I read Nicholas Crafts’ ‘Economic History Matters‘ last night again. (This essay will appear in the special conference issue of Economic History of Developing Regions prepared for the World Economic History Congress 2012 to be held in Stellenbosch from 9-13 July.)
What struck me was his emphasis on the unique contribution economic historians can make to understanding economic growth (or the lack there-of), and which policies ignite or contract growth. He notes the example of Japan:
If continual reform is needed to achieve full catch-up, it is very possible that countries find catch-up easy to start but difficult to complete. Japan, where catch-up of the United States stalled 20 years ago, epitomizes this problem (Chen, 2008). Idiosyncratic features of the Japanese economy such as lifetime employment, the main bank system, business groups, industrial policy, and the absence of competition in non-tradables were no longer advantageous in the 1990s but were hard to reform (Ito, 1996). This suggests that predictions of catch-up and convergence of China with the United States – which is taken to be a done deal by the general public – might be viewed sceptically by economic historians. Similarly, the projections of future catch-up by the so-called BRICs economies, popularized by Goldman Sachs (Wilson and Purushothaman, 2003), have a mechanistic flavour which abstracts from the political economy of development. Exploring the sustainability of catch-up growth processes in the light of historical experience is an area where economic historians have important insights to offer.
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