The Unz Review - Mobile
A Collection of Interesting, Important, and Controversial Perspectives Largely Excluded from the American Mainstream Media
 Russian Reaction BlogTeasers
East Asia's Twenty Year Rule
Email This Page to Someone

 Remember My Information



=>
Search Text Case Sensitive  Exact Words  Include Comments

I have often remarked that a convenient way to think about East Asian comparative economic development is to view its three biggest players – China, Japan, and South Korea – as being separated by twenty year “chunks” of development, with Japan being on its leading edge and China being its laggard.

For instance, here is a graph of their respective per capita GDP growth rates from 1950 for Japan, 1970 for Korea, and 1990 for China – the years when all three passed the $2,000 mark (in terms of 1990 Geary-Khamis dollars, the standard unit of measurement used by what is probably the world’s most accessible comprehensive economic history database compiled by Angus Maddison).

east-asia-comparative-economic-development

This argument has recently been advanced by Jingyi Jiang (via Brian Wang), who likewise noticed the similarity of Japan’s, Korea’s, and now China’s “miracle economy” growth experiences – although his explanation of this might be a bit lacking:

Third, South Korea, Japan and China are geographically close. They trade a great deal with each other, and both South Korea and Japan invest directly in China. These close economic ties suggest that their growth experiences could be similar.

Alternatively, it could have something – just a little – to do with the fact that all three of these countries have First World average national IQs, which have been shown time and time again both on this blog and increasingly in academia to be the best predictors of economic potential around. I know, crazy thought, that.

Jingyi Jiang predicts China’s ultimate steady state level of GDP per capita at around half of the American level. The basis on which he does this is pretty weak: “No country in the world has been able to sustain growth rates of 7 percent or higher for more than four decades.” But this does not have to apply to China, since its level of economic development had been artificially suppressed by Maoist economic lunacy prior to the 1980s. Since China’s average national IQ and hence human capital potential is comparable to that of Japan (which has settled at 75% of the US level) and that of South Korea (at 65% of the US level, but continues eking out small gains), an ultimate limit of 50% seems to be unduly pessimistic.

Of course in population terms China is Japan x10 or Korea x25, so even half the US level of GDP per capita translates to a Chinese economy that is more than twice as large as the US in aggregate and at least as large in terms of military spending even if the share of GDP devoted to it remains 2% and 4% for China and the US, respectively. This is why all the numerous pundits who have argued that the (actually largely non-existent) China hype is all fake by smugly pointing out similar trends with respect to Japan in the 1980s are either idiots or knowing peddlers of nonsense.

 
• Category: Economics • Tags: China, Development 
Commenters to Ignore...to FollowEndorsed Only
    []
  1. Anonymous says: • Disclaimer

    What happens when you compare those three with other East Asian countries? What about a comparison with some Latino countries and West Asian countries?

    Read More
    • Replies: @Stephen R. Diamond
    Yes, Brazil in particular comes to mind. The similarity of the curves is only persuasive against a contrasting background. (Divergent as well as convergent validity, in the language of methodology.)
    ReplyAgree/Disagree/Etc.
    AgreeDisagreeLOLTroll
    These buttons register your public Agreement, Disagreement, Troll, or LOL with the selected comment. They are ONLY available to recent, frequent commenters who have saved their Name+Email using the 'Remember My Information' checkbox, and may also ONLY be used once per hour.
    Sharing Comment via Twitter
    /akarlin/twenty-year-rule/#comment-1448809
    More... This Commenter This Thread Hide Thread Display All Comments
  2. Dear Mr. Karlin, you wrote:

    Since China’s average national IQ and hence human capital potential is comparable to that of Japan (which has settled at 75% of the US level)

    To the best of my humble understanding, “human capital” ,
    is like volume in thermodynamics.
    Pressure in thermodynamics is characterized by “level”, but not the volume.
    Pressure and volume are respectively intensive and extensive variables.
    In other words, it does not make sense to compare “capital”,
    be it human, or financial,
    for two countries with total population differing by factor 10,
    like Japan and China.
    Did you mean “human capital per capita”?

