IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

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

  • Loren Brandt
  • Debin Ma
  • Thomas G. Rawski

China's long-term economic dynamics pose a formidable challenge to economic historians. The Qing Empire (1644-1911), the world's largest national economy before 1800, experienced a tripling of population during the seventeenth and eighteenth centuries with no signs of diminishing per capita income. While the timing remains in dispute, a vast gap emerged between newly rich industrial nations and China's lagging economy in the wake of the Industrial Revolution. Only with an unprecedented growth spurt beginning in the late 1970s did this great divergence separating China from the global leaders substantially diminish, allowing China to regain its former standing among the world's largest economies. This essay develops an integrated framework for understanding that entire history, including both the divergence and the recent convergent trend. We explain how deeply embedded political and economic institutions that contributed to a long process of extensive growth before 1800 subsequently prevented China from capturing the benefits associated with the Industrial Revolution. During the twentieth century, the gradual erosion of these historic constraints and of new obstacles erected by socialist planning eventually opened the door to China's current boom. Our analysis links China's recent development to important elements of its past, while using recent success to provide fresh perspectives on the critical obstacles undermining earlier modernization efforts, and their eventual removal.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jel.52.1.45
Download Restriction: no

File URL: http://www.aeaweb.org/jel/ds/5201/JEL.52.1.45_ds.zip
Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.

Article provided by American Economic Association in its journal Journal of Economic Literature.

Volume (Year): 52 (2014)
Issue (Month): 1 (March)
Pages: 45-123

as
in new window

Handle: RePEc:aea:jeclit:v:52:y:2014:i:1:p:45-123
Note: DOI: 10.1257/jel.52.1.45
Contact details of provider: Web page: https://www.aeaweb.org/journalEmail:


