The Scorecard on

Development
1960-2016:
China and the
Global Economic
Mark Weisbrot, Co-Director, CEPR
Rebound October 9th, 2017
Political Context
• President Obama: “Over the last 25 years, the
number of people living in extreme poverty
has been cut from nearly 40 percent of
humanity to under 10 percent.”

• This is presented as evidence of the success of
“globalization” since 1990
China and Poverty Reduction

• But 2/3 of that reduction was in China

• From 1981-2010, China accounted for 94 percent of the
net reduction in people living below the extreme
poverty line

• Looking at the past 25 years, what about the 1/3 of net
poverty reduction that took place outside of China?

• China had a lot to do with that too
China and Developing Countries
• From 1990 until its peak in 2013, Low- and Middle-Income Country Exports to China
the share of low- and middle- 3.0% $600.00
income country exports sent to
China increased from 0.8 percent $523.09
to 9.7 percent, growing from $4 2.5% $500.00
billion to more than $520 billion.
• Exports to China from low-and-
middle-income countries

Billions of USD (Current)
2.0% $400.00
increased from 0.1 to 2.6 percent
of these countries’ GDP

Percent of GDP
$360.54

• From 2013-16, fell from 2.6 to 2 1.5% $300.00

percent
• Also: hundreds of billions of 1.0% $200.00
dollars of investment, loans, and
aid from China in the past 25
years 0.5% $100.00

0.0% $-
1980 1985 1990 1995 2000 2005 2010 2015

Exports to China as Percent of GDP (Left Axis) Exports to China (Right Axis)

Source: IMF DOTS, IMF WEO
Chinese Globalization
• Chinese globalization has done very well.
China’s per capita GDP has multiplied 21 times
since 1980.

• But Chinese globalization was based on very
different economic policies than those
adopted by the vast majority of low-and
middle-income-countries
Chinese Economic Policy

• Until recently, most investment
controlled by the government
• Huge role for state-owned enterprises
(SOEs), as recently as 2010 controlled
44 percent of major industrial
companies’ assets
China: Economic Policy and Globalization

• Foreign investment controlled to fit with development planning

• Technology transfer, performance requirements, export promotion

• Financial system state-controlled

• Central bank not independent

• Strict currency controls for most of this period

• Gradual, careful transition from planned to mixed economy
“Neoliberal Globalization” for Most Low- and
Middle-income Countries
• Often indiscriminate opening to international trade and capital flows
• Central Bank independence
• Abandonment of industrial and development policies
• Tighter fiscal and monetary policies, often pro-cyclical, inflation targeting
• Financial and other de-regulation
• Increasing protectionism in the area of intellectual property
• Privatization of state-owned enterprises
Failure and Rebound: 1960-2016
Real, Per Capita GDP
4

3
Annualized Growth (Percent)

2

1

0
<$1520 $1520-2900 $2900-7020 $7020-14500 >$14500
Quintile 1 Quintile 2 Quintile 3 Quintile 4 Quintile 5

1960–1980 1980–2000 2000–2015

Source: Penn World Table 9.0 and IMF World Economic Outlook Spring 2017
Failure and Rebound 1960-2016
Real, Per Capita GDP
• Methodology: avoids problem of 4

Source: Penn World Table 9.0 and IMF World Economic Outlook Spring 2017
diminishing returns in per capita GDP
growth and health indicators 3

Annualized Growth (Percent)
• Looks at unweighted averages of
individual countries 2

• Sharp slowdown in growth of per
capita GDP 1980-2000
1

• Note 2nd quintile: 60 percent growth
1960-1980; 15 percent 1980-2000
0

• Rebound in 21st century <$1520
Quintile 1
$1520-2900
Quintile 2
$2900-7020
Quintile 3
$7020-14500
Quintile 4
>$14500
Quintile 5
Real, Per Capita GDP
1960–1980 1980–2000 2000–2015

Source: Penn World Table 9.0 and IMF World Economic Outlook Spring 2017
Possible Reasons for Rebound
Real, Per Capita GDP
• China (noted above) 4

Source: Penn World Table 9.0 and IMF World Economic Outlook Spring 2017

• Loss of IMF influence in middle-
income countries 3

Annualized Growth (Percent)
• Counter-cyclical policies become
more common in developing 2

countries
• Note that high-income countries 1

slowed considerably in 21st
century, did not contribute to the 0
<$1520 $1520-2900 $2900-7020 $7020-14500 >$14500

rebound for rest of world. Real, Per Capita GDP
Quintile 1 Quintile 2

1960–1980
Quintile 3

1980–2000
Quintile 4

2000–2015
Quintile 5

Source: Penn World Table 9.0 and IMF World Economic Outlook Spring 2017
Child Mortality
• Rate of progress shows similar pattern for bottom two quintiles
Mortality Rate, Under Age 5 (per 1,000 live births)
Quintile 1 Quintile 2 Quintile 3 Quintile 4 Quintile 5
175–396 96–175 41–95 20–41 4–19
0
-0.24
-0.37

-1 -0.76
-0.81 -0.82

-1.60
-2 -1.77
Average Annual Change

-2.01

-3 -2.78

-4 -3.81
-3.98 -3.92

-5
-4.89

-6
-6.18

-7

1960–1980 1980–2000 2000–2015

Source: World Bank, World Development Indicators.
Adult Female Mortality
Mortality Rate, Adult, Female (per 1,000 female adults)
Quintile 1 Quintile 2 Quintile 3 Quintile 4 Quintile 5
355–645 238–354 155–234 110–155 41–110
2
0.86

0

-0.76
-1.17 -1.11
-2 -1.34
-1.17
-2.17
Averange Annual Change

-1.89

-3.18 -3.02
-4

-4.37
-4.60
-4.53
-6
-5.56

-8

-10

-10.75

-12
Mortality Rate, Adult, Female (per 1,000 female adults)
1960–1980 1980–2000 2000–2015

Source: World Bank, World Development Indicators
Adult Male Mortality
Mortality Rate, Adult, Male (per 1,000 male adults)
Quintile 1 Quintile 2 Quintile 3 Quintile 4 Quintile 5

Source: World Bank,408–731 307–408
World Development Indicators 243–306 186–241 77–186
2

0.33

0

-0.53
-1.09
-2 -1.73
-1.79
-0.61 -1.97
-2.31
Averange Annual Change

-2.62
-3.47 -3.39
-4
-4.03

-5.00
-6
-5.52

-8

-10

-10.46

-12
Mortality Rate, Adult, Male (per 1,000 male adults)
1960–1980 1980–2000 2000–2015

Source: World Bank, World Development Indicators
Adult Female Mortality Comparison
Mortality Rate, Adult, Female (per 1,000 female adults) Mortality Rate, Adult, Female (per 1,000 female adults), With Selected Countries Removed
Quintile 1 Quintile 2 Quintile 3 Quintile 4 Quintile 5 Quintile 1 Quintile 2 Quintile 3 Quintile 4 Quintile 5
355–645 238–354 155–234 110–155 41–110 355–557 238–354 155–234 110–155 41–110
2 0
0.86

0 -1 -0.80
-1.20 -1.10
-0.76
-1.11 -1.30 -1.20
-1.17
-2 -1.34 -2
Averange Annual Change

-1.17

Average Annual Change
-2.17
-1.89 -2.20
-3.18 -3.02
-4 -3
-2.80
-4.37 -3.20 -3.00
-4.60
-4.53
-6 -4
-5.56
-2.80

-8 -5 -4.70 -4.40

-4.50
-10 -6
-5.80 -6.00
-10.75
-12 -7
Mortality Rate, Adult, Female (per 1,000 female adults)
1960–1980 1980–2000 2000–2015 1960–1980 1980–2000 2000–2015

Source: World Bank, World Development Indicators
Infant Mortality
Mortality Rate, Infant (per 1,000 live births)
Quintile 1 Quintile 2 Quintile 3 Quintile 4 Quintile 5
110–224 68–109 34–68 16–34 3–15
0

-0.20
-0.31
-1

-0.63
-0.66 -0.64
-1
Average Annual Change

-1.06

-1.28
-2 -1.41

-2

-1.71

-3 -2.32 -2.37

-2.23

-3
-2.92
-3.10

-4

1960–1980 1980–2000 2000–2015

Source: World Bank, World Development Indicators
In Conclusion
• Many who praise the success of “globalization” may be unintentionally
praising Chinese economic policy
• There should be more skepticism and inquiry regarding the impact of
“globalization” on low-and-middle-income countries, as has recently
happened with regard to high income countries.
• Also regarding the institutions that promote and embody (IMF and World
Bank) and codify (WTO) the “globalization” effort
• The sharp decline in economic growth 1980-2000, as well as declining
progress on health and social indicators, remains largely unnoticed and
unexplained. Also the 21st century rebound.
• This should be an important topic of interest for economists