Is the worst economic crisis of modern times really over? Though there are risks to the downside, the latest OECD Economic Outlook points to a recovery taking hold. If growth staggered somewhat in the second half of 2010, it was partly because world trade slowed from exceptionally high growth rates earlier in the year, the upturn in the inventory cycle is easing and many governments began unwinding their fiscal stimulus, and in some cases, cutting spending to control burgeoning deficits. However, private investment looks set to take over, with business investment likely to become more robust.
Napoleon Bonaparte never visited China, but his reflections on its future role on the global stage have stood the test of time. “Let China sleep,” he wrote about 200 years ago, “for when she wakes, she will shake the world.” Ironically, back in Napoleon’s day China’s share of the global economy was far larger than it is today, according to the economic historian Angus Maddison. The chart is based on data from his monumental economic study of the second millennium, The World Economy: A Millennial Perspective, which was published by the OECD in 2001. In the early 19th century, China’s share of the economy stood at just under 33%, according to Maddison, but fell to 4-5% in the 1960s and 1970s before recovering to reach about 12% in 2000, the latest year this study provides. China’s global share has continued to rise since then, as more recent, albeit differently based, World Bank estimates indicate. But why the earlier long decline? Maddison splits the millennium into two parts – before 1820 and after… (more…)