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It is in the United States’ interest to support India’s economic development and its rapid rise in the ranks of the global economy. Here are four reasons why.
First, India has the second largest population in the world after China. Its economy has been growing steadily since 1980 with its gross domestic product growing an average of 6 percent annually over the last 30 years, according to World Bank and OECD national accounts data. India also has the highest private domestic consumption as a share of GDP in the Asia Pacific region (57 percent in 2008).
Second, the United States and India are major trading partners, and the two countries can explore an immense potential for continued economic growth through trade. India, like China, has enjoyed high rates of economic growth, and its high rates of growth, like China’s, have been driven by its exports. But unlike China, India allows for fluctuations in its currency exchange rate.
Third, India is home to one of the most dynamic private sectors in the world today. Indian entrepreneurs are developing new and innovative ways to add social and economic value to Indian society through market-based approaches to social-service delivery such as banking through mobile phones. This creates an opportunity for the United States to supply the technology for these efforts.
Fourth, as India continues to become a stronger economy, it will have a greater voice on the global stage—in the governance of the International Monetary Fund, for example. It can then serve as a potential ally in finding a multilateral solution to global challenges such as China’s currency misalignment.
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