1. Chinese Economic Development: Historical & Comparative Perspectives 1.Historical Perspectives a.c. 1000—early commercialization b.c. 1500-1800—agrarian commercial c.c. 1800-1900—divergence 2. Comparative Perspectives a.economic history / development economics b.Where and why economic growth? c.Spatial units of comparison 3. The Challenges of this Course

2. Historical Perspectives 1000 AD—commercialized economy in Jiangnan Growth of market towns (brokers, shops, urban culture of story tellers, theatre, tea houses) Growth of long-distance trade (boats, docks) Specialized agricultural production, cash crops Handicrafts—textiles, silk and cotton.

3. 1500-1800: continued spread of commercialized agrarian economy Rural handicrafts supplement agriculture 2 contrasts with Europe –Rural crafts and agriculture separate –More crafts go to cities Chinese features –Long-distance trade, areal specialization; increased marketing--urban-rural connections AND connections between regions of empire –More isolated peripheral areas have some markets and exchange; differ in resource endowments.

4. Economic ties beyond the empire Silver imports and commercial change Trade w/ Southeast and Northeast Asia—silks, teas, porcelains, foodstuffs, medicines Trade through Central Asia—precious jewels & stones, paper, silk, Trade with Europe--: silks, teas, porcelains

5. 19th-c. Divergence Europe industrializes/China population pressures and environmental challenges grow Changed trade connections—primary products exports, Europeans do import substitution on porcelain and silk But variations within China & Europe too Key differences: technology & institutions

6. 20 th -c. Changes in China Pockets of industrialization Agrarian crisis Growing divide between rural and urban Greater regional variations Questions of whether positive or negative changes to spread faster Key role of unstable political situation

7. China’s economy in 1949 Short-run: –recovery from war and occupation –restore social and economic order Long-run: –industry in certain areas –rural stability –questions about urban-rural relations and development path

8. China’s Past & its Economic Future Re-establish strong centralized state, unified and integrated control Managing agrarian economic and social order a major political job See industrial economy largely for state strength—wealth and power of late 19 th c forward

9. Comparative Perspectives a.economic history / development economics b.Where and why economic growth? c.Spatial units of comparison

10. Sources of Growth –Division of labor, increased market size, economies of scale –Savings/investment vs consumption –Organizational change for increased efficiency –Technological change

11. Economic History Study of how economies have grown historically: application of economic theory and principles to past practices Most developed literature for Western Europe and the United States How to fit in cases with less clear paths of growth—e.g. Africa, Asia and Latin America?

12. Development Economics Assume we know how to create growth: Growth based on the shift from traditional to modern sector—industrialization. Industrial policies: create conditions for private or nationalized industry, varying roles for government Macroeconomic policies to promote market development and stability.

13. Explaining vs creating growth Intentions and complexity—gap between theory/policies and implementation Unintended consequences Consequences of European states needing loans—develop banking Consequences of early modern European war— manufacturing into cities 1950s Chinese government control of resource and product flows to avoid monopoly markets, makes all movements difficult

14. Where and why economic growth? Euro-America has a range of paths –Capital-intensive industrialization –Initially market led but late 19 th c. increasing roles for state Asia has overlapping sequence of paths-- –Japan and China in early 20 th c. are labor intensive methods –Post WW II heavy industrialization with state set priorities.

15. Who industrialized, how & why? At end of WW II, outside of Euro-America and Japan, Argentina, Brazil, Chile, China, Korea, Malaysia, Mexico, India, Indonesia, Taiwan, Thailand and Turkey. Development economics fails to explain or create successes. Cannot model increasing returns to scale or oligopolistic behavior. Result: lack of formal models to make clear causal mechanisms. Politics matter.

16. National units of comparison Large and small countries cannot be compared just with arithemetic averages Variation within large national units and explanations of differences—which variables are the same within a large country and across several small ones? Politically defined spaces matter but how has to be carefully evaluated.

17. The role of institutions in defining economic regions within and beyond national states Common institutions to create a region: e.g., contract law Institutions that link otherwise different sets of institutions—financial markets between institutionally different economies Alternative institutional mixes by region— relative importance of formal and informal, e.g. litigation versus mediation

18. Comparisons and connections States have policies that affect growth Connections in the international economic system shape growth Two questions –The relative importance of economic connections within regions or across the globe –The relative importance of paths of development vs systems within which development takes place

19. locate China’s developments since 1978 in global context compare with other paths of development note spatial scales of variation Observe particular institutional complexes Course challenges

20. Course goals Establish contexts: China in 1950s isolated: growth is largely a domestic issue; China by 2000 increasingly connected to international networks—do connections mean greater similarities? Observe bottom up and top down patterns of change and their social consequences Locate China’s pattern of changes in world time and space