Mostly the EU. Almost every other reason is at best rationalization in comparison. The same goes for Poland. though people from those countries don't necessarily like to admit that the reason they are richer than their peers (in this case, Argentina) is mostly due to geographical luck.
But Argentina also has a peculiar, almost hard to believe tendency to shoot itself in the foot economically
> Simon Kuznets, the winner of the 1971 Nobel Prize in Economics, famously stated there were four types of economies in the world: developed, undeveloped, Japan and Argentina
Spain benefits from being part of EU, Argentina does not have a "support system" like that and sanctified practice of bankruptcy. In the long run, Argentina will beat Spain but that requires them getting their shit together, which is a big if.
Economic projections like this are notoriously bad. For example, two editions of the same text book used the exact same graph showing the Soviet Union would pass the US is about 20 years... Despite the editions being twenty years apart.
Middle income trap is real. You do not grow like your teens and 20s in your 40s and 50s. Economies become big and complex, the character of the system changes and if the underlying demographics do not fit the growth model it is in danger.
Republic of Korea, Japan got rich before they got old. China got old before it got rich.
India disappoints both its optimists and pessimists. It is a middling country with growth spurts here and there, which is admirable in its own way.
> Middle income trap is real. You do not grow like your teens and 20s in your 40s and 50s. Economies become big and complex
Very true. Economic growth is going to be rough for Mainland China for the next several years, but that doesn't preclude becoming a developed country eventually.
China today in 2023 is at roughly the same spot as Malaysia, Taiwan, and South Korea were in the 1980s. All 3 countries became developed, but at different paces. For example, Malaysia only hit the developed country precipice in 2021 (0.8 HDI), Taiwan in the 1990s, and South Korea in 2000. South Korea and Taiwan didn't become Advanced Economies until the late 2000s/early 2010s.
> India disappoints both its optimists and pessimists. It is a middling country with growth spurts here and there
Because India is incorrectly being compared with China. India is 15-20 years behind China because China opened their markets in 1973-1978, while India didn't conduct similar market reforms until 1992-1996. When factoring that 15-20 year lag, comparisons start making sense [1]
I don’t know if you can call 7-9% growth for the last ~20 years (with the exception of 2020 during covid) spurts. It’s a consistently fast growing economy, at massive scale, that has maintained steam for more than two decades and doesn’t look like it’s slowing down.
No in the sense that one of the authors who coined the term did IRC follow up study and explicitly does not think it exists.
The mostly No part: middle income trap, according to the authors / as metric of development is about countries being unable to progress up higher value economic efforts, which then constrains per capita income potential. But the actual "trap" is being stuck in value chain. If one use that metric, PRC is LONG PAST middle income "trap", apart from US, PRC has relatively complete chain across broad spectrum of sectors in the world. Third place is not even close. The question is really what if even being competent and productive at everything simply is not sufficient to uplift everyone because base population is so massive. There's an upper bound on how many high skilled talent economy can support.
The yes part is being stuck in "middle income", which if you look at world bank revised 2024 high income range is 13,846, PRC 2023 projection is ~13,500, it's basically there, almost inevitable with a few more years of even modest growth even if threshold keeps getting revised up. And if you think PRC is massively lying about population like some demographers (-200m people) then PRC's been high income for a while.
The real question behind these "middle income" rhetoric with respect to PRC is can PRC reach advanced economy levels of high income, and the answer is unlikely because again there's simply too many useless people, 600m+ living on less than $2000 who got left behind by modernization that will drag the per capita stats down until they die. On the other hand they will be the first to go since cohort skews old. Let that stats settle in for a second though, ~40% of population contributes about 5% of economy. Once they start dying (2050+) PRC per capita will start trending towards advanced economy with high % of skilled people wages because PRC population with start reflecting composition of advanced economy without 200m+ farmers and 100s million more low skilled people stuck in informal economy. It's why Xi's China dream only targets modest 40k per capita by 2050 (I think in PPP terms). BTW even PRC demographers realized in 80s that PRC was trending towards old before rich, the entire will PRC get rich before old is western rhetoric. And TBH relative to PRC demography plan (one of the few examples of actual PRC long term planning) - PRC currently doing about expection.
>You do not grow like your teens and 20s in your 40s and 50s.
This is simplistic. A society with 25% skilled labour is going to grow differently than one with 60-80% (advanced economy). PRC is former, trending towards the latter. She's spitting out OECD combined in STEM talent per year, and even with 20% youth unemployment that's stupid amount of talent to improve productivity. The TLDR is PRC is in process of building 5x-10x the amount of skilled talent that pushed the them to 15T economy. It's the greatest high skill demographics divident in human history, even if net demographics will decline. The question is where will that get them? Advanced economy income? My guess is no, but will actually happen is PRC talent will increasingly compete and take pie from high income economies, and wages will start to converge. PRC will get modestly richer while advanced economies will start to get poorer.
