Regional perspectives - China Flashcards
What has Chinas GDP and GDPpc journey been like
and poverty
- greatest economic and political powers in medieval period
- their economic growth started late
- have had a huge increase in GDP
- not caught up in terms of GDPpc
- eliminated poverty by 2015
what is Chinas gov like
communist regime
without full democratic representation
historically how was china an economic leader
- led the world in technology (gun powder)
- urbanisation = good proxy for economic development
- high level of state capacity
what is the great divergence
- China was historically a leader
- but then 1700-1800 they fall behind
What is the California School view
Pomeranz (2000)
similar assumption
- China and europe were very similar 1600-1900
- the divergence only seen because of the British industrial revolution
- due to britain having better access to coal and colonies
- China and europe = similar factors of production, economic conditions, levels of development
what are the 3 main points opposing the California school
C and E never started at similar levels
1. living standards
2. institutions
3. integrated markets
what were the claimed similarities between E and C
what was the difference
agricultural productivity
transport
institutions
innovation
Europe = better place to extract coal, access to cheap coal, access to cheap materials from colonies
why was coal important for growth in europe
- areas of europe that had better access to coal develop more early on compared to those that dont
- associated with growth and urbanisation
- coal = helped industrial revolution
but why did china not catch up when technology developed beyond coal
could have used oil, gas, water
- other resources available to fuel chinese growth that wasnt used
- so maybe coal was not big factor
- coal would have played a historic role but not anymore
opposition to california school - GDP
- GDPpc between leading regions were never the same
- E always been higher than C except for 1100
opposition to california school - market integration
- market integration highest across English markets
- more integrated than C markets
- measured by how different prices are across places within the same region
- grain price convergence
opposition to california school - living standards
- big gap in wealfare between C and E
- all european cities have higher real wages compared to Beijing
opposition to california school - institutions
China
* lower state capacity
* lower state revenue
* didnt have growth friendly institutions
- land tax officiers = extract more rent from people
- reduces revenue, collusion and corroption, landownders being over taxed
- reverse incentives to innovate and increase agricultural productivity
what are policies introduced by Mao
- central planning - develop industrial sector
- FP/MP - stabilize inflation
- reconstruction effects
- exporpriation of elite
- land reform - redistribute land
how did Mao fail
- during Mao period 1949-1978 = growth stagnated
- unsuccessful policies
- unsuccessful in government led industrialisation
- after Mao = saw growth
- didnt increase productivity
how did Mao succeed
- maybe created a basis for fast growth after 1978
-improvements to education and health care evidence, expansion of industrial sector
why did Mao fail to see increase in economic growth and productivity
- suceeded in accumulating factors of production - moving K and L from agriculture to manufacturing
- but no imporvement in efficiency in which factors were used
- limited TFP growth
- unsuccessful structural transformation - needs TFP growth
what was the reason behind the failed structural transformation
extractive economic institutions = not growth friendly
* limits to private profit - price controls
* corruption and fear
* policies that restrict labour mobility - can take advantage of productivity gains
what was the great leap forward
objective = facilitate industrialisation by forcibly moving L from agriculture to industry and shifting K
- result = huge famine
- no increase in producivity in agriculture/industrial sector
what were the bad policies behind the great leap forward
- full collectivisation of agricultural produce - no incentive to increase productivity - all given to state to redistribute
- no labour mobility - without permission
- production quotas, price controls - couldnt sell produce on market
- enforced by army
- pressure on local admins to meet production quota - means they would lie
- extensive margin growth = no gains to GDPpc (low wages + high prices)
what happened with great famine
stats
- shifted labour
- drop in A production
- increase in mortality
- fertility rates lowered
- drop in growth rates
can we plausibly say that Mao helped education and health care - prerequists for growth
- no because they were already on an upward trend before Mao
- but Mao didnt prevent this growth
why did GDPpc stagnate in Mao era
- low nominal wages = no growth in productivity
- high prices = inefficient
what are the 3 post mao policies that generated producivity gains
- end of price control
- openness to trade
- SEZ
post Mao - end of price controls
- profit maximising innovation
- incentive to be more efficient
- people can sell on market at fair prices
post Mao - openness to trade
- advantages from export-led growth
- attribute from Mao period = low labour costs - attracted FDI
- reduced tariffs
post Mao - special economic zones
- 0 barriers to trade
- tax incentives for FRDI
what are the 3 direct policies aimed to provide better incentives
- reforms to preexisting communist institutions
- household responsibility system
- contract management responsibility
- township and village enterprise
household responsbility system
- land assigned for 15 years, sell gov a quota of produce at fixed price, sell rest for own profit
- introduce market incentives
- reform of collective farming - cause of famine
- increased agricultural output - was stagnant before
post mao improvements to proximate causes of growth
- what were they and what were the improvements
- savings and investment
- saving schemes = higher life expectancy = solow model
- state banks channel investments to manufacturing - education and health
- HC and K productivity - structural transformation
- move L from low to high productivity sectors - increases TFP
- economies of scale = reduced MC, positive spillovers
what are some of chinas downfalls today in terms of polcies
- one child policy - old population now
- private activity under control of CG
- can limit profits - SEZ created spatial inequality
