Mysteries of growth

Matt writes:

To me the most pointed contrast is between the Soviet Bloc and pre-reform China. Why was East Germany so much poorer than West Germany? That’s easy—Communism! And that’s why North Korea is poorer than South Korea. It’s also why Taiwan is richer than China. But Communism hardly explains why the Soviet Union was always much richer than China. But it was a lot richer despite broadly similar political systems and ideological commitments, and the human suffering involved in the PRC’s failure to implement Communism as successfully as the USSR was enormous.

I would say this: Stalin favored industrialization (albeit of a strange sort) more than did the Chinese communists, China had a more damaging heritage of conquest and civil war, Russia was far more urbanized, Russia had greater access to European ideas (some of them bad of course), and the Russian experience of nation-building was mostly behind them, whereas China is still going through this process.  For Russia/Soviet Union, the major structures of 20th century European growth were largely in place, though “liberal institutions” were rejected.  Russia had an advanced European educational system in place, albeit not for everyone.  If you look at the economic history of the more Asiatic “Stans,” which of course were part of the Soviet Union communist experience, the importance of already-industrializing and European connections looks all the more stronger.  The relative prosperity of Estonia also bears out this thesis, though it would be interesting to ponder Kaliningrad/Königsberg in this regard.


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