On India, I think they'll be a much less successful PRC. Eventually they'll get there, i.e. they'll escape the middle income trap in the sense they will probably be able to competently develop most sectors indigenously - they won't actually be "trapped" by developement. But their sheer population 1.6B+ will likely trap their per capita by denominator of having so many unproductive people - India demographic divident is happening among their states with bad HDI. Nevermind unemployed STEM in PRC, their youth unemployment rate is like 40% (which western MSM doesn't seems to talk about) while being also being less educated with what talent they do generate being highly suceptible to being brain drained. It's... suboptimal.
That doesn't make any sense whatsoever. China's rise will accelerate even further. Growth rate is sinking because they switched to high quality development and dual circulation, which doesn't pump up the numbers as much as low quality development. Looking at Chinese industries, they are on the path of full spectrum domination, from aerospace, chip development, ai, mechanical manufacturing, high tech agriculture, research and so on. Look at the number of research fields where China is now #1. Look at the industries China is dominating.
> China's rise will accelerate even further. Growth rate is sinking because they switched to high quality development and dual circulation, which doesn't pump up the numbers as much as low quality development.
Don't you think those two are contradictory?
If what you say is the case then why is China struggling to retaliate in the chip war?
No, because high quality development focuses on innovation, sustainability and green development instead of raw growth via low quality development (construction, low-end manufacturing etc.) They could ramp up low quality development faster and thus achieving higher growth rates in the short term. But they are focusing on long term strategic goals.
China just retaliated by issuing export restrictions for some rare earths, which is an indicator that they are rapidly approaching self sufficiency in many aspects. There are still some major hurdles(EUV alternatives, high end AI accelerators, software stack) but if the current speed of development is any indication, then these too will be overcome and probably much faster than many anticipate.
> They could ramp up low quality development faster and thus achieving higher growth rates in the short term. But they are focusing on long term strategic goals.
Mathematically there can be only rate of growth at any point in time.
> But they are focusing on long term strategic goals.
You can say the same about US.
> There are still some major hurdles(EUV alternatives, high end AI accelerators, software stack) but if the current speed of development is any indication, then these too will be overcome and probably much faster than many anticipate.
It can go this or that way. With access to Western tech cut off, rate of pilfering from the West will also decrease, so that needs to be factored in too.
> Mathematically there can be only rate of growth at any point in time.
Huh? I don't understand what you mean by that. Different development strategies can result in different growth rates. Some will just take longer to ramp up but will pay off in the long term.
> You can say the same about US.
All major developed economies try to focus on high quality growth. The question is who is able to accomplish their goals faster/better. Considering the flexibility, strategic planning and political will, my bet in on China.
> It can go this or that way. With access to Western tech cut off, rate of pilfering from the West will also decrease, so that needs to be factored in too.
That is exactly why they are doing dual circulation and focusing on Latam, Asia and a Africa.
I know Peter Zeihan. He focuses mainly on energy and demographics. His predictions have a shoddy record. He is your typical "China will collapse any day now" think-tanker. In my opinion his analyses are simple and unscientific. He presents easy to digest ideas in an understandable way, he is also a great speaker. But if you actually deep dive into his narrative and the actual data, you will soon discover that he is mostly wrong or dramatically exaggerating.
Yeah he's just one voice though. Expats are leaving, Global companies are pulling out, the property market is finally crashing, the world is finding other suppliers. Its over.
PRC demographics, as in actual ability to coordinate and exploit divident is SIGNIFICANTLY better than India's whose trending toward's PRC demographers worst nightmare. 100s of millions of undereducated and underemployed youths while their brightest get brain drained to advanced economies.
PRC has the best high skilled demographics in recorded history in the next 30 years. It's only after mid century demographics / risk of Japanification is an issue. PRC demographic collapists (i.e. Zeihan tards) thinks PRC is going to tumble sharply from where she is now and soon, but really she's going to stagnate or fall slowly from a significantly higher position decades from now.
> PRC has the best high skilled demographics in recorded history in the next 30 years
This is a very questionable statement.
"China’s overall education rate is one of the lowest in the middle-income world ... Comparing China’s human capital with that of other countries, it is not only systemically lower than South Korea, Ireland, and other “graduates” out of middle-income status, it is also lower than virtually all other middle-income countries." [0]
This does not mean economic collapse or demise, but there is a very real human capital issue at a macro-level. That said, policymakers in the PRC know this and have been working with SIEPR at Stanford for over a decade on rectifying this at a policymaking level, but there are some very real systemic issues that mean China c. 2023 cannot be compared with countries at a similar levels of development such as Brazil, Thailand, Mexico, Malaysia, etc.