More information through EDIRC

Order Information: Web: https://www.aeaweb.org/subscribe.html

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Wolfgang Keller & Ben Li & Carol H. Shiue, 2010. "China's Foreign Trade: Perspectives From the Past 150 Years," NBER Working Papers 16550, National Bureau of Economic Research, Inc.
  2. Ray Barrell & Julian Morgan & Nigel Pain, 1996. "The World Economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 157(1), pages 28-57, July.
  3. Macauley, Melissa, 1999. "Aisa, Africa, And Latin America The Confusions of Pleasure: Commerce and Culture in Ming China. By Timothy Brook. Berkeley: University of California Press, 1998. Pp.xxv. 320. $40.00," The Journal of Economic History, Cambridge University Press, vol. 59(04), pages 1106-1107, December.
  4. Tirthankar Roy, 2012. "Consumption Of Cotton Cloth In India, 1795–1940," Australian Economic History Review, Economic History Society of Australia and New Zealand, vol. 52(1), pages 61-84, 03.
  5. Eric Maskin & Yingyi Qian & Chenggang Xu, 1999. "Incentives, Information, and Organizational Form," Working Papers 99009, Stanford University, Department of Economics.
  6. Brandt, Loren & Zhu, Xiaodong, 2001. "Soft budget constraint and inflation cycles: a positive model of the macro-dynamics in China during transition," Journal of Development Economics, Elsevier, vol. 64(2), pages 437-457, April.
  7. repec:sae:niesru:v:169:y::i:1:p:38-54 is not listed on IDEAS
  8. Deng, Kent G, 2003. "Development and Its Deadlock in Imperial China, 221 B.C.-1840 A.D," Economic Development and Cultural Change, University of Chicago Press, vol. 51(2), pages 479-522, January.
  9. Li, Hongbin & Zhou, Li-An, 2005. "Political turnover and economic performance: the incentive role of personnel control in China," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1743-1762, September.
  10. Lin, Justin Yifu, 1995. "The Needham Puzzle: Why the Industrial Revolution Did Not Originate in China," Economic Development and Cultural Change, University of Chicago Press, vol. 43(2), pages 269-92, January.
  11. Feuerwerker, Albert, 1970. "Handicraft and Manufactured Cotton Textiles in China, 1871–1910," The Journal of Economic History, Cambridge University Press, vol. 30(02), pages 338-378, June.
  12. Lawrence J. Lau & Yingyi Qian & Gerard Roland, . "Reform without Losers: An Interpretation of China's Dual-Track Approach to Transition," Working Papers 99010, Stanford University, Department of Economics.
  13. Reyerson, Kathryn, 2006. "Institutions and the Path to the Modern Economy: Lessons from Medieval Trade. By Avner Greif. Cambridge: Cambridge University Press, 2006. Pp. xix, 503. $34.99, paper," The Journal of Economic History, Cambridge University Press, vol. 66(04), pages 1080-1081, December.
  14. Brown, Shannon R., 1979. "The Transfer of Technology to China in the Nineteenth Century: The Role of Direct Foreign Investment," The Journal of Economic History, Cambridge University Press, vol. 39(01), pages 181-197, March.
  15. McAfee, R. Preston & McMillan, John., 1990. "Organizational Diseconomies of Scale," Working Papers 728, California Institute of Technology, Division of the Humanities and Social Sciences.
  16. Ma, Debin, 2008. "Economic Growth in the Lower Yangzi Region of China in 1911–1937: A Quantitative and Historical Analysis," The Journal of Economic History, Cambridge University Press, vol. 68(02), pages 355-392, June.
  17. Perkins, Dwight H., 1967. "Government as an Obstacle to Industrialization: The Case of Nineteenth-Century China," The Journal of Economic History, Cambridge University Press, vol. 27(04), pages 478-492, December.
  18. Kent Deng, 2000. "A critical survey of recent research in Chinese economic history," LSE Research Online Documents on Economics 638, London School of Economics and Political Science, LSE Library.
  19. Williamson, Jeffrey G., 2011. "Trade and Poverty: When the Third World Fell Behind," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262015158, June.
  20. Barry Naughton, 2007. "The Chinese Economy: Transitions and Growth," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262640643, June.
  21. "Rawski, Thomas G.", 1982. "The Simple Arithmetic of Chinese Income Distribution," Economic Review, Hitotsubashi University, vol. 33(1), pages 12-26, January.
  22. Keller, Wolfgang & Shiue, Carol Hua, 2004. "Markets in China and Europe on the Eve of the Industrial Revolution," CEPR Discussion Papers 4420, C.E.P.R. Discussion Papers.
  23. Michael Anderson & Ronald Lee, 2002. "Malthus in state space: Macro economic-demographic relations in English history, 1540 to 1870," Journal of Population Economics, Springer, vol. 15(2), pages 195-220.
  24. Ravallion, Martin & Chen, Shaohua, 2007. "China's (uneven) progress against poverty," Journal of Development Economics, Elsevier, vol. 82(1), pages 1-42, January.
  25. Loren Brandt & Arthur J. Hosios, 2010. "Interest-Free Loans between Villagers," Economic Development and Cultural Change, University of Chicago Press, vol. 58(2), pages 345-372, 01.
  26. Nakamura, James I & Miyamoto, Matao, 1982. "Social Structure and Population Change: A Comparative Study of Tokugawa Japan and Ch'ing China," Economic Development and Cultural Change, University of Chicago Press, vol. 30(2), pages 229-69, January.