    Read More
  3. Commenter says:

    Both Japan and South Korea owe their fortunes to exports, and even in the case of Japan the domestic market is nowhere near sufficient, and increasingly less so. So their development into advanced economies was and still is a function of western markets, and the US business cycle in particular.

    China’s fast development since it opened up has been built on the same foundation but China does have the demographic strength to have a sufficiently large domestic market. Chinese brands, eg car makers, smartphone manufacturers, web services etc…should find enough internal (and more or less, captive) demand to create world class products with gigantic consumer bases and then export them all over the world by dumping local markets. On paper, this gives China an advantage that Japan, South Korea, Germany can never have and that even the US could not utimately match. Could this even lead China to blow up the so called US etalon, in the long term?

    No wonder Americans are actively building all sorts of barriers to check China’s global reach…

    Read More
    • Replies: @Mitleser

    On paper, this gives China an advantage that Japan, South Korea, Germany can never have and that even the US could not utimately match.
     
    Germany does have that advantage via the European common market.
  4. If China follows Japan in that growth chart, its rate of growth will drop to about 3% per year and it will take another 25 years or so for China’s GDP per capita to double. In the meanwhile we can expect that the US economy will grow to some extent (let’s say at 2% per year). This will postpone the convergence of US and Chinese economies and perhaps militaries for a long time. At 3% growth for China and 2% for the US it will take 40 years for China to reach 1/2 of US GDP per capita.

    Read More
  5. The US misused or abused the numerous advantages it had post WW2 which, in spite of the dollar dominance, has brought about economic stagnation. That process will be extremely difficult to undo.

    China has one supreme advantage not shared by the US, Japan, or S Korea – it isn’t a democracy. Democracy is the amyloid beta to an economic system. The continual process of democracy gunks up the system with so many destructive legal mandates that it cannot relate to reality and it cannot understand why it can’t.

    Throughout history there have been a few ‘good’ kings, czars, or emperors, good because it was in their nature. They had the power to make sweeping changes for the good, some did, and sometimes it worked.

    Democracy is an inverted pyramid built of impractical, hare-brained, or just plain evil ideas that originate in the minds of people who would be more helpful if they were in a coma. Elected leaders are a distillation of their lunacy. Democracy works to make things not work since it is a centrally planned economy by other means.

    China is not saddled with the inevitable mass stupidity and eventual failure of democracy. If it chose to, Hong Kong could become its future economic model. Not likely, but conceivable.

    Read More
    • Replies: @DB Cooper
    "China has one supreme advantage not shared by the US, Japan, or S Korea".

    Neither Japan nor S Korea were democracies in the sense the West understood it. During years of Japan good times, that basically means the first sixty years after WWII, Japan was a defacto one party state. In fact the LDP was so dominant that it ruled for some sixty odd years uninterrupted right after WWII. South Korea was an outright non-democracy during its take off years. S Korea was run by a military government allied with the US well into the early 90s.

    So may be China shared one advantage with Japan and S Korea but not the US?

  6. @Anonymous
    What happens when you compare those three with other East Asian countries? What about a comparison with some Latino countries and West Asian countries?

    Yes, Brazil in particular comes to mind. The similarity of the curves is only persuasive against a contrasting background. (Divergent as well as convergent validity, in the language of methodology.)

    Read More
  7. DB Cooper says:
    @Drapetomaniac
    The US misused or abused the numerous advantages it had post WW2 which, in spite of the dollar dominance, has brought about economic stagnation. That process will be extremely difficult to undo.

    China has one supreme advantage not shared by the US, Japan, or S Korea - it isn't a democracy. Democracy is the amyloid beta to an economic system. The continual process of democracy gunks up the system with so many destructive legal mandates that it cannot relate to reality and it cannot understand why it can't.

    Throughout history there have been a few 'good' kings, czars, or emperors, good because it was in their nature. They had the power to make sweeping changes for the good, some did, and sometimes it worked.

