How to say “East Asian countries” in 27 words

Via Tyler Cowen, here’s Barry Eichengreen, Donghyun Park, and Kwanho Shin:

We analyze the incidence and correlates of growth slowdowns in fast-growing middle-income countries, extending the analysis of an earlier paper (Eichengreen, Park and Shin 2012). We continue to find dispersion in the per capita income at which slowdowns occur. But in contrast to our earlier analysis which pointed to the existence of a single mode at which slowdowns occur in the neighborhood of $15,000-$16,000 2005 purchasing power parity dollars, new data point to two modes, one in the $10,000-$11,000 range and another at $15,000-$16,000. A number of countries appear to have experienced two slowdowns, consistent with the existence of multiple modes. We conclude that high growth in middle-income countries may decelerate in steps rather than at a single point in time. This implies that a larger group of countries is at risk of a growth slowdown and that middle-income countries may find themselves slowing down at lower income levels than implied by our earlier estimates. We also find that slowdowns are less likely in countries where the population has a relatively high level of secondary and tertiary education and where high-technology products account for a relatively large share of exports, consistent with our earlier emphasis of the importance of moving up the technology ladder in order to avoid the middle-income trap.  (emphasis added)

And speaking of China, in earlier posts I expressed skepticism about China’s high speed rail program.  It seems to me that a country as poor as China ought to first focus on building up its basic rail infrastructure. I still sort of believe that, but was taken aback by this report:

Perhaps the hundreds of billions already spent on high-speed railways might have been more effectively spent upgrading the entire network-enhancing overall mobility and helping reduce tensions between rich and poor. Yet China’s technocratic leaders have a deep belief that elites should lead the way, and high-speed rail is their vision for the future.

And in some ways, perhaps they are right. A recent report says that on many key high-speed lines, fares are covering debt costs, confounding skeptics who said high-speed trains were purely prestige projects.

The Beijing to Guangzhou line just opened.  The 1,428 mile trip has been cut from 24 hours to 8 hours.  And 155 pairs of trains will run each way daily.  China just might end up with the only large high speed rail network that actually makes sense.  The Chinese cities are often too far apart to make driving appealing, and would you fly 500 to 1000 miles if you could take a 200MPH train?

And Chinese economic growth is entering a new upswing, which I’ll report on later.

PS.  When I say “East Asian” I actually mean “ethnically Chinese, Korean, Japanese, Vietnamese.”  That’s 5 words.

PPS. I’m really looking forward to that Fresno to Bakersfield link, maybe in a decade.  By then China’s system will be mostly completed.  All the way out to Urumqi.



33 Responses to “How to say “East Asian countries” in 27 words”

  1. Gravatar of Alexei Sadeski Alexei Sadeski
    12. January 2013 at 11:45

    In response to your question, “Would you fly 500 to 1000 miles if you could take a 200MPH train?”, I answer: Yes, absolutely.

    The 1,500 train trip described takes 8 hours.

    The 1,410 plane flight from Montreal to Miami is under 3.5 hours.

    I’d rather spend an extra hour checking in and out of a flight than an extra 4.5 hours sitting on a train.

  2. Gravatar of Alexei Sadeski Alexei Sadeski
    12. January 2013 at 11:52

    Hahaha, I don’t think that I really answered your question, sorry about that 🙂

    I think that the sweet spot for high speed rail is more like 100-300 miles, as the crow flies.

  3. Gravatar of JVM JVM
    12. January 2013 at 12:25

    I live in New York and for me the extra hassle of flying is about 2 hours. That’s a fairly low quality 2 hours so my cutoff for taking the train is roughly flight time + 3 or 4 hours. I still don’t think I would take an 8 hour train on that route, which is a 3 hour flight.

    I do think NYC->Chicago seems like it might be sensible, 800 miles along a sparsely populated (read: cheap) route could probably cut travel times down to 4 or 5 hours direct between city centers, vs. 2.5 hour flights or a grueling 8 hour drive.

    Of course when Obama/Biden were pumping HSR they ignored any routes that made so much sense, pushing instead routes like BostonMontreal (connect two small cities through 300 miles of mountains!?!?) and TampaOrlando (a 90min drive). If the politics of doing it necessitates so much waste that means it’s just not worth doing.

  4. Gravatar of PublicPersona PublicPersona
    12. January 2013 at 12:42

    High speed rail in Italy is faster than flying from Rome to Venice, if you include airport time. Cheaper as well. Stops in several cities for 10 minutes to off and on load passangers. Internet works all the way, even in the tunels. Comfortable seats facing a table for your computer. This was the regular tickets, not the high price fares.

