The phrase "Asian Century" has become a cliché. This, it is said, is the century in which "Asia" will eclipse "the West."
Whether it comes to pass or not, there is no question that the rise of Asia as a hub of economic growth has been remarkable. In 1960 the idea that an American high tech company, Apple, would employ a Taiwanese company, Foxconn, to assemble an iconic consumer product, the iPhone, from components manufactured by (among others) a Korean company, Samsung, in a mainland Chinese factory, would have sounded like a fairy tale. Fifty years later it seems normal. Asia may or may not eclipse the West but it has arrived as a major force.
So, back in 1960, was there any way of predicting the rise of Asia?
In 1960 most of the world's economic activity was concentrated in North America, Western Europe and Japan. The Soviet bloc was not really part of the global trading system. To an extent that seems unbelievable now, China and India were both quite isolated.
The outstanding feature of both Asia and Africa, especially sub-Saharan Africa, was poverty and technological backwardness. If anything, Africa's prospects seemed a little better than Asia's. The infrastructure was better and, a legacy of the colonial era, they had better links with global trade. Except for the Mao worshippers of that era few people thought in terms of an Asian rise.
So what happened?
To demonstrate what happened I sought a single statistic that best encapsulates a country's progress, or lack thereof, over a 50 year period. After trying various measures I came up with the relative progress indicator, or RPI: per capita GDP as a percentage of US per capita GDP expressed in current dollars
Here's why I think RPI is a reasonable measure. In 1960 the US had by far the world's most productive economy. It also had the greatest GDP per capita of any significant country on Earth. Any poor country that was making progress should see its RPI increase for two reasons:
--Starting from a low base, its per capita GDP should grow faster than the US; and
--As its productivity improved, its currency should appreciate relative to the US dollar.
I readily admit that RPI is a rough and ready measure subject to huge error bands. China, for instance, is a notorious currency manipulator. Its real RPI is greater than what is shown below because it tries to keep the value of the remnimbi down.
Nonetheless, as an indicator of trends over a long period, I think RPI does the job.
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