last lecture_china’s miraculous growth_winter2009

8/6/2019 Last Lecture_Chinas miraculous growth_winter2009

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Chinas miraculous growth:

or is it?

Last Lecturehuhu!

Part I


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Why unexpected?

China exhibits a remarkable combinationof high-speed growth and deeply flawedinstitutions (Loren Brandt and TomRawski)


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Chinas per capita GDP (at PPP)

in the last one thousand years

0

100

0

2000

3

000

4000

1850 19781000 1100 1200 1300 1400 1500 1600 1700 1800 1900 2000


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The worlds average per capita

GDP (at PPP)

0

2000

40

00

6000

1850 1978

1000 1100 1200 1300 1400 1500 1600 1700 1800 1900 2000

China World


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100

200

300

400

500

1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000year

China (1978-2001, +1.5% each year)

South Korea (1978-2001)

China (1978-2001)

Taiwan, China (1978-2001)

Japan (1978-2001)

Chinas growth seems to be thefastest: GDP per head at PPP, semi-

log

Source: Angus Maddison (2003)


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Is Chinas growth unusual Realigning the starting points

Japan: 1950

Taiwan, China: 1958

South Korea: 1962

China: 1978


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China is similar to East Asianeconomies: GDP per head at PPP,

semi-log

100

200

300

400

500

600

800

1000

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29year

Japan (1950-1973)

Taiwan, China (1958-1987)

South Korea (1962-1990)

China (1978-2001)

China (1978-2001, +1.5% each year)

Source: Angus Maddison (2003)


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The rule of law index

Note: From 0 to 100, the higher the score, the better the rule of law.Source: Kaufmann, Kraay and Mastruzzi (2005), Governance Matters IV: Governance Indicators for 1996-2004.

Country/Region 2004 2002 2000 1998 1996

Singapore 95.7 92.3 98.9 99.5 99.4

Hong Kong 90.3 84.7 90.4 90.8 90.4

Japan 89.9 88.3 90.9 90.3 88.0

Hungary 78.7 77.6 78.6 76.2 75.3

South Korea 68.6 76.5 73.8 76.8 81.9

Malaysia 64.7 67.9 71.1 76.8 82.5

Turkey 54.6 53.1 59.9 65.9 58.4

Thailand 51.7 60.2 69.0 69.2 71.1

India 50.7 55.6 62.0 67.0 56.6

Romania 48.3 52.0 51.9 49.7 44.0

Brazil 46.9 45.9 53.5 56.8 46.4

Mexico 45.9 47.4 46.0 40.0 54.2

China 40.6 48.5 48.7 52.4 37.3

Peru 31.9 36.7 38.5 37.3 40.4

Russia 29.5 21.4 18.7 22.7 19.9

Ukraine 23.2 21.4 26.2 23.2 28.3


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The regulatory quality indexCountry/Region 2004 2002 2000 1998 1996

Hong Kong 99.5 89.3 98.4 98.4 98.9

Singapore 99.0 99.0 100.0 100.0 99.4

Hungary 86.7 84.2 88.2 88.0 74.6Japan 83.7 78.1 81.8 69.0 82.3

South Korea 71.9 75.5 69.5 58.2 78.5

Mexico 68.0 66.8 76.5 75.5 74.0

Malaysia 64.5 69.4 64.2 70.1 82.9

Brazil 58.1 63.3 64.7 57.1 60.2

Peru 57.1 62.2 73.3 81.5 76.2

Thailand 51.2 64.8 77.5 56.0 69.6

Romania 49.8 55.1 35.8 58.2 30.4

Turkey 48.8 55.6 55.1 80.4 71.3

China 35.0 37.8 36.9 42.9 47.0

Ukraine 33.5 27.0 11.2 17.9 23.8

Russia 30.5 43.4 5.3 31.5 31.5

India 26.6 43.4 38.5 41.8 44.2

Note: From 0 to 100, the higher the score, the better the regulatory quality.Source: Kaufmann , Kraay and Mastruzzi (2005), Governance Matters IV: Governance Indicators for 1996-2004.


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Corruption perception index

Country/Region 2004 Rank 2004 Score

Finland 1 9.7

Singapore 5 9.3

Hong Kong 16 8.0

United States 17 7.5Mexico 64 3.6

Thailand 64 3.6

Peru 67 3.5

China 71 3.4

Turkey 77 3.2Romania 87 2.9

Russia 90 2.8

India 90 2.8

Ukraine 122 2.2

Source: Transparency International.


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Are Chinas institutions deeplyflawed

But the measured quality of its institutionscorresponds to its level of development(per capita GDP)


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39676

29251

25047

20499

13296

9902 8833 8195

5896 3609 31391670 1140

0

1 0

, 0 0 0

2 0

, 0 0 0 3 0

, 0 0 0

4 0

, 0 0 0

U . S .

J a p a n

S p a

i n

K o r e a

A r g e n

t i n a

R u s s

i a n

W o r l

d

B r a z

i l

C h i n

a

I n d

o n e s

i a

I n d i a

B a n g

l a d

es

h

K e n y a

Source: UN Human Development Report 2006.

China is still below the worldsaverage in per capita GDP at PPP

(US$, 2004)


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Corruption perception and per capitaGDP

0

.5

1

1

.5

2

2.5

lnCPIby

Transparency

Interna

tiona

l

1/64 1/32 1/16 1/8 1/4 1/2 1

GDP per capita at international price (U.S.=1) by PWT (2000)

ln(CPI) Fitted values

CHN


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Take away message

Chinas growth IS miraculous But, it is just one of many East Asian miracles

Biggest part of the miracle is that it matters

to the Rest of the World because China is so big

it is still Communist/Totalitarian

It is China reasserting itself

It is happening with flawed institutions But, all countries at Chinas levels of

development have flawed institutions [sothat is not anything really special]

last lecture_china’s miraculous growth_winter2009

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