Return of China in World Economy?

Economix Blog has a super post on how Chinese economy is making a comeback on its share in World GDP.

The chart above shows the percentage of the world’s economy contributed by China during the last two centuries. As you can see, China held a far bigger share of the world’s economy in 1820 than it does today. From the early 19th century until the mid-20th century, China’s share of global output fell steadily, troughing at about 4 percent of world G.D.P. in the 1960s.

The United States, on the other hand, constituted a mere pittance of world output in the early days of the republic, and then grew steadily up until the Great Depression. It shot up during World War II, and then began to decline and eventually flatten out over the subsequent decades.

How to explain these trends?

As the O.E.C.D.’s Jérome Cukier notes, a country’s share of world output was, until about 200 years ago, strongly correlated with a country’s population size. This partially explained why China, with its huge population, took up so much of the world economy for so long.

But then factors like “colonization, innovation and openness to trade and capital flows” helped change things, Mr. Cukier writes, and economic size began to divorce itself from population size. Western countries shot ahead of China in their share of global economy through much of the last century. Until, that is, China began to catch up and eventually outpace its competitors in the development game more recently.

In other words, China’s plentiful and cheap labor is only part of the key to its rapid growth in the last few decades; what appears to have really made the difference, not surprisingly, is its greater economic interaction with the rest of the world.

Fascinating stuff.

16 Responses to “Return of China in World Economy?”

  1. Taiwan: the other, quieter China » China, Taiwan, EconomicsIBM, Mostly, Economy, Creates » Laptop Answers Says:

    […] Return of China in World Economy? « Mostly Economics […]

  2. iPhone Center » iPad App Store Screenshots Leaked Says:

    […] Return of China in World Economy? « Mostly Economics […]

  3. BIG QUESTION: WILL WE REALLY PAY LESS FOR HEALTH CARE? | AMERICA-Where Are You? Says:

    […] Return of China in World Economy? « Mostly Economics […]

  4. Newbie Knockout | Games Electronics Gizmos Says:

    […] Return of China in World Economy? « Mostly Economics […]

  5. Planning your Disney World Trip Says:

    […] Return of China in World Economy? « Mostly Economics […]

  6. Popularity Of Online Bingo Game Says:

    […] Return of China in World Economy? « Mostly Economics […]

  7. Furnace Fat Burning Review Scam | SALSA SHOES Says:

    […] – The Ultimate Debt Solution?HVAC People…new furnace & ac question? | My Efficient PlanetReturn of China in World Economy? « Mostly EconomicsBodybuilding.coms – THOUGHTS OF A FITNESS FREAK – The Fitness Life …Watch UFC 111: […]

  8. Make a Fashion Statement with a Baby Phat Purse | Baby Phat Purse Review Says:

    […] Return of China in World Economy? « Mostly Economics […]

  9. Why You Should Never Cancel Your Health Insurance | Florida Individual Health Insurance Quotes Says:

    […] Return of China in World Economy? « Mostly Economics […]

  10. Apple Mobile Phone the World at Your Disposal | APPLE CELL PHONES Says:

    […] Return of China in World Economy? « Mostly Economics […]

  11. Mr 40 Money Dot Com » Blog Archive » A New Beginning Down Under Says:

    […] Return of China in World Economy? « Mostly Economics […]

  12. Mitchell Says:

    How has your life been different than what youd imagined?

  13. Cash Gifting Failure | The Peoples Program with Mike Renville Says:

    […] Return of China in World Economy? « Mostly Economics […]

  14. bigben_usa Says:

    No doubt prior to the age of industrialization, population had much to do with the total size of an economy. Before industrial Revolution, agriculture was the often the key factor. The is also the main reason why China had such a huge population – because it was the most advanced in agriculture. It went through the so called “agriculture revolution” centuries ahead of the West. Its agriculture yield was way ahead of Europe until the 1700s. It required less people to produce the same quantity of food than elsewhere, allowing its labor to engage in other activities, lifting overall productivity. Per capita income was difficult to measure in the ancient world, but there were strong indications that ancient China had greater access to discretionary goods that Europe.

  15. select your broker Says:

    The acronym was prominently used by Jim O’Neill of Goldman Sachs in 2001. According to a paper published in 2005, Mexico and South Korea are the only other countries comparable to the BRICs, but their economies were excluded initially because they were considered already more developed. Goldman Sachs argued that, since they are developing rapidly, by 2050 the combined economies of the BRICs could eclipse the combined economies of the current richest countries of the world

  16. unicon india Says:

    Goldman Sachs argues that the economic potential of Brazil, Russia, India, and China is such that they could become among the four most dominant economies by the year 2050. The thesis was proposed by Jim O’Neill, global economist at Goldman Sachs.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.


%d bloggers like this: