Saturday, March 31, 2012

1994 Krugman

Thanks to M Pettis I cam across this article by Paul Krugman from 1994. Fascinating stuff. I like how he tries to educate the readers about the concept of growth and breaks it down into productivity increases and input increases. He made a reference to Singapore's growth miracle and explained how beyond a 40% investment in physical capital and after educating a large chunk of the population, further 'stimuli' to the economy cannot be created. For a country to break into the next bout of growth, innovation and productivity increases are required.
He also makes a reference to China and explains how even that model cannot continue endlessly. One fascinating topic is that of Japan. Remember, that in 1994, there were still many 'analysts' who believed that Japan will find its way out of its 1991 recession - it hasn't stepped out of it yet.

The way people spoke of the USSR in the 60s and Japan in the 70s and 80s and the Asian economies in the 90s, this is now happening with China in the 2000s.

In other news, M Pettis has a bet with the Economist. Look here.

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