Monday, August 08, 2005

India, China and Humanity

Brazilians apparently like to say of their own country that it is “the country of the future, and it always will be.” Much the same could be said of most of the developing world in the entire postcolonial period, particularly the two giants of India and China. But that of course is changing. Starting in roughly 1980 in China and perhaps with the financial crisis of 1991 in India, these two giants appear to have awakened. There has justifiably been much commentary about the effect of these changes, if they proceed all the way to full modernization, on geopolitics, struggles for natural resources such as oil, the U.S. economy, etc. But one potential spectacular side-effect of the development of these two countries is the general improvement in human welfare as over two billion people enter the modern freeway system of science and global commerce.

The economic historian Angus Maddison has built an impressive series of admittedly speculative estimates about economic growth going back almost 2000 years. Per capita GDP worldwide was stagnant from 0-1000 A.D., and grew 0.05 percent annually from 1000-1820. That increase is still microscopic – it amounts to a fifty percent total increase in the standard of living in over eight centuries, an achievement that in the most advanced countries takes only two or three decades now. In that latter interval there were already significant gaps between Western Europe, the initial outposts of what we now call the Anglosphere (Canada, the U.S., Australia, New Zealand) and Japan on the one hand (0.13 percent annually) and the rest of the world (0.03 percent). Since 1820 everything has been different, with the first group of nations leading the way between 1820-1998 at 1.67 percent annual growth and the latter group at 1.21 percent.

That growth has been achieved both through the creation of new scientific, technological and commercial knowledge and through systems of property rights and free trade in ideas that allow that knowledge to spread. When James Watt invented the steam engine, suddenly the power humans could bring to bear was no longer limited by their own physical strength or that of animals. Many things that were impossible suddenly became simple. But the benefits of Watt’s invention only temporarily accrued solely to people in his geographic vicinity – first Glasgow, then the U.K. Soon this knowledge, which could be understood and duplicated by anyone, was raising productivity and living standards worldwide.

Knowledge is a peculiar good in that it is what economists call nonrivalrous – my consumption of it doesn’t limit your ability to consume it at all. If I buy a computer there is one less computer for you. But if I know how to solve a differential equation that in no way leaves less knowledge for you. (The acquisition of the knowledge may be rivalrous, if for example, there are only so many seats in the math classroom, but possession and use of the knowledge is generally not.) When one person produces knowledge everyone can benefit.

But in most of the industrial era the heavy lifting of discovering new things – scientific things such as Boyle’s Law, technological things such as the invention of the transistor, and commercial things such as the superiority in some instances of just-in-time inventory – has been done by a small percentage of the population. According to Charles Murray’s inventory of human achievement, for most of the last several centuries it has been Europeans, with Americans beginning in the last century, who have created so much lasting achievement. (He looks at science and artistic achievements, and does not investigate commercial ones.) If one looks, for example, at Nobel Prize winners in science, the vast majority of them have worked in Europe or the U.S., with the U.S. dominating in the postwar period.

But that is changing. The firm Thomson Scientific publishes a data set called National Science Indicators. Sciencewatch has analyzed the most recent figures, and they indicate that the percentage of scientific papers published by scholars at U.S. universities has been declining at least since 1991, while that from EU nations probably peaked between 1998-2000. (There are no data available on absolute numbers of papers, and U.S. papers tend to have higher impact as measured by citations.)

The balance of course is made up by Asia, whose share between 1990 and 2004 has risen rapidly from 15.67 to 25.32% over that time. There is a natural tendency to think of this as a loss from the point of view of the U.S. – more science for them means less science for us. But “science” is not rivalrous. All we are seeing is a beneficial feedback cycle from greater prosperity in Asia to more scientific output. This progress will soon be if it is not already duplicated in technological and commercial knowledge. Collectively these things feed back into more economic growth, which feeds even more knowledge production. And that knowledge is available to everyone in societies where knowledge transmission is not restricted – by lack of education or by government or culturally imposed isolation. The important thing is not to worry about percentage shares of an output that is growing at astonishing rates. (Consider the number of patents or research papers generated annually; each figure grows significantly over time.) Rather, the key task for a nation is to put a society in a position to use whichever knowledge is generated. This is as much a question of entrepreneurial freedom, low taxes, etc. as of funds devoted to scientific research.

