China and India

The fact that China is a single-party state and decision-making is highly centralized, makes it a more streamlined place to invest in. India is known for corruption, poor infrastructure, and a lively democracy. Nevertheless, a lot of observers suspect that in the long-run, India's democracy, demography, and ex-pat community, might make it better positioned to thrive in this globalized world. As the Financial Times notes, there are serious debates going on inside China's ruling class. Hat tip to Brad Setser:

China is now less equal than the US and Russia, according to the World Bank, and income inequalities are still widening. And while incomes have mostly risen across the board, the social wage ... which provided free health, education, housing and an old-age pension – has been drastically cut, all but disappearing in the countryside.

... China spends less than one-fifth of the developed-country average on health and education.... In rural areas, where China’s poorest communities live, nearly 90 per cent of health costs are borne by individuals. ... education researchers are discovering that drop-out rates among rural children from junior secondary schools average 30-40 per cent. “This is the most under-reported story in China – the country’s massive failure to educate its rural youth in the 1990s,” says Yasheng Huang of MIT Sloan School of Management.

... To old Marxists such as Mr Liu, Mr Hu and Mr Wen have not done enough to uphold government – and, by implication, party – control of the economy. Alongside them, as part of a loose ragtag coalition that marches under the “anti-reform” banner, celebrity economists such as Lang Xianping, who fronts a popular television show in Shanghai, have criticised privatisation as a slow-motion Russian-style theft of state assets.

Many mainstream economists counter that the Hu-Wen administration is shaping up as a disaster precisely because it refuses to tackle the state’s still dominant role. For these economists, pushing the rich-poor gap to centre stage is simply a device by the leadership to increase the role of the state in business...

More excerpts here. India suffers from inequality too. The difference is that discussions take place in the open, there are no communist backbenchers itching to undo all the structural changes.