Population, not free trade, behind China and India booms

An academic paper has challenged widely-held views about the emergence of China and India on to the world stage, one of the most important economic phenomena of recent years.

The reasons for the growth of these countries are usually thought to be globalisation, free trade and high wages in developed countries. But a paper by Professor Paul Sharp of the University of Copenhagen suggests the answer is much more prosaic. Drawing on a study of 19th century America for the Economic History Society's annual conference at the weekend, Prof Sharp said America's emergence in the 1800s was due to phenomenal population growth, not the free trade that was sweeping the globe at that time.

The increase in wheat trade between Britain and the United States in the nineteenth century had little to do with falling barriers to trade, but was linked to a rise in production in the US. This was almost certainly the result of large-scale population growth as immigrants flocked to America and became farmers. Prof Sharp's statistical analysis shows that a 1% increase in US production led to a 3% increase in UK imports. US production increased well over 1,000% in the nineteenth century.

The populations of China and India have been outpacing those of western economies for years, so it should be little surprise that most electrical appliances are manufactured in China or that an increasing amount of software outsourcing goes to India.

Source: Guardian