Mixed Fortunes: An Economic History of China, Russia, and the West

206 Pages·2014·3.91 MB·English

by  Vladimir Popov

Mixed Fortunes
‘InMixedFortunesVladimirPopovhasprovidedaremarkablyoriginalandprovocativeanalysisof
economicgrowthandinstitutionalchangeacrosstheworldbutparticularlyinChina,Russia,and
theWest.Whilemostconventionalinterpretationshaveseenthisprocessasaconsequenceof
eitherenhancingorstiflingthepowerofmarketforces,Popovstressesthedifferingrolesofthe
stateinbuildinginstitutionalcapacityasthemajorexplanatoryvariable.Thisbookcanberead
profitablybybothspecialistsandlaymeninterestedinthepast,present,andfutureoftheworld
economy.’
RonaldFindlay,RagnarNurkseProfessorofEconomicsEmeritus,ColumbiaUniversity
‘Filledwithfreshthinkingonthefactorsbehindeconomicdevelopment,Popov’sanalysiscuts
througholdorthodoxiesandoffersahostofnewinsights.Thisisthebeststudyyetofwhythelast
twodecadeshavebeenmarkedbystunningeconomicsuccessinChina,andfrustratingfailuresin
Russia. Blending attention to institutions and capital accumulation with analyses of the social
order as shown in murder rates and income inequality, Popov demonstrates how promoting
economicgrowthrequirescustomfittingofpoliciestoacountry’sstageofdevelopment,political
institutions,andhistoricallegacies.Thisbook,innon-technicalterms,pointsthewaytoanewand
moreproductiveapproachtoeconomicdevelopment.’
JackA.Goldstone,HazelProfessorofPublicPolicy,GeorgeMasonUniversity
‘Inawidehistoricalsweep,VladimirPopovchartstheriseoftheWestafterthefirstIndustrial
Revolution,theapparentlysuccessfulbutultimatelyfaileddevelopmentchallengelaunchedbythe
Sovietmodel,andthecurrentriseofChina.Heemphasizestheroleofindigenousinstitutionsin
fostering economic growth and the failure of imported models. It is a powerful indictment of
developmenteconomicsaspracticedduringthelastcoupleofdecades.Therearefeweconomists
betterequippedthanPopovtohandletheselargeissuesofriseandfallofeconomicpowers.’
BrankoMilanovic,authorofTheHavesandtheHave-Nots:
ABriefandIdiosyncraticHistoryofGlobalInequality,BasicBooks
‘Abig,boldbookthatprovidesaunifiedframeworkforexplainingwhysomecountriesandregions
getaheadeconomicallywhileothersfallbehind.Popovshowshowinequality,institutions,saving
ratesallmatter–butsometimesinsurprisingandunexpectedways.’
DaniRodrik,InstituteforAdvancedStudy
‘Challenging conventional wisdom, Vladimir Popov offers a rare perspective on the economic
developmentchallengesofourtimesbybringingtogether hisprofoundunderstandingof eco-
nomichistory,developmenttheory,and‘post-communist’transition.Offeringanuancedstatist
developmentalviewofcapitalisttransformationandaccumulation,heprovidesrichcomparative
insightsintotheinteractionandsequencingofvariouskeyelementsacceleratingorretardingand
sustaininggrowthandeconomictransformation.’
JomoKwameSundaram,FAOAssistantDirectorGeneralforEconomicandSocial
Development;UNAssistantSecretaryGeneralforEconomicDevelopment,2005–2012.
Mixed Fortunes
An Economic History of China,
Russia, and the West
Vladimir Popov
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3
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Table of Contents
ListofFigures vii
ListofSchemes xi
ListofTables xiii
Introduction 1
1. HowtheWestBecameRich:StylizedFactsand
LiteratureReview 9
2. WhyDidtheWestBecomeRichFirst?WhyAre
SomeDevelopingCountriesCatchingUp,ButOthersAreNot? 22
3. ChineseandRussianEconomiesUnderCentralPlanning:
WhytheDifferenceinOutcomes? 55
4. ChineseandRussianEconomiesSinceReforms:Transformational
RecessioninRussiaandAccelerationofGrowthinChina 91
5. GrowthMiraclesandFailures:LessonsforDevelopment
Economics 116
Conclusions 148
References 165
NameIndex 181
SubjectIndex 183