    Democracy is an inverted pyramid built of impractical, hare-brained, or just plain evil ideas that originate in the minds of people who would be more helpful if they were in a coma. Elected leaders are a distillation of their lunacy. Democracy works to make things not work since it is a centrally planned economy by other means.

    China is not saddled with the inevitable mass stupidity and eventual failure of democracy. If it chose to, Hong Kong could become its future economic model. Not likely, but conceivable.

    “China has one supreme advantage not shared by the US, Japan, or S Korea”.

    Neither Japan nor S Korea were democracies in the sense the West understood it. During years of Japan good times, that basically means the first sixty years after WWII, Japan was a defacto one party state. In fact the LDP was so dominant that it ruled for some sixty odd years uninterrupted right after WWII. South Korea was an outright non-democracy during its take off years. S Korea was run by a military government allied with the US well into the early 90s.

    So may be China shared one advantage with Japan and S Korea but not the US?

    Read More
  8. I read in somewhere that one of the explanations to the long japanese recession was that they save too much money, resulting in an internal consumer market progressively monotonous, not counting the downsizing of the younger age groups.

    Based on Rushton-esque macro-races comparisons, afro-black descendents TEND TO –OR–have a higher proportion of people who are compulsive consumers and east asians or asia-”yellow” populations have the otherwise situation, a ”excess’ of people who are ”savers” consumers.

    Japan enriched more than South Korea, even because of its population size, resulting in a comparative higher per capita income and now, it seems that will increase more by the lack of young people risking, and the excess of older people ( which are among the richest in the country) than for growth ” normal ” of the economy.

    Read More
  9. Spandrell says: • Website

    You must understand that managing South Korea is one thing. Managing Japan is another thing.

    Managing China is orders of magnitude harder. There are transaction costs in just keeping the thing together.
    Even ignoring resource constraints; China as a whole just will never be as rich as Korea, let alone Japan.

    Read More
  10. 5371 says:
    @Spandrell
    You must understand that managing South Korea is one thing. Managing Japan is another thing.

    Managing China is orders of magnitude harder. There are transaction costs in just keeping the thing together.
    Even ignoring resource constraints; China as a whole just will never be as rich as Korea, let alone Japan.

    [just]

    Count me convinced!

    Read More
  11. Anonymous says: • Disclaimer

    GDP per capita 1990 International GK$

    Click “Maddison Project Database” for data:

    http://www.ggdc.net/maddison/maddison-project/data.htm

    USA (1852) – $2022
    USA (1872) – $2541
    USA (1892) – $3728
    USA (1920) – $5552
    USA (1950) – $9561
    USA (1980) – $18577
    USA (2010) – 30491

    Canada (1881) – $2040
    Canada (1901) – $3097
    Canada (1921) – $3357
    Canada (1941) – $6051
    Canada (1950) – $7291
    Canada (1980) – $16176
    Canada (2010) – $24941

    Australia (1848) – $2121
    Australia (1868) – $3156
    Australia (1888) – $4504
    Australia (1920) – $4766
    Australia (1950) – $7412
    Australia (1980) – $14412
    Australia (2010) – $25584

    Argentina (1883) – $2116
    Argentina (1903) – $2992
    Argentina (1923) – $3898
    Argentina (1950) – $4987
    Argentina (1980) – $8206
    Argentina (2010) – $10256

    Brazil (1958) – $2111
    Brazil (1978) – $4678
    Brazil (1998) – $5334
    Brazil (2010) – $6879

    Chile (1891) – $2099
    Chile (1911) – $2887
    Chile (1931) – $2218
    Chile (1950) – $3670
    Chile (1980) – $5680
    Chile (2010) – $13883

    Mexico (1942) – $2032
    Mexico (1960) – $3155
    Mexico (1980) – $6320
    Mexico (2010) – $7716

    Venezuela (1925) – $2081
    Venezuela (1950) – $7462
    Venezuela (1980) – $10139
    Venezuela (2010) – $9874

