Is China’s Economy Crashing?

Bearishness on China has gone viral. Two years ago talk was of China’s economy saving the world. Today observers have swung to the opposite extreme, one expressed elegantly by Paul Krugman as “the Chinese model is about to hit its Great Wall, and the only question now is just how bad the crash will be.” […]

China and the Middle-Income Trap: Indiscriminate Tuna Fishing

Like a spectre, the Middle Income Trap stalks China and the rest of the world’s successful emerging economies. This Trap says that no matter how fast-growing initially, all emerging economies will slow. (In January 2013, Google returned 400,000 references  to the term “Middle-Income Trap”; by July that number had risen to 1.3mn.) The proposition that fast-growing economies […]

The East Grows Only Because the West Consumes…It’s a Hypothesis

An abiding belief held by many about the global economy is that the East is one gigantic Foxconn-shaped, steroid-boosted manufacturing facility, pumping out iPhones, shoes, clothing, refrigerators, air-conditioners, and defective toys that its own people could never afford. In this narrative, the only reason that measured Eastern GDP shows any kind of life is because […]

UK Austerity and Growth: Winter Is Coming

Policy debate in the current recession is often portrayed to be an irreconcilable political battle, pitting those pushing austerity against those advocating growth.  Indeed, substantive real differences do separate groups having different views on what different policies can achieve.  But, equally, uncertainty on the state of the economy clouds judgment on what appropriate policies should […]

Clash at ERC: The UK and the Eurozone in the Shifting Global Economy

The UK’s Economic Research Council invited me to represent LSE in a panel discussion on near-term prospects for the UK economy. Lord Norman Lamont, 1990-1993 Chancellor of the Exchequer, chaired. The other panelists were Prof John Muellbauer from Oxford and Prof Hashem Pesaran from Cambridge. The venue? The Royal Institution of Great Britain’s Faraday Lecture […]

Making Global Policy: The Great Shift East

As the East continues to rise in economic strength, debate in the West grows increasingly alarmist.  Invariably, the focus is how to respond; invariably, the focus is what is best for the West.  But shouldn’t the global community be asking instead, what will bring peace and prosperity across the world? Of course, many thoughtful observers […]

The Global Economy’s Shifting Center of Gravity

In the current policy debate on whether China, India, and the rest of Asia can continue to grow without a return to international markets of the US consumer—or, indeed, the opposite whether those national-economies will from now form the engine of growth for the global economy—compelling empirical evidence has been relatively scarce.  This posting seeks to repair that and provide a depiction of what the somewhat longer-run historical evidence says.

Define the global economy’s centre of gravity to be the average location of economic activity, measured 3-dimensionally, across geographies on Earth.  To fix ideas, I obtained PPP-adjusted incomes and geographical location data (World Development Indicators Online, Asian Development Bank, Google Earth, Brinkhoff; and Grether and Mathys, 2009).  By merging already-extant data and estimating previously unused locations (distributing national income across urban agglomerations and rural places), I derived nearly 700 identifiable places on the planet where economic activity is measurable. 

Malaysia’s New Economic Model: Making Choices

In June 2009, Malaysia’s Prime Minister Datuk Seri Najib Razak asked if I would serve on his council of economic advisers, the National Economic Advisory Council (NEAC). This Council was to come up with a New Economic Model for the country. It would not be a group that got together every month to fine-tune the economy. This Council was not to sift through the entrails of inventory reports, and propose economic policies to lean against the wind.

China in Global Economic Recovery

Reuters reported on Thursday 16 July 2009 that with China’s economic activity picking up in 2009Q2, the Chinese full-year 8% growth target might now be achievable. Will China save the world? A natural skepticism, of course, surrounds such numbers.  So, recent historical perspective might be useful here. The 1997 Asian Currency Crisis was, up through […]