Debin Ma

Wages, prices, and living standards in China, 1738–1925: in comparison with Europe, Japan, and India

This article develops data on the history of wages and prices in Beijing, Canton, and Suzhou/Shanghai in China from the eighteenth century to the twentieth, and compares them with leading cities in Europe, Japan, and India in terms of nominal wages, the cost of living, and the standard of living. In the eighteenth century, the real income of building workers in Asia was similar to that of workers in the backward parts of Europe but far behind that in the leading economies in north-western Europe. Real wages stagnated in China in the eighteenth and early nineteenth centuries and rose slowly in the late nineteenth and early twentieth, with little cumulative change for 200 years. The income disparities of the early twentieth century were due to long-run stagnation in China combined with industrialization in Japan and Europe.

Japanese Unskilled Wages in International Perspective, 1741–1913

Constructing consumption baskets for the benchmark periods 1745–1754 and 1882–1886, and price indices, we calculate real wages for Japanese unskilled daily laborers in 1741–1913. Matching caloric content and protein contents in our Japanese consumption baskets with those for Europe, we compare Japanese and European urban real wages. Real wages in Kyoto and later Tokyo are about a third London wages but comparable to wages in major Southern and Central European cities for 1700–1900. In Japan, wages are substantially higher in the Meiji period than in the Tokugawa period. These findings have implications for the debate on conditions in Europe and Asia on the eve of the Industrial Revolution.

Real GDP in Pre-War East Asia: A 1934-36 Benchmark Purchasing Power Parity Comparison with the U.S

This article provides estimates of purchasing power parity (PPP) converters for expenditure side GDP of Japan/China and Japan/U.S through a detailed matching of prices for more than 50 types of goods and services in private consumption and about 20 items or sectors for investment and government expenditure. Based on our finding and linking with the earlier studies on the relative price levels of Taiwan and Korea, we derive the mid-1930s benchmark PPP adjusted per capita income of Japan, China, Taiwan and Korea at 31%, 10%, 23%, and 12% of the U.S. level respectively for the mid-1930s. These estimates corrected the consistent downward bias in East Asian income levels based on market exchange rate conversions. While confirming Angus Maddisons estimates for China and Taiwan based on the 1990 benchmark back-projection method, they do point to a 23% and 85% overestimate in his comparable figures for Japan and Korea respectively for the mid-1930s period. This article develops a preliminary theoretical and empirical framework to demonstrate the possible source of the biases in the back-projection method. We briefly discuss the implications of our findings on the initial conditions and long-term growth dynamics in East Asia and beyond.

Why Japan, Not China, Was the First to Develop in East Asia: Lessons from Sericulture, 1850–1937*

Raw silk exports constituted the most important foreign currency-earning item for China and Japan during the period of 1860-1929. In the 1870s, China exported three times as much as Japan, but by the late 1920s, Chinese exports became less than 30% of Japanese exports. This paper focuses on the comparative performance of sericulture in Japan and the Lower Yangzi delta of China and constructs productivity indices including a price dual total factor productivity index. These indices, supported by a comparative narrative of the cocoon production and distribution sectors, suggest that Japan’s competitive success resulted from a set of interrelated technical and institutional innovations. It was the different reform policies pursued by Meiji Japan and Late-Qing China that created different conditions leading to the rise and absence of innovations respectively in these two regions.

State capacity and great divergence, the case of Qing China (1644–1911)

This article posits that the political institution of imperial China – its unitary and centralized ruling structure – is an essential determinant to China’s long-run economic trajectory and its early modern divergence from Western Europe. Drawing on institutional economics, I demonstrate that monopoly rule, a long time-horizon, and the large size of the empire could give rise to a path of low-taxation and dynastic stability in imperial China. But fundamental incentive misalignment and information asymmetry problems embedded within its centralized and hierarchical political structure also constrained the development of the fiscal and financial capacity of the Chinese state. This paper develops several sets of unique data series on warfare, central government revenue, and governmental savings (in the form of silver reserves) for seventeenth–nineteenth century Qing China, matched with an historical narrative to illustrate the problem of incentives and information as the origin of China’s economic divergence from Western Europe.

The Paradox of Power: Understanding Fiscal Capacity in Imperial China and Absolutist Regimes

Tax extraction is often low in absolutist regimes. Why are absolutists unable to convert power into revenue? Supported by evidence from Imperial China, we explain this puzzle with a principal-agent model which reveals that absolutists, unconstrained by rule of law and unable to commit to not predating on their tax-collecting agents (and the masses), may find it optimal to settle for a low wage-low tax equilibrium, while permitting agents to keep extra, unmonitored taxes. Our analysis suggests that low investment in administrative capacity is a conscious choice for an absolutist since it substitutes for credible commitment to refrain from confiscation.

The role of traditional Chinese state and the origin of modern East Asia

Part of Professor Yujiro Hayami’s lifelong research agenda has been to engage the large question of the growth and causal mechanism of modern economic growth in East and Southeast Asia. In a series of highly influential publications, he succinctly outlined the sequence of the East Asian miracle in dimensions of economic theory, empirical analysis, and historical implication (Hayami, 1998, 2001). He characterized the East Asian miracle initiated by Japan since the Meiji as a process of rapid catch-up with Western advanced economies based on massive technology and institutional borrowing. However this capacity to borrow did not come automatically, but was built on a creative adaptive learning process that was in turn preceded and supported by rapid improvements in human-capital formation (Godo and Hayami, 2002).