    Uruguay (1870) – $2181
    Uruguay (1890) – $2147
    Uruguay (1910) – $3136
    Uruguay (1930) – $4301
    Uruguay (1950) – $4659
    Uruguay (1980) – $6555
    Uruguay (2010) – $11526

    India (2003) – $2130
    India (2009) – $3372

    Thailand (1976) – $2091
    Thailand (1996) – $6820
    Thailand (2010) – $9372

    Philippines (1975) – $2033
    Philippines (1995) – $2193
    Philippines (2010) – $3024

    Taiwan (1967) – $2070
    Taiwan (1980) – $5260
    Taiwan (2000) – $16628
    Taiwan (2010) – $23292

    Malaysia (1969) – $2005
    Malaysia (1989) – $4789
    Malaysia (2010) – $10094

    Iran (1959) – $2024
    Iran (1979) – $4817
    Iran (1999) – $4141
    Iran (2010) – $6456

    Israel (1950) – $2817
    Israel (1970) – $8101
    Israel (1980) – $10984
    Israel (1990) – $13067
    Israel (2000) – $16985
    Israel (2010) – $19171

    Lebanon (1950) – $2429
    Lebanon (1970) – $2917
    Lebanon (1990) – $1936
    Lebanon (2008) – $4453

    Cape Colony/South Africa (1939) – $2053
    Cape Colony/South Africa (1959) – $2995
    Cape Colony/South Africa (1979) – $4232
    Cape Colony/South Africa (1999) – $3810
    Cape Colony/South Africa (2010) – $5080

    Read More
  12. Mitleser says:
    @Commenter
    Both Japan and South Korea owe their fortunes to exports, and even in the case of Japan the domestic market is nowhere near sufficient, and increasingly less so. So their development into advanced economies was and still is a function of western markets, and the US business cycle in particular.

    China's fast development since it opened up has been built on the same foundation but China does have the demographic strength to have a sufficiently large domestic market. Chinese brands, eg car makers, smartphone manufacturers, web services etc...should find enough internal (and more or less, captive) demand to create world class products with gigantic consumer bases and then export them all over the world by dumping local markets. On paper, this gives China an advantage that Japan, South Korea, Germany can never have and that even the US could not utimately match. Could this even lead China to blow up the so called US etalon, in the long term?

    No wonder Americans are actively building all sorts of barriers to check China's global reach...

    On paper, this gives China an advantage that Japan, South Korea, Germany can never have and that even the US could not utimately match.

    Germany does have that advantage via the European common market.

    Read More
  13. Who’s next? We’re past due for a new East Asian Tiger.

    Read More
    • Replies: @Cicerone
    If you check around by average IQ and GDP per capita and look at the distortions from the true trend, then Vietnam is the most promising candidate, followed by North Korea, China (yes, China is still way behind), Ukraine, Armenia, the Palestinean Territories and Moldova. Probably Bangladesh and Myanmar also belong to this group. According to HBD theory these countries should experience the fastest GDP growth, however war or institutions prevent that at the moment.

    On the opposite side are the countries that are much richer than what their education systems and average IQs can sustain. The nature of these countries is very obvious: Bahrain, Kuwait, Oman, Saudi Arabia, Qatar, UAE but also Luxemburg.

  14. anonymous says: • Disclaimer

    A lot of the projections taking place assume one thing that was left out of the article. The continued dominance of the US dollar ie dollar hegemony.

    Japans per capita GDP would have easily surpassed Americas if they did not foolishly devalue their currency, something China is not pursuing.

    What is more likely to happen is that after a great period of turmoil, the US will see a regression to the mean and Chinas wealth will surpass the US.

    Read More
  15. But this does not have to apply to China, since its level of economic development had been artificially suppressed by Maoist economic lunacy prior to the 1980s.

    Without the Mao period, China would remain dominated by foreign imperialism.

    Read More
  16. Anonymous says: • Disclaimer

    Figures are GDP per capita (nominal basis).

