The historical roots of East Asia’s growth miracle

I’ve mentioned before my beef with the so-called puzzle that “[insert African nation here] and [insert Asian nation here] had the same income per person in 1950, and yet look at the difference now.”

Income levels in 1950 were not, it seems, the best guide to why some countries became rich and why some stayed poor. The understudied field of development history has much to teach us. One recent example:

In this paper, we provide aggregate trends in China’s trade performance from the 1840s to the present. Based on historical benchmarks, we argue that China’s recent gains are not exclusively due to the reforms since 1978. Rather, foreign economic activity can be understood by developments that were set in motion in the 19th century.

We turn our focus to Shanghai, currently the world’s largest port. Shanghai began direct trade relations with western nations starting in 1843. By 1853, Shanghai already accounted for more than half of China’s foreign trade.

In tracking the levels and growth rates of the city’s net and gross imports and exports, foreign direct investment, and foreign residents over more than a century, we find that Shanghai’s level of bilateral trade today with the United States, the United Kingdom, or Japan, for example, are by no means high given Shanghai’s 19th century experience.

This paper argues that a regional approach that embeds national trading destinations within an international trading system provides a meaningful approach to understanding the history of China’s trade.

A new working paper by Keller, Li, and Shiue.

I am also fond of this Keller paper on ‘Why the industrial revolution in Western Europe and not China?’

And yes, I have development historian envy.