  5. Gravatar of PublicPersona PublicPersona
    12. January 2013 at 12:47

    If we want high speed rail and lots of jobs everywhere: choose a central transport hub, build rail in every large city aimed towards the central hub with feeders from other large cities along the line.

    After that we can connect the dots fairly easily.

  6. Gravatar of Alexei Sadeski Alexei Sadeski
    12. January 2013 at 12:49

    For our tax dollar, money spent on additional TSA screeners and additional equipment, with the goal of getting airport times down to thirty mins from sixty, would be far more efficient than HSR.

  7. Gravatar of ChargerCarl ChargerCarl
    12. January 2013 at 13:25

    Scott Im kind of confused here. In krugman’s latest post on Japan he says the effect of monetary stimulus is showing up as a lower real rate of interest, however i thought the MM view was that monetary stimulus raises real rates?

  8. Gravatar of ssumner ssumner
    12. January 2013 at 14:05

    JVM, I agree, which is why I mentioned 500 to 1000 miles. I took the HSR from Beijing to Shanghai, which was 4 hours 50 minutes, and I definitely prefer it to flying. That’s about the same as NYC to Chicago in distance. But I see zero chance of the US building a HSR system. The environmentalists would be horrified if tracks were rammed through sensitive areas. Our actual “HSR” (Acela) is a joke.

    PublicPersona, I agree they have nice little systems, but it doesn’t seem to be an important component of their transport infrastructure. Or cost effective. I suppose France comes closest.

    Alexia, I agree that it would be a waste of money in the US. I’d rather abolish the TSA, BTW.

    Chargercarl, I’ve always argued that monetary stimulus raises real rates at times and reduces them at other times, because, well because that’s what we observe. I find his post to be odd. I don’t see the “dramatic” surge in inflation expectations that he sees. And the graph is out of date. And he doesn’t seem to realize the markets started reacting back in November when Abe called for 2% inflation target.

  9. Gravatar of Lorenzo from Oz Lorenzo from Oz
    12. January 2013 at 15:17

    The advantage of technological catch-up, you can leapfrog steps and you know what is workable.

    There are a couple of elements of C19th history which seem relevant to contemporary circumstances. Up until the 1870s, the US and UK had similar per capita growth rates. From the 1870s to 1914, the US’s was significantly faster. The combination of the US constitutional regime finally settling down after the Civil War (the deal whereby slavery went but Southern whites still got to exclude blacks from politics and economic competition; their other war aims apart from keeping slavery, the reasons why non-slave owners cared), Germany unifying into the Second Reich and both adopting the gold standard meant that the US and Germany got supply-side gains and export facilitation while the UK only got the monetary restriction from the expansion of the gold zone.

    Meanwhile, in our time, China continues to get supply-side gains (including from technological catch up) and export facilitation while the eurozone is the gold zone on steriods and the Fed, BoJ, BoE also (along with the ECB) hand out monetary restriction.

    Another parallel. In 1815, the UK public debt was over 200% of GDP (wits said half of it was accrued pushing the Bourbons off the throne of France and the other half putting them back on) when central government revenues were 10% of GDP. So British national debt was over 20 times revenue. Yet, economic growth (after a postwar hiatus) took off. There were supply-side gains (they were still abolishing licenses, restrictions, etc) and technological takeoff — the ride was bumpy because of technological and geographical uncertainty (what would work, how much and where could onlt be found out by trial and bust) but the massive accumulation of safe assets does not seem to have got in the way of investment in new technology. If you assume a given risk preference, riskier investments might have seemed more reasonable to add on to very low risk investment (British bonds).

  10. Gravatar of Lorenzo from Oz Lorenzo from Oz
    12. January 2013 at 15:18

    Just checking to see if this also gets stuck in moderation.

  11. Gravatar of Lorenzo from Oz Lorenzo from Oz
    12. January 2013 at 15:20

    Which I cannot re-post because it becomes a duplicate comment. sigh.

  12. Gravatar of Neal Neal
    12. January 2013 at 17:45

    The Los Angeles to Houston line just opened. The 1,546 mile trip has been cut from 24 hours to 8 hours. And 155 pairs of trains will run each way daily. The United States just might end up with the only large high speed rail network that actually makes sense. The American cities are often too far apart to make driving appealing, and would you fly 500 to 1000 miles if you could take a 200MPH train?

  13. Gravatar of Steve Steve
    12. January 2013 at 18:52

    Off-topic, but does anyone know when we the 2007 FOMC meeting *TRANSCRIPTS* get released? And will the 2008s come out one meeting at a time, or do we have to wait until next year?

  14. Gravatar of Benjamin Cole Benjamin Cole
    12. January 2013 at 19:55

    China is a cipher.

    If they had a domestic jet manufacturing industry, would you see high-speed rail?

    I have read whole books on China, predicting nirvana or doom.

    Maybe central and regional planning can work if:

    1. There is only bad, but not rampant corruption.
    2. People are smart and have a work ethic.
    3. Planners are serious, and able to access information unlike the old Soviet days (Internet, computers).
    4. People can tell the truth, i.e., if crops are failing they can say crops are failing, and that melting down pots and pans to manufacture steel locally is a bad idea.

    Seems like the Han Chinese will dominate the planet in 100 years. Let’s hope they are peaceful. But then, maybe they will just fizzle out, ala Japan.

  15. Gravatar of Brock Brock
    12. January 2013 at 20:21

    Benjamin Cole,

    I feel safe predicting the Han will never dominate the world. Be a major player, sure, but they simply don’t have the cultural skills to rule over a world. Just look at how their current policies regarding offshore islands are so abrasive and jingoistic they can make nations that hate each other as deeply as Korea, Japan and the Philippines cooperate. The Han piss off literally everyone in Asia, from Japan to India. Even Myanmar is moving away from them.

    As for the OP, yes, HSR can be nice if done well. But America can’t do it well. We are too built up and don’t have the confidence in the project to tear up our cities to do it right. China has the advantage of having this technology at the same time they’re building their modern world. We will have to think of something else. Maybe Elon Musk’s Hyperloop will amount to something and put HSR to shame.

  16. Gravatar of dtoh dtoh
    12. January 2013 at 23:23


    I think the sweet spot for rail is probably in 100 to 700 mile range. Beyond that (as is the case in Japan) large numbers of people will prefer air travel because of the significant time savings. Also you need to have very unusual population density and distribution…. essentially bipolar as in the case of Tokyo Osaka in order for the train to be economically feasible (not significantly more expensive than air travel). There are very few places in the world where it will work and none in the U.S.

    On top of that, there is no way an HSR could be operated efficiently in the U.S. unless there was no government involvement. (The U.S. can’t even operate the Accela efficiently.)

    I like rail travel and I suspect there are many places where HSR will get built and operated with government subsidies but it just does not make any sense from the standpoint of economic efficiency.

    Finally, rail will in the future increasinglyhave to compete with automated vehicles (buses and cars) running at relatively high speeds on roads.

  17. Gravatar of RebelEconomist RebelEconomist
    13. January 2013 at 03:13

    @Brock, I agree that Chinese (especially North Chinese) nationalism is frightening. Perhaps you were thinking of the “nine dash line”:

  18. Gravatar of Jim Crow Jim Crow
    13. January 2013 at 03:38

    Lorenzo from Oz, that was fascinating. Are there any economic historians you’d recommend?

  19. Gravatar of nickik nickik
    13. January 2013 at 04:41

    Seams to me if we could get on plane the same way we could get on a train it would be much faster and probebly cheaper.

    The hole Airport Security and all the rest of the normal airport buissness is slowing everything down. Why does a Airport have to be so much harder to get on then a train?

  20. Gravatar of Becon Becon
    13. January 2013 at 08:16

    I would fly 500-1000 miles more often if we could eliminate the Kabuki theater called the TSA.

    Which is more likely:
    1) Scaling back the TSA to make flying more appealing.
    2) Working around NIMBYism and eminent domain battles to lay high speed rail.

  21. Gravatar of ssumner ssumner
    13. January 2013 at 08:19

    Lorenzo, Sorry about the delay. Good post.

    Ben, A few responses:

    1. Coase argued that China doesn’t have central planning, and didn’t even have it under Mao. (Which surprised me.)

    2. In 100 years China’s population is expected to be about 750 million, about the same as Nigeria, and less than half that of India. It will not dominate a world of 9 billion. Of course one must take projections with a grain of salt.

    dtoh, You are mostly repeating what I said–high speed rail would be a horrible idea for the US.

    I don’t agree on distances—I took the high speed train from Beijing to Shanghai, a distance of 850 miles. No way would I ever even consider flying if that train option was available. In 20 years China will be much more affluent, and will have over 1400 million people, eleven times Japan’s population. The cities will expand dramatically. There will be lots of very busy HSR routes. Flying is such a pain, and HSR is delightful.

    Nickik, Exactly. But don’t forget that trains are also MUCH more comfortable. (I mean Chinese trains, not the crummy US trains.) And I don’t see the time issue as being a big deal, until you have very long trips. Most people can pass a few hours reading or on the laptop–I’d be doing some of that anyway, even if at home.

  22. Gravatar of ssumner ssumner
    13. January 2013 at 08:19

    Becon, I completely agree.

  23. Gravatar of Jon Jon
    13. January 2013 at 09:00

    I think the sweet spot for rail is probably in 100 to 700 mile range. Beyond that (as is the case in Japan) large numbers of people will prefer air travel because of the significant time savings

    I travel between some place in the city limits of Chicago to someplace within the city limits of LA. On a good trip this is about 8-9 hours door to door. Flight delays add to this.

    There is lots improvement possible in the US. The issue is that there is also a lit of rent seeking by land holders. That makes everything very expensive. The Chinese have property rights–witness those stories about a lone house in the middle if the freeway, but they also have the belief to just go forward.

  24. Gravatar of Tom Tom
    13. January 2013 at 14:30

    As home office/ mobile work becomes more ubiquitous, the space & comfort of trains (& good wi-fi internet) expands that sweet spot. But HSR is very real-estate intensive for rail rights of way, so that’s a huge expense in the US.

    Driverless cars/ minivans/ internet buses seem more likely for the US.

    I doubt most rosy Chinese scenarios, due to the evident movement by rich Chinese to take many of their personal assets out of China. But the gov’t since Chou (after Mao) seems so pragmatic, I suspect they’ll be able to avoid most doomy gloomy outcomes, too — altho their bad factories seem to be chem-pollution poisonous hell-holes of the worst kind.

    I’d recommend to them to give big limit credit cards to their rural class to keep them on the farms longer and improve the out-of-city AD in China.

    What are they going to do about the Renmimbi? will it become more of an international currency? It should.

  25. Gravatar of dtoh dtoh
    13. January 2013 at 15:07

    You said,
    “I don’t agree on distances””I took the high speed train from Beijing to Shanghai, a distance of 850 miles. No way would I ever even consider flying if that train option was available. In 20 years China will be much more affluent, and will have over 1400 million people, eleven times Japan’s population. The cities will expand dramatically. There will be lots of very busy HSR routes. ”

    I think you are a bit of an outlier. It depends on a bunch of factors including distance from airports/stations to city center, per capita income, cost of electricity generation versus cost of jet fuel, etc.

    If you assume real economic costs however, HSR is usually more expensive than air for longer distances so low income travelers will prefer air, and for high income travelers time is costly so they will prefer whatever is faster.

    “Flying is such a pain, and HSR is delightful.”
    It depends on how you fly!!

  26. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    13. January 2013 at 16:09

    Tom Maguire has been having a lot of bun smashing the ‘trillion dollar coin gimmick’. Actually researching the law, which is something neither Laurence Tribe nor Paul Krugman bothered to do;

    ‘A bullion coin is valued by the weight of its metal, not its face amount. ….

    ‘By this criteria, a trillion dollar platinum coin would need to contain a trillion dollar’s worth of platinum (which doesn’t exist) and would weigh roughly 18,000 tons.’

  27. Gravatar of Jim Glass Jim Glass
    14. January 2013 at 00:23

    Re that damned coin, since it has been brought up, both the Treasury and Fed yesterday publicly disowned the whole nonsense thing, saying it is neither legal nor advisable to go this route.

    The legal point may have something to do with what I mentioned before — *the law* says that a bullion coin does **not** become legal tender until the mint is paid its full legal tender value for it (see Langbord v US, and the very interesting tale of the Fenton-King Farouk 1933 Double Eagle.)

    And where must the money come from to pay $1 trillion to the mint for a coin with a legal tender value of $1 trillion? From $1 trillion of taxes or borrowing — meaning, in our current circumstances, borrowing … after increasing the debt limit by $1 trillion. Oooops.

    The whole thing ends right there, we don’t have to go beyond that.

    As to the advisability point … how did getting around his debt limit by printing trillion dollar bills help the credit rating of Mugabe’s government?

    It’s remarkable that this absurd bogosity has become by far the most popular idea of Modern Monetary Theory — joined at the hip as it is with the MMT belief that printing trillion dollar bills did *not* cause the hyperinflation in Zimbabwe.

    And the whole exercise has been a fascinating example of the “psychological self-interest” that rules both the public choice analysis of politics and If there is *no cost to them* for doing so, people will believe *any* absurdity, obvious falsehood, or urban legend that gives them the psychic *gain* of being part of an affinity group and/or feeling more original and clever than everyone else out there (especially the boring staid old professionals who actually know what they are talking about — it’s no coincidence that this loopiness was a MMT idea.)