The rise of India and China is not just a rise but an entry into a traffic flow, one already occupied by the people of the wealthy nations of North America, Australia, Europe and East Asia. In those societies the ability of communications technology, property rights and free speech to expand our knowledge base has resulted in an extraordinary transformation since the Industrial Revolution. The entry of Japan shortly after World War II and Korea, Taiwan and others since about 1970 has accelerated knowledge production further. (Think just in recent months about the rapidly growing contributions of Korean scientists to cloning research.) The merging of billions of Indians and Chinese into this system has the potential not to diminish American horizons, but to expand them. The entry of so many people into the modern global/commercial/scientific system, with its emphasis on creating knowledge competitively and allowing it to travel freely, will dramatically increase the rate of human progress. Technological, medical and other advances will progress more dramatically. More knowledge from them is not less for us, but more for everyone in a position to use it. The cure for cancer may ultimately be found not in an NIH lab but in Bangalore. As long as people are free to offer the medicine here, why would that bother us? The era when Europe was the primary knowledge society gave us the railroad, steam power, the modern university, the corporation and vaccines. The addition of the U.S. has yielded the information revolution, aviation and an array of medical breakthroughs too numerous to properly appreciate. What China and India will add is utterly unpredictable in its particulars but will undoubtedly be spectacular in the aggregate.

Geopolitically, the rise of new powers always poses challenges (witness the rise of Germany and the U.S. in the late 19th century or Japan in the early 20th), and China's rise is no sure thing. But it is impossible and immoral in any event to try and forestall the transformation of nations like India and China emerging from centuries of penury. Knitting such nations into the global system would seem to be the more urgent task, the more so because it allows humanity to benefit from their people’s creative energies.

5 Comments:

Blogger just sayin' said...

extremely well thought out and expressed. I've always thought that as much education as one wishes to receive one should get and it should be free (along the lines of our public schools). an educated person benefits the world.

1:21 PM  
Blogger ms énigme said...

ditto

1:50 PM  
Anonymous Anonymous said...

This comment has been removed by a blog administrator.

5:20 PM  
Anonymous questionmarker said...

I've read your posts with regards to China's fallibility and am wondering, what do you think will the global scenario for trade be like in, say, the next 10 years? Trade flows have already been shifting to North-east Asia, with everyone's sights set on the big dragon; the more cautious of us are observing India's rise in the background. I've often wondered if this shift in trade flows is uncertain or predetermined.

I'm curious to listen to more views - in 10 years time, what role will the rest of the world play? What role will declining Europe play? The rest of Asia, i.e. the NIEs, the developing ASEAN region? Where will the U.S. stand?

I wonder.

5:05 AM  
Blogger Evan said...

I've read your posts with regards to China's fallibility and am wondering, what do you think will the global scenario for trade be like in, say, the next 10 years?

I think one of the under-appreciated aspects of the huge importance of the U.S. economy is the way it allows the U.S. to influence other nations. If Britain or Sweden threatens to boycott or impose tariffs on some other country they will largely be ignored, but the U.S. is another matter. Indeed, IMHO the world has become excessively dependent on the U.S. economy in the last twenty years.

But that will probably change with the rise of China. In recent years NE Asia is the only region in the world where the percentage of exports going to the U.S. has declined, and that is because of the rise of China. We may already be seeing in the more accomodative policy of South Korea the ability of trade flows to dictate geopolitics.

Everything is uncertain, of course. I tend to think that long-term China's prospects are better than 50/50, and where money goes influence follows.

1:47 PM  

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