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Endogenous growth theory, for which Paul Romer won a 2018 Nobel prize in economics, implies that long-term economic prosperity depends on the spread of knowledg

Endogenous growth theory, for which Paul Romer won a 2018 Nobel prize in economics, implies that long-term economic prosperity depends on the spread of knowledge and technological innovation in the economy. [1] If these are the primary factors, then the closest analogues to China would be other East Asian economies like Japan and South Korea. These nations greatly value education, with top-tiered performance in international tests, and invest heavily in R&D. An oft-repeated criticism that authoritarianism constrains scientific and technological creativity is still unproven and will be tested in the coming decades by China. [2] [1] From Wikipedia: “Endogenous growth theory holds that economic growth is primarily the result of endogenous and not external forces.[1] Endogenous growth theory holds that investment in human capital, innovation, and knowledge are significant contributors to economic growth.” https://www.nobelprize.org/prizes/economic-sciences/2018/press-release/ https://www.nobelprize.org/prizes/economic-sciences/2018/pre... https://en.m.wikipedia.org/wiki/Endogenous_growth_theory https://en.m.wikipedia.org/wiki/Endogenous_growth_theory [2] How China could dominate science. https://www.economist.com/leaders/2019/01/12/how-china-could-dominate-science https://www.economist.com/leaders/2019/01/12/how-china-could...

nopinsight 8y ago
My prediction: To reinvigorate the economy, China will invest even more heavily in technological R&D as a form of economic stimulus since the last round of 2008 stimulus already resulted in some superfluous infrastructure. Its R&D spending as a percentage of GDP is already head & shoulders above most other developing economies and in fact above several Western European economies (it is close to the level of France) but still below Japan and South Korea, for example. https://en.m.wikipedia.org/wiki/List_of_countries_by_research_and_development_spending https://en.m.wikipedia.org/wiki/List_of_countries_by_researc...
throwaway32r5y 8y ago
One thing to point out is China still has around 600 million citizens that live in poverty. Just getting them up to current Chinese standards will ensure China’s economy for awhile.
- ksec 8y ago
  >One thing to point out is China still has around 600 million citizens that live in poverty. Um.... No. There are now less than 600M people living in poverty around the world. There are now less 30M of Chinese living in poverty. With the aim of getting close eradicating poverty by 2020.
  - james_s_tayler 8y ago
    You're both correct but relatively so. You're thinking about the poverty line of $1.90 a day, what the late Hans Rosling would refer to as Level 1. And you're spot on. Relatively speaking though anyone living on level 4 feels like level 2 or 3 is 'poverty' in comparison. From that perspective there is still a lot of potential upside and maybe that's what the parent was trying to say?
  - ksec 8y ago
    Thanks to all those downvoting and not giving a reply. Figures came out of Wiki and other World Data sources. As much as I dislike the idea of how we define poverty, that is how most of the economist today are defining them.
- DeonPenny 8y ago
  Yeh but with what. Manufacturing from exports is basically saturated, construction is saturated, public works is saturated. Yes you have 600M people but what will you do with them all.
speedplane 8y ago
> Endogenous growth theory, ... implies that long-term economic prosperity depends on the spread of knowledge and technological innovation What if Moore's law wasn't really an exponential, but more of a step function over the past 50 years. What if it was a one-time fluke that greatly advanced society, but we're gearing up for a long haul of flat or linear growth? It explains a lot, including why China is able to quickly catch up to the U.S. in tech. If U.S. tech was really growing exponentially, it would be impossible for China to gain ground even if it was growing at an equal exponential rate. It also explains why iPhone sales are down. It isn't because of lower consumer demand or market saturation, those are just symptoms of a larger problem. It's because the rate of innovation is slowing down. We've relied on Moore's law of exponential growth for three generations, but it's sadly dying (if not dead). The ramifications will affect everything.
- nopinsight 8y ago
  Catching up is usually faster than pushing the state of the art further. I think the smartphone industry’s slower growth is more the result of diminishing returns from the form factor than the cessation of Moore’s law.
  - speedplane 8y ago
    > Catching up is usually faster than pushing the state of the art further. Not so for exponential growth. e^x will always be greater than e^(x-t).
    - melling 8y ago
      You missed the part where they can simply borrow to catch up: “One is that as Chinese technology converges on that of advanced countries, the room for rapid improvement through borrowing declines”
    - nopinsight 8y ago
      The base for an economic growth model does not need to be e and generally would not be the same for different economies. The base for catching up economies is usually higher than developed economies (say 1.2 vs 1.1). In any case, a simple exponential equation is too simplistic for real economies.

