IDEAS home Printed from https://ideas.repec.org/a/nea/journl/y2012i15p35-64.html
   My bibliography  Save this article

Why the West got Rich Before Other Countries and Why China is Catching Up With the West Today? New Answer to the Old Question

Author

Listed:
  • Popov, V.

    (Graduate School of International Business of the Russian Presidential Academy of National Economy and Public Administration, Moscow, Russia)

Abstract

The goal of this paper is to offer a non-technical interpretation of the "Great Divergence" and "Great Convergence" stories. After reviewing existing explanations in the literature, I propose a different interpretation. Western countries exited the Malthusian trap by destroying traditional institutions, which was associated with an increase in income inequality and even a decrease in life expectancy, but allowed the redistribution of income in favor of savings and investment at the expense of consumption. When the same pattern was imposed on some developing countries (colonialism - Sub-Sahara Africa, Latin America, and the former Soviet Union), it resulted in the destruction of traditional institutions, increase of income inequality, and worsening of starting positions for catch-up development. Other developing countries - East Asia, South Asia, the Middle East and North Africa - that were less affected by colonialism, managed to retain traditional institutions and by the end of the XX century found themselves in a better starting position for modern economic growth. The slow-going technical progress finally allowed them to find another exit from the Malthusian trap - increased income that permitted the share of investment in GDP to rise without a major increase in income inequality and decrease in life expectancy.

Suggested Citation

  • Popov, V., 2012. "Why the West got Rich Before Other Countries and Why China is Catching Up With the West Today? New Answer to the Old Question," Journal of the New Economic Association, New Economic Association, vol. 15(3), pages 35-64.
  • Handle: RePEc:nea:journl:y:2012:i:15:p:35-64
    as

    Download full text from publisher

    File URL: http://www.econorus.org/repec/journl/2012-15-35-64r.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Ronald Findlay & Kevin H. O'Rourke, 2007. "Power and Plenty: Trade, War and the World Economy in the Second Millennium (Preface)," Trinity Economics Papers tep0107, Trinity College Dublin, Department of Economics.
    2. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2004. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," Journal of Economic Growth, Springer, vol. 9(2), pages 131-165, June.
    3. Jeffrey G. Williamson, 2009. "History without Evidence: Latin American Inequality since 1491," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 3, Courant Research Centre PEG.
    4. Oded Galor, 2006. "Economic Growth in the Very Long-Run," Working Papers 2006-16, Brown University, Department of Economics.
    5. Maddison, Angus, 1992. " A Long-Run Perspective on Saving," Scandinavian Journal of Economics, Wiley Blackwell, vol. 94(2), pages 181-196.
    6. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
    7. Michael Faye & John McArthur & Jeffrey Sachs & Thomas Snow, 2004. "The Challenges Facing Landlocked Developing Countries," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 5(1), pages 31-68.
    8. Popov, Vladimir, 2011. "Developing new measurements of State institutional capacity," MPRA Paper 32389, University Library of Munich, Germany.
    9. David N. Weil & Oded Galor, 2000. "Population, Technology, and Growth: From Malthusian Stagnation to the Demographic Transition and Beyond," American Economic Review, American Economic Association, vol. 90(4), pages 806-828, September.
    10. Gregory Clark, 2007. "Introduction to A Farewell to Alms: A Brief Economic History of the World," Introductory Chapters,in: A Farewell to Alms: A Brief Economic History of the World Princeton University Press.
    11. Jeffrey G. Williamson, 2009. "History without Evidence: Latin American Inequality since 1491," NBER Working Papers 14766, National Bureau of Economic Research, Inc.
    12. Arvind Subramanian, 2011. "Eclipse: Living in the Shadow of China's Economic Dominance," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 6062.
    13. Williamson, Jeffrey G., 2009. "History without evidence: Latin American inequality since 1491," Center for European, Governance and Economic Development Research Discussion Papers 81, University of Goettingen, Department of Economics.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Aleksandr Gusev, 2013. "Economic development strategies of regions of Russia: system crisis and new economic space," Economy of region, Centre for Economic Security, Institute of Economics of Ural Branch of Russian Academy of Sciences, vol. 1(4), pages 220-237.

    More about this item

    Keywords

    economic history; rates of economic growth; gap in per capital GDP between countries; the West; developing countries; China;

    JEL classification:

    • N00 - Economic History - - General - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nea:journl:y:2012:i:15:p:35-64. 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: (Alexey Tcharykov). General contact details of provider: http://edirc.repec.org/data/nearuea.html .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.