Mature vs immature economy. It is easier to grow at a high percentage rate when you have a smaller economy. Growing at a constant high percentage rate is harder with a larger and more mature economy.
A smaller, less developed economy can easily borrow technologies from developed economies to achieve high gains in productivity and growth.
The decline in growth rates in China shows that they have tapped the big productivity gains and will be unlikely to see those growth rates again.
Not a shock.
China, given it’s enormous capital base in both physical capital and labor capital, has been massively behind the rest of the world due to various inefficiencies.
Now that it’s been fixing a lot of those inefficiencies, it’s getting closer to its pareto optimal output (I just really want to use pareto optimal once in a post), which the US was already far closer to, and as such growth rates are running similar.
Don’t think there’s a lot more to read into it. And its worth questioning the official GDP numbers as well; considering stuff like the use of Light output as a proxy for GDP output halves China’s actual GDP growth give or take, which would also look a lot less impressive.
2 comments
Mature vs immature economy. It is easier to grow at a high percentage rate when you have a smaller economy. Growing at a constant high percentage rate is harder with a larger and more mature economy.
A smaller, less developed economy can easily borrow technologies from developed economies to achieve high gains in productivity and growth.
The decline in growth rates in China shows that they have tapped the big productivity gains and will be unlikely to see those growth rates again.
Not a shock.
China, given it’s enormous capital base in both physical capital and labor capital, has been massively behind the rest of the world due to various inefficiencies.
Now that it’s been fixing a lot of those inefficiencies, it’s getting closer to its pareto optimal output (I just really want to use pareto optimal once in a post), which the US was already far closer to, and as such growth rates are running similar.
Don’t think there’s a lot more to read into it. And its worth questioning the official GDP numbers as well; considering stuff like the use of Light output as a proxy for GDP output halves China’s actual GDP growth give or take, which would also look a lot less impressive.