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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).
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.