Read that article, very interesting. The West thought it was inevitable that the big developing nations like China would ultimately follow the West's model. Turns out the West was wrong.
I am not sure what they mean by the word "rise". State-owned enterprises were always there in the developed economies. They didn't rise today.
It's just that their market share and capitalisation only recently started to expand.
Anyway, rapid growth rates in the Third World are a true but trivial point.
It's basic mathematics.
An increase in industrial output by $40 billion in a $1 trillion economy is a 4% increase.
An increase in industrial output by $10 billion in a $100 billion economy is a 10% increase.
Rapid growth rates in emerging markets - Brazil, India, China,.etc - are more indicative of how low their industrial output currently is than how much they are actually producing.
Either way, if incomes of Chinese people uniformly rise at 10% p.a. for several consistent years, than by the end of the decade, they shall be as wealthy as....Turkish people. (Chinese PCI is half of Turkish PCI)
In some ways they are following the development of the West, but the free market economists of the West have not interpreted their history correctly. See - Ha-Joon Chang
Obviously the world is a little different now as it's more industrialized and has room for mega-corporations but the states had a hand in the development of Western economies.
I have to second Anonymous at 10:28 PM. It is interesting that you rarely hear about the various government policies that aided in the development of the Western countries. Is this the result of the decline of economic history as a field of study within economics programs?
My understanding is that prior to the period of neoclassical dominance, economic history was a common course of study for economics students. Now the emphasis is on mastering the neoclassical models.
I am not sure if my information is correct, but it would seem that a lack of historical background into how economies actually worked in reality would certainly hurt the scientific credibility of a practical field like economics.
Lord Keynes, you should read Ian Bremmer's The End of the Free Market: Who Wins the War Between States and Corporations? because it's an excellent book that touches on exactly this issue.
Read that article, very interesting. The West thought it was inevitable that the big developing nations like China would ultimately follow the West's model. Turns out the West was wrong.
ReplyDeleteI am not sure what they mean by the word "rise". State-owned enterprises were always there in the developed economies. They didn't rise today.
ReplyDeleteIt's just that their market share and capitalisation only recently started to expand.
Anyway, rapid growth rates in the Third World are a true but trivial point.
It's basic mathematics.
An increase in industrial output by $40 billion in a $1 trillion economy is a 4% increase.
An increase in industrial output by $10 billion in a $100 billion economy is a 10% increase.
Rapid growth rates in emerging markets - Brazil, India, China,.etc - are more indicative of how low their industrial output currently is than how much they are actually producing.
Either way, if incomes of Chinese people uniformly rise at 10% p.a. for several consistent years, than by the end of the decade, they shall be as wealthy as....Turkish people. (Chinese PCI is half of Turkish PCI)
In some ways they are following the development of the West, but the free market economists of the West have not interpreted their history correctly. See - Ha-Joon Chang
ReplyDeleteObviously the world is a little different now as it's more industrialized and has room for mega-corporations but the states had a hand in the development of Western economies.
I have to second Anonymous at 10:28 PM. It is interesting that you rarely hear about the various government policies that aided in the development of the Western countries. Is this the result of the decline of economic history as a field of study within economics programs?
ReplyDeleteMy understanding is that prior to the period of neoclassical dominance, economic history was a common course of study for economics students. Now the emphasis is on mastering the neoclassical models.
I am not sure if my information is correct, but it would seem that a lack of historical background into how economies actually worked in reality would certainly hurt the scientific credibility of a practical field like economics.
Lord Keynes, you should read Ian Bremmer's The End of the Free Market: Who Wins the War Between States and Corporations? because it's an excellent book that touches on exactly this issue.
ReplyDeletehttp://www.amazon.com/End-Free-Market-Between-Corporations/dp/1591843014