Via Tyler Cowen, here’s Barry Eichengreen, Donghyun Park, and Kwanho Shin:
We analyze the incidence and correlates of growth slowdowns in fast-growing middle-income countries, extending the analysis of an earlier paper (Eichengreen, Park and Shin 2012). We continue to find dispersion in the per capita income at which slowdowns occur. But in contrast to our earlier analysis which pointed to the existence of a single mode at which slowdowns occur in the neighborhood of $15,000-$16,000 2005 purchasing power parity dollars, new data point to two modes, one in the $10,000-$11,000 range and another at $15,000-$16,000. A number of countries appear to have experienced two slowdowns, consistent with the existence of multiple modes. We conclude that high growth in middle-income countries may decelerate in steps rather than at a single point in time. This implies that a larger group of countries is at risk of a growth slowdown and that middle-income countries may find themselves slowing down at lower income levels than implied by our earlier estimates. We also find that slowdowns are less likely in countries where the population has a relatively high level of secondary and tertiary education and where high-technology products account for a relatively large share of exports, consistent with our earlier emphasis of the importance of moving up the technology ladder in order to avoid the middle-income trap. (emphasis added)
And speaking of China, in earlier posts I expressed skepticism about China’s high speed rail program. It seems to me that a country as poor as China ought to first focus on building up its basic rail infrastructure. I still sort of believe that, but was taken aback by this report:
Perhaps the hundreds of billions already spent on high-speed railways might have been more effectively spent upgrading the entire network-enhancing overall mobility and helping reduce tensions between rich and poor. Yet China’s technocratic leaders have a deep belief that elites should lead the way, and high-speed rail is their vision for the future.
And in some ways, perhaps they are right. A recent report says that on many key high-speed lines, fares are covering debt costs, confounding skeptics who said high-speed trains were purely prestige projects.
The Beijing to Guangzhou line just opened. The 1,428 mile trip has been cut from 24 hours to 8 hours. And 155 pairs of trains will run each way daily. China just might end up with the only large high speed rail network that actually makes sense. The Chinese cities are often too far apart to make driving appealing, and would you fly 500 to 1000 miles if you could take a 200MPH train?
And Chinese economic growth is entering a new upswing, which I’ll report on later.
PS. When I say “East Asian” I actually mean “ethnically Chinese, Korean, Japanese, Vietnamese.” That’s 5 words.
PPS. I’m really looking forward to that Fresno to Bakersfield link, maybe in a decade. By then China’s system will be mostly completed. All the way out to Urumqi.