    Happily, both the Treasury and Fed, who bear the cost of responsibility, have also denied the alternative nonsense claim circulating that the Constitution guarantees payment of the debt by its terms as promised. (As nobody told FDR.)

    For more sensible ideas bout dealing with the debt ceiling, Keith Hennessey (who’s been inside these negotiations and so knows what he is talking about) makes a suggestion for the Republican side based on a fact that nobody has noticed — while the left excoriates the Republicans for refusing to increase it, they as the majority in the House actually in the end *do* vote to increase it while Democrats free ride politically by voting *against* doing so. (Talk about playing both sides!) Which creates a negotiating opportunity for Boehner.

    OTOH, for the Democrats Obama could simply use the plain fact that there is plenty of tax revenue to service the debt, “default” on it *in no way* logically follows from refusing to raise the debt ceiling. He can simply announce to the public…

    “The US will not default on its debt while I am President. Keeping our debt promises is far too important to our national welfare — and the entire world’s as well — in addition to being commanded by the Constitution. [Not true, but he’s a politician and telling credible sounding lies for the greater good is part of his job, no reason to stop now.] If the Republicans wish to block a debt limit increase, we will simply prioritize our spending by servicing the US debt in full first, as promised, while cutting back other expenditures — for Medicare, defense, farm subsidies, education, and so on — as is necessary for as long as the Republicans’ obstructionism forces us to do so…”

    The Repubs will fold faster than the cheapest 3rd-hand tent you ever saw.

    All that’s needed is simple prioritization of payments, like every competent organization practices. With no need at all to go throwing out yet more pieces of the Constitution.

  28. Gravatar of ssumner ssumner
    14. January 2013 at 08:14

    dtoh, Is HSR more expensive (in China) in a marginal cost sense? I wonder. And the fixed costs will become sunk costs once the system is built.

    Patrick, The coins often have face values much higher than the bullion value.

    Jim, I’ve always agreed the GOP will fold–they have no leverage.

  29. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    14. January 2013 at 08:22

    Scott, the definition of a ‘bullion coin’ by the US Mint is;

    ‘A bullion coin is a coin that is valued by its weight in a specific precious metal.’

    A ‘proof’ coin is simply a fancier version of the same for collectors.

  30. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    14. January 2013 at 08:26

    Here’s the Mint link;

  31. Gravatar of Lorenzo from Oz Lorenzo from Oz
    14. January 2013 at 19:37

    Jim Crow: Start with Milton Friedman’s “Monetary Mischief”. Follow up with pieces on the 1870s (there are some fine papers internet-available). Notably “The French Crime of 1873: An Essay on the Emergence of the International Gold Standard, 1870-1880” by Marc Flandreau. Also papers on technology creating rational bubbles such as “A Theory of Asset Price Booms and Busts and the Uncertain Return to Innovation” by Satyajit Chatterjee. Also “Crushing national debts, economic revolutions, and extraordinary popular delusions” by Andrew Odlyzko, which looks at the UK railway booms of the early C19th.

    The Measuring Worth website has some excellent time series.

    (Sorry, only one link to not trip blocking software.)

    Some of the above post is just me filling in the dots.

  32. Gravatar of Lorenzo from Oz Lorenzo from Oz
    14. January 2013 at 19:53

    Jim Crow: also pieces on “good bad and ugly” deflation. Such as “Good Versus Bad Deflation: Lessons From The Gold Standard Era” by Michael D. Bordo, John Landon Lane and Angela Redish or “Is price stability enough?”
    by William R White.

    Regarding the war aims of the South and why non-slave owning whites cared about slavery, that is just thinking intelligently about the existing circumstances and consequent history. The “Civil War was about tariffs” line is complete crap. No one goes to civil war over tariffs. (This is particularly obvious to an Australian, as Australia federated in the 1890s when the biggest divide in Oz politics was protection versus free trade; our first PM–Edmund Barton–led a Protectionist Government against a Free Trade Opposition led by George Reid.) Read the Constitution of the Confederacy (available online). It is no more a “states rights” document than the US Constitution; what it makes a very big fuss over is protecting slavery. I posted about it here (with link to a comparison of the US and Confederate Constitutions)

  33. Gravatar of ssumner ssumner
    15. January 2013 at 08:08

    Patrick, I don’t think that is correct, but don’t have time to research it. Maybe someone else can.

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