by CID added.

Besides, the projections divide countries into three basic categories -- the countries with too few productive capabilities to easily diversify into related products.

Secondly, the countries that have enough capabilities that make diversification and growth easier, which include India, Indonesia and Turkey.

Last, the advanced countries such as Japan, Germany and the US that already produce nearly all existing products, so that progress will require pushing the world's technological frontier by inventing new products, a process that implies slower growth.

Growth in emerging markets is predicted to continue to outpace that of advanced economies, though not uniformly says CID's new growth projections.

The growth projections are based on measures of each country's economic complexity, which captures the diversity and sophistication of the productive capabilities embedded in its exports and the ease with which it could further diversify by expanding those capabilities.

The CID is a university-wide center that works to advance the understanding of development challenges and offer viable solutions to problems of global poverty.