From Divergence to Convergence: Reevaluating the History Behind China's Economic Boom

Abstract

China's long-term economic dynamics pose a formidable challenge to economic historians. The Qing Empire , the world's largest national economy prior to the 19th century, experienced a tripling of population during the 17th and 18th centuries with no signs of diminishing per capita income. In some regions, the standard of living may have matched levels recorded in advanced regions of Western Europe.However, with the Industrial Revolution a vast gap emerged between newly rich industrial nations and China's lagging economy. Only with an unprecedented growth spurt beginning in the late 1970s has the gap separating China from the global leaders been substantially diminished, and China regained its former standing among the world's largest economies. This essay develops an integrated framework for understanding this entire history, including both the long period of divergence and the more recent convergent trend. The analysis sets out to explain how deeply embedded political and economic institutions that had contributed to a long process of extensive growth subsequently prevented China from capturing the benefits associated with new technologies and information arising from the Industrial Revolution. During the 20th century, the gradual erosion of these historic constraints and of new obstacles created by socialist planning eventually opened the door to China's current boom. Our analysis links China's recent economic development to important elements of its past, while using the success of the last three decades to provide fresh perspectives on the critical obstacles undermining earlier modernization efforts, and their removal over the last century and a half.

Asia’s little divergence: state capacity in China and Japan before 1850

“…Our work significantly extends his model by incorporating public goods provision and offers new comparative empirical evidence by bringing Japan into the picture. Our approach is complementary to Brandt et al (2014), who provide a comprehensive survey of the long-run evolution of the Chinese political economy since the tenth century.…”

“…Rozman (1973) calculated that in 1800, Japan's urbanization rate (16.5 %) was more than twice that of China (5.5 %), and "the most urbanized province of China [Zhili] was considerably less urban than the least urbanized region of Japan [Tohoku]" (Table 1c). Some scholars have pointed out that conventional measures of urbanization may have underestimated China's true level of urbanization, for these measures overlook the proliferation of small market towns in early modern China (Li 2000;Brandt et al 2014). Our comparative analysis shows that the lack of state leadership in solving urban collective action problems may help to explain why, instead of seeing its largest cities growing, China's "urbanization" took such a unique path.…”

Why did the knowledge transition occur in the West and not in the East? ICT and the role of governments in Europe, East Asia and the Muslim world

“…While many studies focus on China [e.g. Pomeranz 2000;Landes 2006;Brandt, Ma, and Rawski 2014], Korea appears to have received -somewhat surprisinglyonly little attention in Western economic literature. This makes the analysis of the Korean case even more valuable.…”

Early globalizations: The integration of Asia in the world economy, 1800–1938

“…Yet, at the same time, the Asian countries (with the partial exception of Japan) fell increasingly behind the advanced European ones (Broadberry 2013), in spite of rapidly growing exports (Federico and Tena 2013). Some scholars have tackled the paradox posed by this "great divergence" (Pomeranz, 2000) by pointing out that exports of primary products did benefit the Asian economies, but their effect was too small to foster economy-wide growth (Feuerwerker 1980, Booth 1988, Tomlison 1993 der Eng 1996, Roy 2000, Brandt et al 2013. Others blame the colonial powers for forcing the Asian economies to export primary products, thus damaging their growth potential (Dutt 1969, Parthasarathi 2011).…”