nopinsight 8y ago

My prediction: To reinvigorate the economy, China will invest even more heavily in technological R&D as a form of economic stimulus since the last round of 2008 stimulus already resulted in some superfluous infrastructure. Its R&D spending as a percentage of GDP is already head & shoulders above most other developing economies and in fact above several Western European economies (it is close to the level of France) but still below Japan and South Korea, for example. https://en.m.wikipedia.org/wiki/List_of_countries_by_research_and_development_spending https://en.m.wikipedia.org/wiki/List_of_countries_by_researc...

throwaway32r5y 8y ago

One thing to point out is China still has around 600 million citizens that live in poverty. Just getting them up to current Chinese standards will ensure China’s economy for awhile.

ksec 8y ago
>One thing to point out is China still has around 600 million citizens that live in poverty. Um.... No. There are now less than 600M people living in poverty around the world. There are now less 30M of Chinese living in poverty. With the aim of getting close eradicating poverty by 2020.
- james_s_tayler 8y ago
  You're both correct but relatively so. You're thinking about the poverty line of $1.90 a day, what the late Hans Rosling would refer to as Level 1. And you're spot on. Relatively speaking though anyone living on level 4 feels like level 2 or 3 is 'poverty' in comparison. From that perspective there is still a lot of potential upside and maybe that's what the parent was trying to say?
- ksec 8y ago
  Thanks to all those downvoting and not giving a reply. Figures came out of Wiki and other World Data sources. As much as I dislike the idea of how we define poverty, that is how most of the economist today are defining them.
DeonPenny 8y ago
Yeh but with what. Manufacturing from exports is basically saturated, construction is saturated, public works is saturated. Yes you have 600M people but what will you do with them all.

speedplane 8y ago

> Endogenous growth theory, ... implies that long-term economic prosperity depends on the spread of knowledge and technological innovation What if Moore's law wasn't really an exponential, but more of a step function over the past 50 years. What if it was a one-time fluke that greatly advanced society, but we're gearing up for a long haul of flat or linear growth? It explains a lot, including why China is able to quickly catch up to the U.S. in tech. If U.S. tech was really growing exponentially, it would be impossible for China to gain ground even if it was growing at an equal exponential rate. It also explains why iPhone sales are down. It isn't because of lower consumer demand or market saturation, those are just symptoms of a larger problem. It's because the rate of innovation is slowing down. We've relied on Moore's law of exponential growth for three generations, but it's sadly dying (if not dead). The ramifications will affect everything.

nopinsight 8y ago
Catching up is usually faster than pushing the state of the art further. I think the smartphone industry’s slower growth is more the result of diminishing returns from the form factor than the cessation of Moore’s law.
- speedplane 8y ago
  > Catching up is usually faster than pushing the state of the art further. Not so for exponential growth. e^x will always be greater than e^(x-t).
  - melling 8y ago
    You missed the part where they can simply borrow to catch up: “One is that as Chinese technology converges on that of advanced countries, the room for rapid improvement through borrowing declines”
  - nopinsight 8y ago
    The base for an economic growth model does not need to be e and generally would not be the same for different economies. The base for catching up economies is usually higher than developed economies (say 1.2 vs 1.1). In any case, a simple exponential equation is too simplistic for real economies.