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No.E2018004: The Latecomer Advantages and Disadvantages: A New Structural Economics Perspectiv

2018-07-26

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No. E2018004                                                                                                                                                                                    2018-7-20





The Latecomer Advantages and Disadvantages:
A New Structural Economics Perspective

Justin Yifu Lin








Introduction

The world was quite stagnant and flat in terms of the speed of growth and difference in per capita income across countries before the industrial revolution in the 18th century. Most countries lived on agriculture and poor. According to Maddison’s estimates it took about 1400 years to double per capita income in Western Europe before the 18th century and the per capita GDP of Netherlands, the richest and trading power country, at the beginning of 18th century was 2130 international dollar, about 5 times of the average of 421 international dollar in Africa (Maddison 2011).2 The industrial revolution, referred as the only event in human history by historian Clark (2007), started in the UK in the mid-18th century, marking a dramatic turning point in the economic progress of nations. Rapid technological innovation after the advent of industrial revolution created new tools with higher productivity and new industries with higher values that made the possibility not only for breaking the Malthusian trap but also for a dramatic increase in per capita income (Kuznets 1966). During the nineteenth century, a number of industrial revolution pioneers in Western Europe and North America leapt ahead of the rest of the world. By 1851 the UK overtook Netherlands to become the richest country in the world and at the beginning of the 20th century, its per capita GDP reached 4492 dollar, 8.2 time of that in China, the poorest country in the world at that time on Maddison’s table of historical statistics of the world economy. ....


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