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Measuring The Economic Performance Of Transition Economies: Some Lessons From Chinese Experience

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  • Angus Maddison

Abstract

This article quantifies the comparative performance of China in several dimensions. Firstly, it shows that China's move from a command to a market economy was less abrupt and more successful than that of 29 other economies making a similar transition. Secondly, while official estimates show annual GDP growth of 9.6 percent in 1978-2003, this is reduced to 7.9 percent after adjustment for exaggeration of industrial performance and growth in non-material services. Thirdly, as the exchange rate understates China's achievement, a purchasing power parity (PPP) converter is necessary to measure comparative level of performance. Our PPP converter shows that China in 2005 was the world's second largest economy, with a GDP about 80 percent of the U.S. It is assumed that China will have overtaken the U.S. as the world's biggest economy before 2015. Until recently, the World Bank estimate of the PPP for China was close to that of Maddison, but the Bank's new estimate for 2005 shows Chinese GDP about half this level. The Bank's new estimates for China and other Asian countries are not plausible, and this paper advances several reasons for rejecting them. Finally, energy use per head of population is a good deal smaller than that of the U.S., and its total energy use for a much bigger population is likely to be somewhat smaller than that of the U.S. in 2030. However, heavy dependence on dirty coal means that it will have bigger carbon emissions than the U.S. This is a major problem as Beijing and other big cities already have severe pollution problems. Copyright 2009 The Author. Journal compilation International Association for Research in Income and Wealth 2009.

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  • Angus Maddison, 2009. "Measuring The Economic Performance Of Transition Economies: Some Lessons From Chinese Experience," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 55(s1), pages 423-441, July.
  • Handle: RePEc:bla:revinw:v:55:y:2009:i:s1:p:423-441
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    Cited by:

    1. Piketty, Thomas & Yang, Li & Zucman, Gabriel, 2017. "Capital Accumulation, Private Property and Rising Inequality in China, 1978-2015," CEPR Discussion Papers 12410, C.E.P.R. Discussion Papers.
    2. Andrea Boltho & Maria Weber, 2009. "Did China follow the East Asian development model?," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 6(2), pages 267-286, December.
    3. Wolcott, Susan, 2010. "Explorations' contribution to the 'Asian Century'," Explorations in Economic History, Elsevier, vol. 47(3), pages 360-367, July.
    4. Michel Damian & Mehdi Abbas & Pierre Berthaud, 2015. "L'accord États-Unis/Chine du 12 novembre 2014 n'est pas seulement "climatique"," Post-Print halshs-01194775, HAL.
    5. Tang, Bo, 2015. "Real exchange rate and economic growth in China: A cointegrated VAR approach," China Economic Review, Elsevier, pages 293-310.
    6. Thomas Piketty & Li Yang & Gabriel Zucman, 2017. "Appendix to "Capital Accumulation, Private Property and Rising Inequality in China, 1978-2015"," Working Papers 201707, World Inequality Lab.
    7. Branko Milanovic, 2012. "Global inequality recalculated and updated: the effect of new PPP estimates on global inequality and 2005 estimates," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, pages 1-18.
    8. Jorgenson, Dale W. & Vu, Khuong M., 2010. "Potential growth of the world economy," Journal of Policy Modeling, Elsevier, pages 615-631.
    9. Michael Keren, 2009. "China and India - a Note on the Influence of Hierarchy vs. Polyarchy on Economic Growth," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 6(2), pages 325-346, December.
    10. Angus Maddison & Pierre van der Eng, 2013. "Asia's role in the global economy in historical perspective," CEH Discussion Papers 021, Centre for Economic History, Research School of Economics, Australian National University.
    11. Michel Damian, 2010. "Le prix international du carbone sera-t-il un jour fixé par la Chine ?," Post-Print halshs-00512150, HAL.

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