By: Knowledge@Wharton

India and China are both vast countries just opening to development, filled with opportunity and risk for private equity investors. Inevitably, the two countries' rising economic fortunes invite debate over which offers the better climate for investment.

At first glance, India might not seem the safer bet, with its pitted roadways, tainted water and visible, widespread poverty. Yet those outward signs obscure solid underpinnings for economic growth, including a democratic government, a strong education system, widespread knowledge of English and a deep pool of expatriates experienced in Western businesses, according to emerging market private equity experts.

Cheap labor and foreign direct investment have made China the world's manufacturing powerhouse under a government that has embraced Western-style capitalism. China has provided spectacular private-equity returns in recent years, but, the experts note, weaknesses in China's legal system and the possibility of political instability remain concerns for investors.

"Clearly there's enormous private-equity opportunities in both countries," says finance professor Jeremy Siegel, of University of Pennsylvania's Wharton School.

Full Story...

Posted by pichu at August 10, 2006 9:56 PM