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With growth in China likely to slow further in the coming years, some observers wonder if India could take over China’s role as the world’s most important developing economy. On one hand, India has strong demographic factors in its favor. However, India has never achieved the same rate of capital deepening as China, and there are a number of impediments that may hinder the development of the Indian industrial sector. The Indian economy may have a difficult time achieving supercharged rates of economic growth on a sustained basis unless structural reforms make industrial activity more viable in the country.

The Chinese economy was growing rapidly in the 1980s and 1990s, but it was not yet the economic powerhouse that it would become in the 21st century. India appears to be at the same stage of development as China was two or three decades ago. With enough economic reforms, India may eventually become more economically relevant than China. In the view of Wells Fargo, however, India is not yet ready to assume China’s mantle as the world’s most important developing economy.

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