Who moved my BlackBerry... and those hundreds of millions of people?

China and India are, for now, the only billion-people economies. In one popular telling, China shifted hundreds of millions of workers from farms to urban areas. In that story that switch rate, paired with reasonable assumptions on relative productivities in relatively backwards agriculture and forward-looking manufacturing just about matches China's overall growth rate, after factoring in other measureable progress.

A related not uncommon view further has it that India codes workman-like software, designs lower-end pharmaceuticals, answers queries about insurance claims over the telephone, and scans X-rays that Western doctors are too busy to do. These jobs might pay far less than done in the West but, in their part of the global marketplace, they almost surely pay better than stitching together textiles in Shanghai (上海) or assembling refrigerators in Shandong Peninsula (山东半岛).

So, which economy has had its growth driven more by changes in labour input? Where have more people moved out of poverty?


The Figures (using data kindly provided me by Dale Jorgensen and Khuong-minh Vu that they had used in their paper "Information Technology and the World Economy", 2006) show decompositions of Chinese and Indian growth into contributions due to physical capital, labour, and productivity (TFP). Earlier on, between 1989 and 1995, China certainly drew more on labour than did India to power economic growth and, true to stereotype, drew more on labour hours ("mere sweat and effort") than on labour quality, i.e., on skills and human capital. But even then the difference was small.

By 2000-2005 the most recent period for which we have data, China had come to rely more on physical capital, i.e., on machines. Its reliance on labour had fallen to 13%, almost exactly half that of India's. That shift occurred, moreover, with little loss in productivity's contribution. Through both periods and in both countries, productivity never contributed less than 40% of growth overall.

By 2000-2005, in fact, China's profile of growth contribution from capital, labour, and productivity almost exactly matched that of the US. The difference, of course, is that China has been growing at 3 times the rate of the US.




The next Figure (per capita income on the horizontal axis; hundreds of millions in $1/day-poverty) shows how China's much, much more impressive aggregate growth has lifted half a billion people out of extreme poverty in the last quarter-century; India, on the other hand, has only recently and, by comparison, imperceptibly started along the same path. But with a long way to go still. The data are for 1984-2004; I had used them in a previous blog posting.



My own small contribution on global inequality the last couple months was extremely practical. I did what I could in charitable fundraising. The video shows my friend Maria Gratsova holding the board for an airbreak. I performed a jump spinning hook kick. This particular event was the LSE Development Society auction on 05 February 2008, and I was up on the auction block. Fortunately, someone did buy me - for much more than I'm worth. But the money went to a good cause and the deal was that we had a paid-for dinner together afterwards.

(Yes, yes, I know, boards don't hit back but an airbreak means the board swings loose, and so is harder to break. And of course that they don't hit back doesn't mean they break everytime. In this next video [from September 2007] I attempted two boards on one jump and only broke one.)



Thanks to the kindness of friends, Maria and I held a repeat performance at LSE's Malaysia-Singapore Students Night, 23 February 2008, in the Old Theatre. Money changed hands there too, and for just as worthy a cause. (This still is from LiEe Ng's camera; thanks LiEe!)

The Confidence of Nations

In 1993 the New York Times ranked as one of the world’s top 10 restaurants the Far East Asian eatery Din Tai Fung (鼎泰丰): This restaurant specializes in xialongbao (small steamed dumplings).

Overnight, culture snobs everywhere no longer had to hide their inner ethnic hawker stall-foodie.

When I was growing up on a small Far East Asian island—when I say small, I mean 46 miles around—the height of sophistication was to eschew hawker foods like small steamed dumplings. Instead, if you were one of the cool kids, you boasted of having been at least once to an air-conditioned café, to sit there and have lunch comprising a ham sandwich and a salad, with tomatoes in it (although this last cost extra).

These days, of course, you can’t stay in any top international hotel in most countries in the Far East without waking up to a breakfast (or lunch or dinner) of koay teow thng, laksa, nasi lemak, sar hor fun, rojak, char koay teow, murtabak, oh chien, …, and, last but not least, small steamed dumplings. Everyone is now Deckard gesturing for two portions, only sitting in fancy surroundings.