Yes, it's questionable if the context is per capita. But with PRC pop denominator effect, it's fine/prudent to also recognize absolute effects, the trend of PRC talent generation that bias towards skilled individuals means PRC will accumulate historically unprecedented pool of skilled talent over next 20 years since they have pipeline of 10-14m new birth for past 26 years for accessible future tertiary talent. Unless CCP completely cracks down on educating their population, with rate of current tertiary excess capacity and even if bodies get redirected into skilled vocational training, the country is trending towards ~100m new skilled over next few decades. Which assuming PRC has ability to retain and coordinate (and so far they've done reasonable job), that cohort is very much potentially the best/greatest pool of (TBF potential) high skilled demographics divident humanity has ever assembled in a generation period. Like there simply isn't any time period in the past where one country had population or institutions to do so, nor are any countries likely to match including US who would to increase immigration to politically unfeasible levels, or (IMO) India even with 1.6B pop unless they manage to not only stop crippling brain drain but also coordinate talent domestically on par with PRC capabilities. Hence PRC human capita can be per capita lower but also in aggregate better than virtually all other countries, including potentially US + immigration. Hence why c 2023 no one seriously thinks Brazil, Thailand, Mexico, Malaysia are currently or even potential future US competitors, while PRC with poor per capita education metrics is acknowledged as more than enough to be, because for some purposes, the more useful comparison is absolute vs relative.
E: And in agreement, yes there will be macro level issues to low per capita performance - it's not going to be pretty but it's not going to be collapse either. A country can simulatenously improve/lead at top while bottom languish/decline.
> Hence why c 2023 no one seriously thinks Brazil, Thailand, Mexico, Malaysia are currently or even potential future US competitors
Because all those countries largely aligned with the liberal international order and didn't try to antagonize their neighbors.
A notable exception to your list is Russia, a fellow upper middle income country that in 2010-2014 was on the precipice of becoming a developed country (HDI above 0.800 AND GDP per Capita above $12,000/yr c. 2010-13)
Russia began playing a belligerent role in Georgia/Abkhazia/Ossetia (2008-Present), Ukraine (2014-present), Syria (2015-present), and the CAR (2018-president) and we burnt multiple cycles worrying about them.
When I was on the Hill, we were honestly neutral/indifferent about China until you guys hacked our companies (Google, Lockheed Martin) and our government (OPM Hack in 2015, CIA in 2012-13).
This is just the US. The leadership in post-2011 China has unnecessarily antagonized Japan, South Korea, Vietnam, Phillipines, India, Australia, and Vietnam despite all those countries preferring to the neutral in any US-PRC confrontation.
All the hawkish comments on here hoping for the collapse of the PRC are disgusting and do not reflect what those of us in a decisionmaking capacity or adjacent to those think.
Yet unbridled nationalism and hubris by commentators on both sides is impacting the ability to get shit done.
> Like there simply isn't any time period in the past where one country had population or institutions to do so, nor are any countries likely to match including US who would to increase immigration to politically unfeasible levels, or (IMO) India even with 1.6B pop unless they manage to not only stop crippling brain drain but also coordinate talent domestically on par with PRC capabilities
India in 2023 is a country with developmental indicators, institutions, and infrastructure largely on par with the PRC in the 2000-2003 period.
A lot of the same problems you mentioned about India are the exact same problems China faced and overcame, and the same playbook is being applied there.
In fact, the same kind of commentary you are bristling too is the exact same commentary people used to give China during the exact same time period, and it's kind of funny seeing Chinese commentators reusing the same comments we Americans made about China in the 2000-2015 period on India.
> A country can simulatenously improve/lead at top while bottom languish/decline
This is a still an open question. No country has ever transitioned from a developing country to an advanced economy with as crippling a Human Capital Handicap as the PRC today. The last large upper middle income countries that had a similar handicap were Mexico, Brazil, Türkiye, and Malaysia.
None of these countries are shitholes, but when they reached a similar pivot as China did today in the late 90s/early 2000s, they had the need to resort to extensive social and economic reforms. While Malaysia has succeeded at that, this hasn't been as successful in Brazil, Türkiye, and Mexico.
If I was a gambling man, I'd lean towards assuming this transition will be a protracted affair. Not "institutions collapse" bad but 7-10 years of malaise, because building human capital takes time and effort.
