Saturday, July 01, 2006

Why China Stagnated

Cafe Hayek: Why China Stagnated:
In his compelling lead article in the Spring 2006 issue of the Journal of Economic Perspectives, economic historian David Landes wonders why the industrial revolution didn't happen first in China. His answer is unequivocal: although it had lots of genius, China had neither the institutions nor the culture to transform this genius into widespread prosperity.

Almost every element usually regarded by historians as a major contributory cause to the Industrial Revolution in north-western Europe was also present in China [some 500 years before the wealth explosion that began in Europe in the 18th century].

So why, specifically, was there no industrial revolution in China?

Why indeed? Sinologists have put forward several partial explanations. Those that I find most persuasive are the following:

First, China lacked a free market and institutionalized property rights. The Chinese state was always stepping in to interere with private enterprise -- to take over certain activities, to prohibit and inhibit others, to manipulate prices, to exact bribes [p. 6]."

No comments: