Re. Understanding China
- From: news@xxxxxxxxxxxxxx
- Date: Mon, 05 Mar 2007 11:22:47 -0600
Its economic gains of the past 25 years have
been impressive, but there seems to be an unwritten law of
economic gravity that a country can grow quickly for a long
time, but cannot do so indefinitely.
Economics works largely by physical constraints on the real world,
rather than by 'unwritten laws'.
Apparently many don't understand the economic development
'event' in China.
Since this event, like industrialisation and the discovery of distant
lands can only happen once [in a civilisation], it must be understood
theoretically -- without recourse to previous examples.
The key concept is the dependancy ratio: the number of unproductive
citizens eg. students and pensioners; to working producers.
In societies like Africa and the middle east, where the number of
children per mother is high, economic development is near
impossible because resources to educate the next generation, to
develop the society, are never available. The poverty trap.
The other type of high dependancy ratio exists increasingly in
Europe and Japan, from the numbers of pensioners to workers.
Contrary to press hype this is not a problem, since productivety
is already high in these societies.
Obviously, as the demographic buldge moves from too many
young unproductive persons to many pensioners, it passes through
the 'many productive-aged and educated persons' stage.
Because China bit the bullet re. the one-child policy some years
ago, and they have a traditional respect for education, a massive
wave of producers has recently hit the market. This bubble can only
last for some 20 years; never to be repeated.
The same mechanism could theoretically also happen in India.
But since China has the greatest population, the magnitude of the
effect is unlikely to be repeated ever again.
== Chris Glur.
.
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