The most concise answer to the question, “What explains China’s rise?” is one word: luck. (On the left, the Chinese character for luck.) Actually luck has been a major factor in the rise of all nations that escaped the grip of poverty.
Economists, starting with the classical economists like David Ricardo and Adam Smith around the mid-18th century, have struggled with explaining the causes of the wealth of nations. All of the various causal factors they and their successors identified are relevant and the question is far from settled, as evidenced by the hundreds of papers and books published every year by serious scholars on the subject of economic development, growth and progress. But hardly anyone invokes lady luck.
Just So Stories
Is there a secret to economic development? Actually, no. Only the ignorant or the seriously deluded are convinced that they know the secret. Each country follows a unique path that cannot be duplicated. Which is not to say that there are no general principles that affect development. Just as in the case of individuals, there are general principles that push toward success: intelligence, the ability to work hard, endowments, and external factors that are beyond one’s control. But let’s be clear about this: both nature as well as nurture are luck of the draw. You are born to wealth or poverty, and so also you are born with the genes that make you hard-working or lazy or intelligent or stupid. Continue reading “What Explains China’s Rise? — Part 2”