What’s going on here? When did emerging economies acquire the self-confidence that allowed their native foods—for centuries sold only in back alleys and street-side hawker stalls, and served on banana leaf and old newspaper—to assume the mantle of cosmopolitan sophistication? Is it just higher incomes per capita? Is it the lifting of hundreds of millions of their populations out of absolute poverty? Or did the self-confidence come first and it is that that drove the people living in these economies to engage with the rest of humanity through trade and exchange, to clear out corrupt and ineffectual governments, to go to schools and be educated, to organize markets and to engineer efficient production?

I like it that my students at the LSE (including the 70% non-UK ones of LSE’s 8300, from over 150 countries worldwide) have that kind of self-confidence. This year (together with the very personable and prolific Conor Gearty, Professor of Human Rights Law at the LSE) I got to give a welcome lecture to their parents the week before classes began. I talked to them about “Globalization and The Student,” [PDF transcript, podcast coming soon]; I enjoyed tremendously the entire event, the questions the parents asked, and the conversations I got to have with them afterwards at the drinks reception. From everything I’ve seen at the LSE in my time here, their kids—our charges for the next few years—will be as interesting and interested, as delightful and entertaining as those kind people I got to meet Thursday evening.

"3 little syllables": LSE graduation, July 2007

Given how knowledge is supposed to be just world knowledge---not Korean, Japanese, British, or American knowledge---it is impressive how much gets written comparing to those in the West the sheer numbers employed in Chinese science and technology, or the levels of expertise in Indian engineering. How long will it be, it is implied, before Chinese knowledge or Indian knowledge overtake Western knowledge?

Thomas Friedman describes in The World is Flat how Craig Barret --- the current Chairman and former CEO of Intel Corporation --- shocks Americans by admitting Intel could well thrive as a company even if it never hired another American, although this of course is neither Intel's intent or desire. "We still do hire lots of Americans. But today we can hire the best talent around the world and be very successful," casting his eye over how a lot of Intel investment now takes place in Russia, China, India, Malaysia, and Israel.

Why hold back? Why not hire only the best?

The other story making the rounds is how in many Western firms now, annual prize ceremonies for top performance come with cheat-sheets to help the CEO pronounce the names of 9 out of 10 of the firm's most outstanding employees. Now and then, of course, "John Smith" from Peoria Illinois surprises.


So it was with some trepidation in early July that, as Head of the LSE Economics Department, I looked over the list of 300 or so graduating students whose names I would have to announce, before an audience of 1,000 in the Peacock Theatre at LSE's graduation ceremony. As I had previously blogged last December and October, that audience would include friends and family who had travelled vast distances to attend.

LSE has long been and continues to be far more international than any other university I know. Of its student population of 8,000, half come from more than 120 countries outside the European Union. Last year, for the first time ever, China and Hong Kong fielded over 950, the highest number of foreign students at the LSE. Malaysia and Singapore, even when added together manage only a tiny population at home. Yet, somehow they routinely send the LSE almost as many students as does the Chinese mainland now, and one-third more students than does all of Germany.

At the ceremony, I got up to the podium and, following protocol, tipped my hat to Howard Davies, the Director of the LSE, standing across the stage. He nodded, and looked pointedly back at me, for my Department's students were the bulk of those waiting to be called up on stage to shake his hand. I started down the list, and got smoothly around the first bend with "Igor Cesarec", "Christina Yuen Kiu Chan", "Wang Sheair Chua", "Yahan Li", "Sulwyn Lim", "Saravanan Nagappan", "Hieu Nguyen", "Sunehra Rahman", and "Muhammad Kashif Riaz".

I figured I was doing well. I only had 240 names that morning; some graduates had decided to go home or had had to start work, and couldn't attend.

I could see the finish line. I headed towards it with "Adrian Zhi Da Wong", "Sukjai Wongwaisiriwat", and "Zhi Jia Yap". I was on the final straightaway now with "Jiaqian Chen", "Ilja Boelaars", "Kun Lung Wu", "Vasileios Gkionakis", and "Nuarpear Warn Lekfuangfu".

Then I messed up.

"Linda Peng". Three syllables. From Malaysia.

These people I have named and others in the Peacock Theatre that morning are friends of mine. Of those who graduated BSc from the Economics Department, three years back I had given them and their classmates, all 850 of them, the very first lecture they ever attended at the LSE. Not by coincidence, that had also occurred in the Peacock Theatre; it was the first lecture on Introductory Economics. These people are members of an amazing and accomplished class. I wasn't pleased to see them leave that July morning. But I was proud I got to announce their names as they left.

