6 - Miracle productivity growth in the Asian Tigers?

Summary

What is the story in the larger part of the world where productivity has risen but not so much as to allow the types of gains that have created the wealth of the developed world? In this chapter we are going to focus on three cases: South Korea, China and India. They each started late and had different degrees of success in raising their productivity; so much so that they are sometimes seen as examples of miracle productivity growth. But first we need to put their stories into the wider perspective of the global productivity pattern.

Most of the high-productivity economies today are members of the OECD. It was formed in 1961 as a “Western” group in the midst of the Cold War. Today it has 36 members with an average per capita nominal income of some $41,000. Unfortunately, the population of the OECD countries today makes up only 17 per cent of the world's population. High productivity is not an explicit membership requirement of the OECD. Politics matters too. This explains why Russia is still not a member. But the high productivity of the OECD economies makes them a huge force in the global economy. In Asia only Japan and South Korea are members. In Central and South America only Chile and Mexico. No African country is a member of the OECD.

Table 6.1 shows the productivity gaps which exist today. We are again measuring these in terms of GDP per person employed because the poorer economies lack good enough data to calculate GDP per hour worked. Some regional categories are ragbag ones. There is a big gap, for example, between the economies with oil in the Middle East and North Africa and those without it. Still, the contrasts are sharp. We see here the leading role of the US and the relatively high position of the OECD as a whole, even allowing for some members with weaker productivity levels. The five BRICS are a coming together of Brazil, Russia, India, China and South Africa. The BRICS countries have size – their combined population amounts to 42 per cent of the global population – but their average nominal GDP per capita is just under $7,000. They are also far from moving forwards at the same speed and their performance and level is dominated by China.