  27. Deng, Kent G, 2003. "Development and Its Deadlock in Imperial China, 221 B.C.-1840 A.D," Economic Development and Cultural Change, University of Chicago Press, vol. 51(2), pages 479-522, January.
  28. Shahid Yusuf & Kaoru Nabeshima & Dwight H. Perkins, 2005. "Under New Ownership : Privatizing China's State-Owned Enterprises," World Bank Publications, The World Bank, number 7399, October.
  29. Ma, Debin, 2012. "Political Institution and Long Run Economic Trajectory: Some Lessons from Two Millennia of Chinese Civilization," CEPR Discussion Papers 8791, C.E.P.R. Discussion Papers.
  30. repec:sae:niesru:v:149:y::i:1:p:30-52 is not listed on IDEAS
  31. Kent Deng, 2003. "Development and its deadlock in Imperial China, 221 B.C.–1840 A.D," LSE Research Online Documents on Economics 639, London School of Economics and Political Science, LSE Library.
  32. Nicholas R. Lardy, 1994. "China in the World Economy," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 24, December.
  33. Rosenthal, Jean-Laurent & Wong, R. Bin, 2011. "Before and Beyond Divergence: The Politics of Economic Change in China and Europe," Economics Books, Harvard University Press, number 9780674057913, march.
  34. Kent G. Deng, 2000. "A critical survey of recent research in Chinese economic history," Economic History Review, Economic History Society, vol. 53(1), pages 1-28, 02.
  35. Jeffrey G. Williamson, 2011. "Trade and Poverty: When the Third World Fell Behind," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262015153, June.
  36. Rawski, Thomas G., 1969. "Chinese dominance of treaty port commerce and its implications, 1860-1875," Explorations in Economic History, Elsevier, vol. 7(1-2), pages 451-473.
  37. Romer, Paul, 1993. "Idea gaps and object gaps in economic development," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 543-573, December.
  38. Tommy Bengtsson & Cameron Campbell & James Z. Lee, 2004. "Life Under Pressure: Mortality and Living Standards in Europe and Asia, 1700-1900," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262025515, June.
  39. Feuerwerker, Albert, 1961. "Materials for the Study of the Economic History of Modern China," The Journal of Economic History, Cambridge University Press, vol. 21(01), pages 41-60, March.
  40. Debin Ma, 2008. "Economic growth in the Lower Yangzi region of China in 1911–1937: a quantitative and historical analysis," LSE Research Online Documents on Economics 32398, London School of Economics and Political Science, LSE Library.
  41. Lin, Justin Yifu, 1988. "The Household Responsibility System in China's Agricultural Reform: A Theoretical and Empirical Study," Economic Development and Cultural Change, University of Chicago Press, vol. 36(3), pages S199-224, Supplemen.
  42. Loren Brandt & Xiaodong Zhu, 2000. "Redistribution in a Decentralized Economy: Growth and Inflation in China under Reform," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 422-451, April.
  43. repec:cup:cbooks:9780521687850 is not listed on IDEAS
  44. Rawski, Thomas G., 2002. "Will investment behavior constrain China's growth?," China Economic Review, Elsevier, vol. 13(4), pages 361-372, December.
  45. Brandt, Loren & Hosios, Arthur J, 1996. "Credit, Incentives, and Reputation: A Hedonic Analysis of Contractual Wage Profiles," Journal of Political Economy, University of Chicago Press, vol. 104(6), pages 1172-1226, December.
  46. Brandt, Loren & Sargent, Thomas J., 1989. "Interpreting new evidence about China and U.S. silver purchases," Journal of Monetary Economics, Elsevier, vol. 23(1), pages 31-51, January.
  47. Dittrich, Scott R & Myers, Ramon H, 1971. "Resource Allocation in Traditional Agriculture: Republican China, 1937-1940," Journal of Political Economy, University of Chicago Press, vol. 79(4), pages 887-96, July-Aug..
  48. North, Douglass C., 1993. "Economic Performance through Time," Nobel Prize in Economics documents 1993-2, Nobel Prize Committee.
  49. Brandt, Loren, 1985. "Chinese agriculture and the international economy, 1870-1930: A reassessment," Explorations in Economic History, Elsevier, vol. 22(2), pages 168-193, April.
  50. repec:cup:cbooks:9780521022866 is not listed on IDEAS
  51. Robert Allen & Robert C. Allen, 2007. "Wages, Prices, and Living Standards in China, Japan, and Europe, 1738-1925," Economics Series Working Papers 316, University of Oxford, Department of Economics.
  52. Chenggang Xu, 2011. "The Fundamental Institutions of China's Reforms and Development," Journal of Economic Literature, American Economic Association, vol. 49(4), pages 1076-1151, December.
  53. Tirole, Jean, 1986. "Hierarchies and Bureaucracies: On the Role of Collusion in Organizations," Journal of Law, Economics and Organization, Oxford University Press, vol. 2(2), pages 181-214, Fall.
  54. repec:cup:cbooks:9780521868273 is not listed on IDEAS
  55. Debin Ma, 2011. "Rock, scissors, paper: the problem of incentives and information in traditional Chinese state and the origin of Great Divergence," Economic History Working Papers 37569, London School of Economics and Political Science, Department of Economic History.
  56. Lin, Justin Yifu, 1992. "Rural Reforms and Agricultural Growth in China," American Economic Review, American Economic Association, vol. 82(1), pages 34-51, March.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:aea:jeclit:v:52:y:2014:i:1:p:45-123. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jane Voros)

or (Michael P. Albert)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.