World knowledge it is then.

Did Hollaback Girl scan more easily than Bootylicious?

One of the really enjoyable things about being Head of Department is attending graduation ceremony and reading out, to the assembly, the names of all the economics students who are graduating. The freshly-minted graduates come up on stage, one at a time, and shake hands with the Director. At the LSE we have two of these ceremonies each year. And each time around I marvel at how well our students scrub clean. (You know who you are.)

London being what it is, it's always seemed to me that the families and friends of our students save up the annual GDP of a small under-developed nation so they can attend these ceremonies. Of course, the students have already spent the GDP of several such nations just getting to that point. The least we can do is put on a show.

This time around I also go to read out my oration for an Honorary Doctorate for Robert Mundell. That was roaring good fun. As was he.

It's just a metaphor!

I missed a September posting on this blog. On the other hand, being Head of Department lets me indulge in talking to large groups in other ways. For instance, I got to address the entering class of BSc Econ students at the LSE. 28 September 2006. So maybe that talk will have to do instead.


Speaking to these cosmopolitan students got me thinking about textbooks that, optimistically, label themselves International Edition, yet still use examples like consuming lobster at a New England clambake. These students of ours have munched fried silkworm while walking down Wangfujing in Beijing. They've come in from homes on windswept, treeless plains outside Ulanbataar; or they regularly shop Singapore's Orchard Road and Shanghai's Nanjing Road. They've bitten into black pudding, for breakfast both in an English cafe and with noodles in soup in a Far East Asian open-air foodcourt. Why does anyone think a New England clambake would hold any resonance for them? But then again why would it hold any resonance even for someone biting into corndog at a Minnesota state fair?

Maybe that was OK when the whole world watched CNN and MTV together. But no one does anymore. They're too busy looking at 180-second segments of amateur content on YouTube or MySpace, generated by relatively random people from over 130 countries around the world.

Oh, and yes, to the parents of these LSE kids: Sex, drugs, and rock-n-roll is just a metaphor. Like when someone has 243 friends on LSE's Facebook? They are really working hard at school, and not hanging out with 243 people the entire time. Chill.

Not teaching

This fall is the first in the last 9 that I will not be teaching Introductory Economics to first-year undergraduates at the London School of Economics.



Because of my other duties at the School I will not, early this October, be standing up in a large, darkened theatre in London's West End in front of 850 undergraduates sitting in their first university lecture. I will not be worrying if their first lecture will set the appropriate tone for the rest of their university career. I will not be worrying if economics will come alive for them, over their first year, in a way that fires their imagination for the rest of their lives. I will not be worrying if the ideas these students encounter lead them later in life to assess affairs of the world thoughtfully and reasonably.

Well, I will worry - it's just that I no longer face the hazard of doing anything about it, for good or bad.

Less than 30 percent of the students sitting in that large lecture theatre for Introductory Economics will go on to study economics as a specialization at LSE. An even smaller fraction will contemplate doing economics professionally. For the overwhelming majority, those Introductory Economics lectures provide the one opportunity we (academic economists and social scientists) have to tell them why we think the way we do.


Will the economics we teach seem obtuse, technical, obscure, specialized, counter-intuitive, uncool, and ..., well, just plain the opposite of fun? Will this economics appear in a hurry to get on to yet something else (a more advanced course?), and not spend enough time revealing itself, right then and there, as a pretty remarkable way of understanding and improving the world around us?


LSE has the most cosmopolitan and international a student body of any top university in the world. About 1000 undergraduates matriculate at the LSE each year; of 8000 students here overall, 49 percent come from more than 120 countries outside the European Union. The native languages and states of origin among the students milling about the tiny expanse of Houghton Street dot every single part of the globe.


No other location on Earth matches per square meter the intellectual and experiential diversity worn so lightly by the LSE.

"Anyway...".


CM were in Paris this month with their mom for a French language course; then they all visited the Arc de Triomphe.

Two things I am currently working on frenziedly (beyond the long-term projects listed elsewhere on this page): First, a paper on the Digital Divide for the Copenhagen Consensus---what should the global community do if we had an additional $50 billion to spend over the next four years? Second, in taekwon-do a 540-degree jump spinning hook kick (here's what it's supposed to look like:



I'm just trying to get close for now.) If I don't get both these done soon after this item gets posted, I will become even more embarrassed and have to remove all of it from this blog.