Chinese Economic Development:
Historical & Comparative Perspectives
1. Historical Perspectives
a. c. 1000—early commercialization
b. c. 1500-1800—agrarian commercial
c. c. 1800-1900—divergence
2. Comparative Perspectives
a. economic history / development economics
b. Where and why economic growth?
c. Spatial units of comparison
3. The Challenges of this Course
Historical Perspectives
1000 AD—commercialized
economy in Jiangnan
• Growth of market towns (brokers, shops, urban
culture of story tellers, theatre, tea houses)
• Growth of long-distance trade (boats, docks)
• Specialized agricultural production, cash crops
• Handicrafts—textiles, silk and cotton.
1500-1800: continued spread of
commercialized agrarian economy
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Rural handicrafts supplement agriculture
2 contrasts with Europe
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Rural crafts and agriculture separate
More crafts go to cities
Chinese features
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Long-distance trade, areal specialization; increased
marketing--urban-rural connections AND
connections between regions of empire
More isolated peripheral areas have some markets
and exchange; differ in resource endowments.
Economic ties beyond the empire
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Silver imports and commercial change
Trade w/ Southeast and Northeast
Asia—silks, teas, porcelains, foodstuffs,
medicines
Trade through Central Asia—precious
jewels & stones, paper, silk,
Trade with Europe--: silks, teas,
porcelains
19th-c. Divergence
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Europe industrializes/China population
pressures and environmental challenges
grow
Changed trade connections—primary
products exports, Europeans do import
substitution on porcelain and silk
But variations within China & Europe too
Key differences: technology & institutions
20th-c. Changes in China
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Pockets of industrialization
Agrarian crisis
Growing divide between rural and urban
Greater regional variations
Questions of whether positive or
negative changes to spread faster
Key role of unstable political situation
China’s economy in 1949
• Short-run:
– recovery from war and occupation
– restore social and economic order
• Long-run:
– industry in certain areas
– rural stability
– questions about urban-rural relations and
development path
China’s Past & its Economic Future
• Re-establish strong centralized state,
unified and integrated control
• Managing agrarian economic and
social order a major political job
• See industrial economy largely for
state strength—wealth and power of
late 19th c forward
Comparative Perspectives
a. economic history / development
economics
b. Where and why economic growth?
c. Spatial units of comparison
Sources of Growth
– Division of labor, increased market size,
economies of scale
– Savings/investment vs consumption
– Organizational change for increased
efficiency
– Technological change
Economic History
• Study of how economies have grown
historically: application of economic theory
and principles to past practices
• Most developed literature for Western
Europe and the United States
• How to fit in cases with less clear paths of
growth—e.g. Africa, Asia and Latin
America?
Development Economics
• Assume we know how to create growth:
• Growth based on the shift from traditional
to modern sector—industrialization.
• Industrial policies: create conditions for
private or nationalized industry, varying
roles for government
• Macroeconomic policies to promote
market development and stability.
Explaining vs creating growth
• Intentions and complexity—gap between
theory/policies and implementation
• Unintended consequences
• Consequences of European states needing
loans—develop banking
• Consequences of early modern European war—
manufacturing into cities
• 1950s Chinese government control of resource
and product flows to avoid monopoly markets,
makes all movements difficult
Where and why economic growth?
• Euro-America has a range of paths
– Capital-intensive industrialization
– Initially market led but late 19th c. increasing
roles for state
• Asia has overlapping sequence of paths-– Japan and China in early 20th c. are labor
intensive methods
– Post WW II heavy industrialization with state
set priorities.
Who industrialized, how & why?
• At end of WW II, outside of Euro-America
and Japan, Argentina, Brazil, Chile, China,
Korea, Malaysia, Mexico, India, Indonesia,
Taiwan, Thailand and Turkey.
• Development economics fails to explain or
create successes. Cannot model
increasing returns to scale or oligopolistic
behavior. Result: lack of formal models to
make clear causal mechanisms. Politics
matter.
National units of comparison
• Large and small countries cannot be
compared just with arithemetic averages
• Variation within large national units and
explanations of differences—which
variables are the same within a large
country and across several small ones?
• Politically defined spaces matter but how
has to be carefully evaluated.
The role of institutions in defining
economic regions within and
beyond national states
• Common institutions to create a region:
e.g., contract law
• Institutions that link otherwise different
sets of institutions—financial markets
between institutionally different economies
• Alternative institutional mixes by region—
relative importance of formal and informal,
e.g. litigation versus mediation
Comparisons and connections
• States have policies that affect growth
• Connections in the international economic
system shape growth
• Two questions
– The relative importance of economic
connections within regions or across the
globe
– The relative importance of paths of
development vs systems within which
development takes place
Course challenges
• locate China’s developments since 1978 in
global context
• compare with other paths of development
• note spatial scales of variation
• Observe particular institutional complexes
Course goals
• Establish contexts: China in 1950s
isolated: growth is largely a domestic
issue; China by 2000 increasingly
connected to international networks—do
connections mean greater similarities?
• Observe bottom up and top down patterns
of change and their social consequences
• Locate China’s pattern of changes in world
time and space