Saturday, October 6, 2012

China and Latin America

Back in the late 1960s and early 1970s the topic in economic development was the so-called Brazilian Miracle. Rates of growth were a staggering 7.5% on average, and in the last phase of the boom were in the two digit level. Forty years later the Brazilian economy is far from that kind of performance. Only the Chinese can boast such a miracle (at least so far). The graph below shows the relative performance of China with respect to both Argentina and Brazil from the 1950s until 2009.
The chart shows that until 1980 Brazil income per capita grew slightly faster than China, while Argentina did basically at the same rate, and both Latin American countries were considerably wealthier than China. By 2007 China's income per capita had surpassed that of Brazil and was approaching fast that of Argentina. Also, it is clear that in the 2000s the comparative performance of Argentina was better than that of Brazil.

These measures are with Geary-Khamis Purchasing Power Parity (PPP) 1990 dollars, which should be taken with some skepticism. From our perspective the important thing is that the data provides a good picture of the relative growth of China, even if the absolute level (whether the average Chinese is better off than the average Brazilian) might be less than precise. The source is from Fundación Norte y Sur, headed by Orlando Ferreres , but the original data (my guess is that with the exception of Argentina for the last few years) is from Angus Maddison.

I'll have more on the problems of PPP measures in a different post.


  1. I have two little concerns about Angus Maddison's data. Firstly, it has significantly faster growth for China in recent years than the data of IMF, CIA Factbook or Word Bank. The reason I don't wuite understand, but he uses an alternative measure for Chinese GDP.

    The other is smaller, but important in talking about Brazilian GDP per capita. The population growth estimates for after 2000 are much higher than what really happened. Many international data still haven't adjusted for the last Brazilian census.

    Other than this, I would apreciate what problems you find in PPP measures.

  2. Yep, that's the point I referred to when I said you have to take PPP with a grain of salt. A lot of the increase in Chinese living standards is an exchange rate adjustment. I'm going to post a brief critique of PPP and the data at market prices. In current dollars Chinese GDP per capita is around 6000, while Argentine and Brazilian GDP per capita are closer to 12,000.


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