    See this IMF table https://en.wikipedia.org/wiki/List_of_countries_by_past_and_projected_GDP_(nominal)_per_capita#IMF_estimates_between_1990_and_1999

    In 1990 Japan was $25,000 v $24,000 for the US
    In 2000 Japan was $37,000 v. $36,400 for the US

    So I think Japan is past its peak. For about 10-15 years it held at 100% US levels. Then it got older.

    Also as Japan industrialized before WWII, it’s experiences post-WWII aren’t comparable to the other Asian countries. In 1970, when Japan was at $2,000, it was 40% of US GDP per capita. In 2015, with China at $8,000, it’s 15% of US GDP per capita. So China is still quite a bit behind where Japan was in 1970.

    Read More
  17. Brohemius says:

    I agree with the author’s thesis. I think the Chinese (generally speaking) should develop their own version of Korea’s Hangul. National pride and complacency, however, are still blocking the road to progress. (How well we know about pride and complacency here in North America!) I have been referring to this problem as “China’s Great Linguistic Wall.”

    In the meantime, until the inevitable conceptual breakthrough in China, Korean has a great future as a “lingua franca”, at least in the Asian-Pacific region. The Japanese system (or systems) are a bit more complex than Korea’s.

    I’m sure a few professional linguists will take exception to all this, but I welcome their observations.

    Read More
    • Replies: @spandrell
    "Korean has a great future as a “lingua franca”, at least in the Asian-Pacific region."

    Stupidest thing I've read in years.

    Korean chauvinism might be the stupidest ideology this side of Black Egyptianism.
  18. spandrell says: • Website
    @Brohemius
    I agree with the author's thesis. I think the Chinese (generally speaking) should develop their own version of Korea's Hangul. National pride and complacency, however, are still blocking the road to progress. (How well we know about pride and complacency here in North America!) I have been referring to this problem as "China's Great Linguistic Wall."

    In the meantime, until the inevitable conceptual breakthrough in China, Korean has a great future as a "lingua franca", at least in the Asian-Pacific region. The Japanese system (or systems) are a bit more complex than Korea's.

    I'm sure a few professional linguists will take exception to all this, but I welcome their observations.

    “Korean has a great future as a “lingua franca”, at least in the Asian-Pacific region.”

    Stupidest thing I’ve read in years.

    Korean chauvinism might be the stupidest ideology this side of Black Egyptianism.

    Read More
  19. Cicerone says:
    @Fidelios Automata
    Who's next? We're past due for a new East Asian Tiger.

    If you check around by average IQ and GDP per capita and look at the distortions from the true trend, then Vietnam is the most promising candidate, followed by North Korea, China (yes, China is still way behind), Ukraine, Armenia, the Palestinean Territories and Moldova. Probably Bangladesh and Myanmar also belong to this group. According to HBD theory these countries should experience the fastest GDP growth, however war or institutions prevent that at the moment.

    On the opposite side are the countries that are much richer than what their education systems and average IQs can sustain. The nature of these countries is very obvious: Bahrain, Kuwait, Oman, Saudi Arabia, Qatar, UAE but also Luxemburg.

    Read More
  20. The trick is the demographic window of opportunity, when during the demographic transition, you have a large majority of people of working age than of dependents such as the elderly and children. Japan, already had a modern industrial structure before the second war, while South Korea, it seems, did not, or was less imponent than the Japanese.

    It seems Japan grew all it had to grow, while South Korea did not, was still in development when the Asian crisis broke out in 97 and when it began to age prematurely.

    Read More

Comments are closed.

Subscribe to All Anatoly Karlin Comments via RSS
PastClassics
Are elite university admissions based on meritocracy and diversity as claimed?
A simple remedy for income stagnation
Confederate Flag Day, State Capitol, Raleigh, N.C. -- March 3, 2007
The major media overlooked Communist spies and Madoff’s fraud. What are they missing today?
The evidence is clear — but often ignored