Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca

. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Friday, February 11, 2005

India vs. China
Property Rights vs. Central Planning

Even though India and China had per capita GDPs that were roughly similar in 1980, now, 25 years later, China's economic growth has been much greater than that of India. But how long will that lead persist? Not forever, according to this article:

While India notched up average annual GDP growth of 5.9 percent from 1993-2003, China raced ahead at a 9.0 percent clip.

But a more favorable demographic profile, a stronger capacity for technological innovation and Western-style democratic institutions provide the potential for India to raise its game and catch up with its neighbor.

"It will be much easier for China to go from $500 to $1,000 than from $1,000 to $5,000," said Dominique Dwor-Frecaut of Barclays Capital in Singapore.

Tyler Cowen, of Marginal Revolution, has posted quite a bit about India, but he has not made any predictions as strong as these.

I like the concept of having well-established and easily enforced legal entitlements. India has had these for quite some time; they are clearly necessary, but not sufficient, conditions for prolonged growth. The other thing India is acquiring is an appreciation of the benefits of free trade. I cannot imagine these differences will be enough, however, for India's GDP per capita to overtake that of China any time in the near future.

thanks to Jack for the pointer.

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