Historical Precident for Rapid Economic Growth

[Rubber Duck]

" In 1965, Japan's nominal GDP was estimated at just over $91 billion. Fifteen years later, the nominal GDP had soared to a record $1,065 billion by 1980."

http://en.wikipedia.org/wiki/Japanes...onomic_miracle

In other word Japan's economy expanded by 1192% in 15 years.

That is an average growth of about 18% per annum.

[touchring]

Originally Posted by Rubber Duck

" In 1965, Japan's nominal GDP was estimated at just over $91 billion. Fifteen years later, the nominal GDP had soared to a record $1,065 billion by 1980."

http://en.wikipedia.org/wiki/Japanes...onomic_miracle

In other word Japan's economy expanded by 1192% in 15 years.

That is an average growth of about 18% per annum.

Japan was already an industrialized nation by WWII, it is well known that the Mitsuibishi zero fighters were the best in the world then.

[bramiozo]

Originally Posted by touchring

Japan was already an industrialized nation by WWII, it is well known that the Mitsuibishi zero fighters were the best in the world then.

They were among the most agile fighters in the world but they were also very fragile, to save weight they practically left out pilot protection as a design criterium.

The Fw190 would have been better to name an example, faster, higher ceiling, more firepower and almost as agile as the a6m.

[Rubber Duck]

Originally Posted by touchring

Japan was already an industrialized nation by WWII, it is well known that the Mitsuibishi zero fighters were the best in the world then.

Yes, that only goes to show that China is coming from much further back and can come on much more quickly without facing economic meltdown.

Interestingly the exchange rate of the Yen to the dollar never moved from 360 from 1953 right through to 1970, so there is a historical precidence for pegging of currency during a period of rapid expansion as well. But by 1978 the Yen had appreciated to 210 and went on to hit an all time high of 94 in 1995.

If the this currency appreciation is discounted then Japanese expansion in Yen terems was actually only about 14.4%, which is still bigger than China is achieving today.

It would seem that there is every reason to believe that the Chinese economy is far from overheating yet.

Originally Posted by bramiozo

They were among the most agile fighters in the world but they were also very fragile, to save weight they practically left out pilot protection as a design criterium.

The Fw190 would have been better to name an example, faster, higher ceiling, more firepower and almost as agile as the a6m.

http://www.odyssey.dircon.co.uk/VBv190.htm

This was the the German response to the Spitfire. Too late to play a critical role and the technical advantage was short lived.

http://www.odyssey.dircon.co.uk/Spitfire14v190.htm

[touchring]

I think you should compare the chinese economy with the korean phenomenon which is also quite recent.

The Japanese culture is quite distinct from china. As a reference, there might some similarity between Chinese and korean culture, although the former would be nastier when it comes to cutting out business competition, and will not hesitate to acquire foriegn assets, and assimulate into foreign culture.

Individualism also runs much higher in china, confucianism and traditional thinking almost completely wiped out by Communism and the cultural revolution.

[Rubber Duck]

Originally Posted by touchring

I think you should compare the chinese economy with the korean phenomenon. The Japanese culture is quite distinct from china. As a reference, there might some similarity between Chinese and korean culture, although the former would be nastier when it comes to cutting out business competition, and will not hesitate to acquire foriegn assets, and assimulate into foreign culture. Individualism also runs much higher in chinese societies.

I don't think it matters particularly, but if you want to dig up some info to demonstrate the Koreans did even better that would be very interesting.

What is important when trying to decide what is possible and what is not is appreciating the extent to which control of the money supply is understood, not only globally but by the regime in power. It is certainly the case we know a lot more about the mechanics of boom and bust and how to regulate economies than we did back then, but as the Americans have demonstrated, just because you know how to keep an economy on track, it doesn't mean that individual governments will use that information wisely.

[idn]

Originally Posted by Rubber Duck

" In 1965, Japan's nominal GDP was estimated at just over $91 billion. Fifteen years later, the nominal GDP had soared to a record $1,065 billion by 1980."

http://en.wikipedia.org/wiki/Japanes...onomic_miracle

In other word Japan's economy expanded by 1192% in 15 years.

That is an average growth of about 18% per annum.