Or because those countries baseline size means their natural growth trajectory will not threaten western incumbents the same way PRC growth would, including modest 2% military budget which is enough to make everyone shit bricks. Nor would I characterize those countries as "largely" aligned with LIO seeing current headlines and it's not like India doesn't antagonize neighbours when PRC started spread influence in south Asia.
Difference between RU and PRC is RU actually mired in kinetic war with neighbours vs PRC grey zone that pushes region to some security hedging but not at expense of PRC trade. IMO that's natural/forgone, and let's not forget PRC antagonism was rarely PRC initiated. SKR over THAAD, Japan was always weary. PRC also last to reclaim/militarized SCS started by Vietnam (barring Brunei) but doing so at PRC scale revealed gap in capability causing others to hedge and they still do. Current US posture in region under Trump and Biden admins still pale in comparison to initial deterrence proposals of ringing PRC with missiles and agile basing. AU is AU they couldn't stay neutral if US pushed. But overall current US posture is still shadow of what they thought they could get despite going HAM on diplomatic efforts.
On India, note elsewhere I said I'm optimistic they'll get shit together eventually but unlikely to replicate PRC because they lack same levers for state capacity. It's not unreasonable to observe India does not have the same favourable headwinds as PRC in 2000s, i.e. PRC+1 is mostly shifting to where PRC willing to shift and that's ASEAN not India who is unlikely to capture PRC levels of manufacturing base and ability to snowball development for the simple reason that PRC is not willing to relinquish manufacturing advantage and west can only shift so much. The fact that India is at PRC early 2000s indicators despite starting with comparable if not favourable conditions and still not addressing some of the major social hurdles PRC has mostly addressed at the time (i.e. single language to facilitate migrant / labour transfers), reflect inherent inefficiencies that is relatively more difficult to coordinate around. India on par with PRC in 2000 is still India 20 years behind due to systemic differences that extrapolated will unlikely see India catch up at 1:1 time scale.
And yes consensus in washington was OPM fair game but PRC industrial espionage that pushed up PRC industry to compete with west was the real concern. Entire MIC2025 drama. And circling back to India this is exactly why they're not squeezing the level same tech transfers PRC was able to because everyone wised up. The playbook doesn't work as well anymore. US willing to cripple JP semi despite JP being fully LIO aligned, ultimately no one is going to want India to repeat a PRC including the PRC. Nevermind studies showing export oriented models working increasingly less well - countries milk industrialization opportunities faster and settle at lower levels of income due to labour saving technologies that remove a lot of human potential from being realized. Will India make it? Again IMO, yes, but it will take longer and the race against Indian demographics much more difficult. PRC "only" saddled with 600m farmers and informal economy "halfwits" despite deliberate family planning policy to mitigate, India will likely have 1B+ having tried and fail family planning of their own, that's another tier of drag to govern around.
>No country has ever transitioned from a developing country to an advanced economy with as crippling a Human Capital Handicap as the PRC today.
Sure but PRC doesn't need to be advanced across the board it needs regions to be sufficiently advanced to compete with advanced economies and by and large it already has at the scale of tier 1/2 efforts. PRC isn't a large country - it's a massive country the scale dynamics operates differently than turkey mexico or malaysia. At PRC scale, 5M STEM per year is enough to saturate/build up strategic industries with talent and directly challenge advanced economies across the board vs 100,000s of from "large" countries that still has to pick and choose. I'm one of the first to note PRC isn't going to uplift everyone to advanced indicators but it will uplift enough to be extremely competitive and resulting in advanced economies also suffering malaise (which many already are) by spreading out the pie. Convergence is as much about PRC doing better but also incumbents doing worse because they need to compete with segements of PRC that can compete. And that segment set to massively expand in next 30 years while current level is already competing/leading in industries with historically dominant western share. Time and effort has been put in via initiatives in 90s and early 00s and we're approaching divident reaping phase. There's a decent report on PRC leveraging scale in domestic efforts and eventual effect on oversea share of incumbents and effect was something like 50-90% reduction in operating margins of leading (mostly western companies) when PRC pushes surplus abroad. Hence why PRC competitiveness at even current PRC scale enabled by low % per capita skill is making advanced economies justifiably nervous.
Yet will continue to be among the worst in the world in all per capita metrics. Is having a large economy really that meaningful when the benefits are enjoyed by the top 0.1% and not able to trickle down?
That’s essentially impossible. The birth rate in India is below 2 at this point so the population will drop. That combined with a larger economy means the per capita metrics will improve.
Sure it will. Just like China would surpass the US by 2018 and then it didn’t happen. These only apply if the US does nothing and let’s these countries do so.
https://www.cnbc.com/2023/07/10/india-to-become-worlds-secon...