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A Metric for Growth Speeds

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Mahalanobis quotes Peter C.B. Phillips and Donggyu Sul,

the fastest learning countries are China, India and the East Asian group. Remarkably, China has experienced over four centuries of base trajectory OECD growth in the last 52 years taking it to year 1917 levels on the OECD trajectory. India and the East Asian group of countries have experienced more than three and a half centuries of base trajectory growth in 52 years, taking them to mid-nineteenth century OECD levels of income.

It took me a few moments to understand what the authors were doing, but it is an interesting metric. They take each region of the world and look at per capita income 52 years ago. They then match this up with the year that the OECD reached that level of income. This gives the "OECD year" the other region started from. Then they look at the region's most recent per capita income and figure out its "OECD" year. That way, you measure the region's economic growth in OECD years.

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COMMENTS (5 to date)
Michael Parekh writes:

Great post. Do they have any forward projections from 2005 onward?

Jacqueline writes:

Fun and all, but how good is the data, really?

Dan Landau writes:

The comparison is misleading. The OECD countries were growing slower between 1500 and 1950, than over the 1950-2001 period. To compare the growth of other countries over the 1950-2001 period to the OECD before 1950 is misleading. It is easy now to grow faster than in 1500, 1700, or even 1850. That is not a great achievement.

Many of the countries compared with the OECD of course grew quite rapidly between 1950 and 2001. But comparing this growth with 1500-1950 makes it look better than it was. China in 1950 had automobiles, airplanes, electricity, etc., just not enough of them. The OECD countries did not have these things in 1500.

Mr. Econotarian writes:

What is it good for? Extrapolating reasonable regulations.

If a country is at the OECD level of 1890, you can expect that application of labor regulations enacted in OECD countries after 1890 will result in growth of the informal economy in that country (and a rise in the growth-reducing results of increased informality).

John S Bolton writes:

This shows up the problem of comparing catch up growth with the original, which had to invent the means of productivity increase. A baby learning language does not have to invent the concepts learned, so the growth rate can be high at the start, but it cannot continue very long at very high rates. Likewise catch up growth should be expected to slow down on average, with each decade as it approaches the point where it would have to generate new methods of productivity enhancement. The incentive to substitute capital for labor in a given operation, must be less as labor supply at low wagesis greater.China has to use influx control for its cities, also to avoid this effect.

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