Most macroeconomists would claim this is because a significant amount of capital stock was destroyed during the war. The phenomenal growth was growth by accumulation. China is now in a similar position. Growth by accumulation only takes economies so far until depreciation equals savings/investment. TFP then becomes the main factor. In the 1990s Japan's "economic miracle" faded followed by a 10 year recession.

[Rubber Duck]

Originally Posted by idn

Most macroeconomists would claim this is because a significant amount of capital stock was destroyed during the war. The phenomenal growth was growth by accumulation. China is now in a similar position. Growth by accumulation only takes economies so far until depreciation equals savings/investment. TFP then becomes the main factor. In the 1990s Japan's "economic miracle" faded followed by a 10 year recession.

There is some truth in what you say. Japan came out the comfort zone, let asset appreciation get totally out of control and screwed up the management of the money supply. Even after the wheels had fallen off, their actions were as crass as those applied in the States during the great depression. I think the main Japanese problem is that they had been successful for so long, they thought they knew better than everyone else. That might be a theme that could relate to another major economy.

[touchring]

Originally Posted by idn

Most macroeconomists would claim this is because a significant amount of capital stock was destroyed during the war. The phenomenal growth was growth by accumulation. China is now in a similar position. Growth by accumulation only takes economies so far until depreciation equals savings/investment. TFP then becomes the main factor. In the 1990s Japan's "economic miracle" faded followed by a 10 year recession.

Well, you can deprive a group of engineers capital or money, and they will rebuild their lives a hundred times faster than a bunch of unruly and uneducated farmers - which was what china was post 1950s.

Unruly peasants up to today is still the biggest problem in China.

I once hired a chinese engineer with masters degree in a top university from a county level city, and he behaved like a farmer. He was brilliant in his coding work, but was as sturbborn as a mule.

It should take at least two generations for the rural culture to change completely. Japan's industrialization started after the Meiji revolution 1870s - have you guys watched the Last Samurai?

[Rubber Duck]

First off Japan was not deprived of Capital. The amount of capital available was a significant factor in its success as it is in China.

Second, one of the great strengths of China is the strength of its education and its high literacy rates.

[touchring]

http://hdr.undp.org/hdr2006/statisti...ty_fs_CHN.html

Table 1: China’s human developmentindex 2004
Combined primary, secondary and tertiary gross enrolment ratio
(%)

1. Australia (113.2)
95. Tajikistan (70.
96. Botswana (70.7)
97. China (70.4)
98. Nicaragua (70.2)
99. Moldova, Rep. of (70.1)

China is just ranked 1 above Botswana.

[Rubber Duck]

The problem is there are lies, damned lies and statics.

Perhaps you should take a look at this:

http://en.wikipedia.org/wiki/Literac...literacy_rates

[Rubber Duck]

More updates on those unruly peasants!

http://news.bbc.co.uk/2/hi/uk_news/e...on/6589301.stm

Originally Posted by touchring

Well, you can deprive a group of engineers capital or money, and they will rebuild their lives a hundred times faster than a bunch of unruly and uneducated farmers - which was what china was post 1950s.

Unruly peasants up to today is still the biggest problem in China.

I once hired a chinese engineer with masters degree in a top university from a county level city, and he behaved like a farmer. He was brilliant in his coding work, but was as sturbborn as a mule.

It should take at least two generations for the rural culture to change completely. Japan's industrialization started after the Meiji revolution 1870s - have you guys watched the Last Samurai?

[touchring]

Originally Posted by Rubber Duck

More updates on those unruly peasants!

http://news.bbc.co.uk/2/hi/uk_news/e...on/6589301.stm

Yes, the guy i employed is a math genius, he codes C as fast as we post on forums, and when he stops typing to think, ocassionally, it is only for 10 seconds or less.

[Rubber Duck]

Originally Posted by touchring

Yes, the guy i employed is a math genius, he codes C as fast as we post on forums, and when he stops typing to think, ocassionally, it is only for 10 seconds or less.

Yes, people like that don't always react well to what they might regard as unnecessary or unhelpful input. Not only that but they can be resentful of people further up the pecking order that they regard as intellectually inferior. Such a situation often requires highly developed people skills.