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During the past five years, I have seen many similar charts. But this one really stands out as the best story-teller.
How the Great Recession and European debt crisis have turned back the growth “clock” of most advanced economies, sometimes more than ten years. Looks like Ken Rogoff was right: this is not Great Recession; it’s Great Contraction.
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Source: Economist Mag.
Nobelist Michael Spence discusses with Charlie Rose on the next convergence, where China and India and other emerging economies potentially catch up with the industrialized world.
The convergence is in reference to the Great Divergence that sent Great Britain, France and other Western European countries into the leading world economies.
This transition, most likely, will not be smooth. I am writing a paper on what could stall fast developing economies, like China, into a middle-income trap, where income growth becomes stagnant and gets stuck in around $12-15K range.
An interesting question ask, and a nice debate to watch.
My 2 seconds on this: China’s TOTAL GDP, now about 1/3 of the US, will catch up with the US in around 2020-2025 – for this I have no doubt. China is not another Soviet Union – China’s political party is still called Communist Party, but if you ever travel to China, and talk to the average people there, you will immediately know China is the most capitalist country in the world – travel makes you smarter 🙂
The much more difficult task is to lift the living standards of average Chinese citizen to the US level – China’s GDP per capita is only 1/10 of the US – and build up stronger and better institutions, especially political and legal ones, to sustain the long-term growth. For this, China has a lot to learn from the US.