Why the West got Rich Before Other Countries and Why China is Catching Up With the West Today? New Answer to the Old Question

Vladimir Popov

Journal of the New Economic Association, 2012, vol. 15, issue 3, 35-64

Abstract: The goal of this paper is to offer a non-technical interpretation of the "Great Divergence" and "Great Convergence" stories. After reviewing existing explanations in the literature, I propose a different interpretation. Western countries exited the Malthusian trap by destroying traditional institutions, which was associated with an increase in income inequality and even a decrease in life expectancy, but allowed the redistribution of income in favor of savings and investment at the expense of consumption. When the same pattern was imposed on some developing countries (colonialism - Sub-Sahara Africa, Latin America, and the former Soviet Union), it resulted in the destruction of traditional institutions, increase of income inequality, and worsening of starting positions for catch-up development. Other developing countries - East Asia, South Asia, the Middle East and North Africa - that were less affected by colonialism, managed to retain traditional institutions and by the end of the XX century found themselves in a better starting position for modern economic growth. The slow-going technical progress finally allowed them to find another exit from the Malthusian trap - increased income that permitted the share of investment in GDP to rise without a major increase in income inequality and decrease in life expectancy.

Keywords: economic history; rates of economic growth; gap in per capital GDP between countries; the West; developing countries; China (search for similar items in EconPapers)
JEL-codes: N00 O10 O40 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.econorus.org/repec/journl/2012-15-35-64r.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nea:journl:y:2012:i:15:p:35-64

Access Statistics for this article

Journal of the New Economic Association is currently edited by Victor Polterovich and Aleksandr Rubinshtein

More articles in Journal of the New Economic Association from New Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Alexey Tcharykov ().