List of Figures
1.1 PPPGDPpercapitainmajorcountriesandregionssince1500,
internationalGeary–Khamisdollarsof1990 10
1.2 ShareofmajorcountriesinworldPPPGDP,1500–2006 12
1.3 Percapitacultivatedland(mu,leftscale)andthelevelofurbanization
(percent,rightscale)inChina 16
1.4 Percapitacultivatedland,mu(1/15ofahectare),in1993 17
2.1 AnnualaveragegrowthratesofpopulationandGDPpercapitain
1980–2007,percent 26
2.2 Mortalityratesandlifeexpectancy(atbirth)inthecourseofearly
urbanization:England1540–1870 29
2.3 TotalsavingsinArgentina,percentageofGDP 33
2.4 DomesticsavingsasapercentageofGDPin1970–2011andPPPGDP
percapitaasapercentageoftheUSlevelin1990 34
2.5 TheratioofgrossdomesticsavingstoGDPandaverageannual
growthratesofGDPpercapitain1970–2011,percent 34
2.6 Murderrateper100,000inhabitantsin2008 37
2.7 Long-termhomicideratesinEuropeper100,000inhabitants 40
2.8 ShareoftheshadoweconomyinGDPin2005,percent,and
governmenteffectivenessindexin2002 41
2.9 TheshareoftheshadoweconomyinGDPin2005,percent,and
themurderrateper100,000inhabitantsin2002 41
2.10 Incomesharesoftop0.1,1,5,and10%in17developedcountries,
unweightedaverage 43
2.11 InequalityintheUSAandUKoverthelongterm,Gini
coefficient,percent 44
2.12 LargestfortunesintheUSAinmilliondollarsandasamultiple
ofthemedianwealthofhouseholds,logscale 45
2.13 Long-termtrendsinincomeinequalitiesintheUSA,1913–2010 45
2.14 PredictedinequalityinLatinAmerica1491–1929 46
2.15 Incomesharesoftop0.1%ofhouseholdsinfivedeveloping
countries,percent 47
ListofFigures
2.16 Murderratein2002andincomeinequalitiesin1990–2005 48
2.17 Inequalitiesinincomeandwealthdistribution,Ginicoefficients
in1990–2005,percent 49
3.1 Thenumberofpeasantdisturbancesperyearin1800–1920inRussia 57
3.2 Numberoftotalcrimesper100,000inhabitantsinRussiain1800–1920 57
3.3 PPPGDPpercapitaintheUSSRandRussia,aspercentageofWestern
EuropeanandUSlevel 64
3.4 AnnualaverageproductivitygrowthratesinSovieteconomy,percent 65
3.5 GrossinvestmentandretirementinSovietindustryasapercentageof
grossfixedcapitalstock 71
3.6 Shareofinvestmenttoreplaceretirementintotalgrossinvestment
inSovietindustry,percent 71
3.7 ShiftcoefficientinSovietindustry,1960–89 72
3.8 Growthratesafterthe‘bigpush’intheCPE(withconstraintson
investmenttoreplaceretirementoffixedcapitalstock),percent 75
3.9 MortalityrateandlifeexpectancyinRussiaandtheUSSR 76
3.10 MortalityrateandconsumptionofalcoholinRussia 77
3.11 Crimerateper1000(leftscale),mortalityrateper1000,murderrate
andsuiciderateper100,000inhabitants(rightscale)inRussia 78
3.12 Consumptionofalcoholandcrime,murder,andsuicideratesin
Russiasince1970 78
3.13 PPPGDPpercapitainChinaandIndiain1950–2008,1990
Geary–Khamisinternationaldollars 80
3.14 GDPgrowthratesofmajorcountriesandregionsin1960–2008,percent 80
3.15 PPPGDPpercapitaincurrentinternationaldollars,ChinaandIndia,
1980–2010,WorldBankdata 81
3.16 Lifeexpectancyatbirth,years,ChinaandIndia,1960–2010 81
3.17 GinicoefficientofincomedistributioninChinaandRussia,
1978–2012 84
3.18 Numberofbillionairesin2007andPPPGDPin2005(billion$)
bycountry 85
3.19 MurderrateinChinaper100,000inhabitants 85
3.20 ShareofChinainworldpopulation,percentageoftotal 88
4.1 GDPchangeinFSUeconomies,1989=100% 93
4.2 Murdersper100,000ofinhabitantsin1987andin2002in
post-communistcountries 94
4.3 Economicliberalizationandoutputchange 96
4.4 IndicesofeconomicfreedomandGDPgrowthinRussiaandChina 97
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ListofFigures
4.5 Aggregatedistortionsinindustrialstructureandexternaltradebefore
transitionandGDPchangeduringtransition 103
4.6 Governmentexpenditureduringtransition,percentageofGDP 109
4.7 Governmentrevenuesandshadoweconomy,percentageof
GDP,1989–96 110
4.8 ChangeinGDPandintheshareofgovernmentrevenuesinGDP 111
4.9 ConsolidatedgovernmentrevenuesasapercentageofGDP 111
4.10 Indicesoftheruleoflawandpoliticalrights(democracy),0–10scale,
highervaluesrepresentstrongerruleoflawanddemocracy 114
5.1 Grainproduction,procurement,andexportintheUSSRinthe
1920s–1930s,milliontons 121
5.2 AveragecurrentaccountasapercentageofGDPandgrowthofGDP
percapita,percent,in1970–2007 124
5.3 ODAandofficialaidtodevelopingcountriesincurrentdollars
(leftscale)andoilpricesperbarrelin2007dollars(rightscale) 127
5.4 PPPGDPpercapitain1999andtheratioofdomestictoUSpricesof
tradablesandnon-tradablesin1993,percent 132
5.5 RatioofofficialtoPPPexchangeratein1975–99forgroupsof
countries(unweightedaverage) 133
5.6 ForeignexchangereservesasapercentageofGNIandinmonthsof
importintheworldasawholeandinmajorregions 134
5.7 SovereignwealthfundsasofNovember2011byfundingsourceand
byregion,percentoftotal 135
5.8 Balanceofpaymentsoncurrentaccountsforsomecountriesand
countrygroups,2003–2011,billiondollars 138
5.9 NetinternationalinvestmentpositionoftheUnitedStates,
percentageofGDP 139
5.10 Foreignexchangereserves(includinggold)asapercentageofGDP
andPPPGDP,China 140
5.11 ExchangerateoftheyenandeconomicgrowthinJapan 141
5.12 Euroarea17(fixedcomposition)netinternationalinvestment
position,percentageofGDP 142
5.13 Japan’sinternationalassetsandliabilities,trillionyen(direct
investmentestimatedonamarketvaluebasis) 143
1 Oilprices(brent,$abarrel,rightscale)andGDPgrowthratesin
Russia(%,leftscale),1990–2012 155
2 Crimerate(leftscale),murderratesandsuiciderate(rightscale)
per100,000inhabitants 159
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