Category Archives: Uncategorized

Did Eighteenth Century China Go Backwards or Forwards?

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5921462

This article estimates factor prices in pre-Opium War China. Provincial interest rates are inferred from seasonal fluctuations in grain prices, which is used to convert farmland value based on land contracts into land rents. Assuming a Cobb-Douglas production function with a land share of 0.5, twice the land rents equals grain yields. Estimated interest rates and land rents trended downwards in the eighteenth century, which, given the undisputed fact of growing population, predicts a decline in workers’ earnings consistent with available wage evidence. Falling factor prices imply that eighteenth century China experienced income and total factor productivity decline, rather than achieving Smithian growth or traversing an involutionary path. Sectoral TFP duals indicate that the productivity failure was not sector-specific but generalized, suggesting that the Qing misperformance was policy-induced. 

Keywords: China, Eighteenth Century, Land Yield, Interest Rates, Land Prices

JEL Classification: N1, N5, N95, O47, Q1

Why Did the Two Koreas Diverge?

https://dx.doi.org/10.2139/ssrn.5367910

This study models North Korea as a Solow economy to measure the role of different causes driving the country’s growth underperformance visa -vis South Korea from 1958-2018. Counterfactual experiments show that North Korea’s nonperformance resulted primarily from productivity failure, with the disintegration of the Soviet Union and high defense burden aggravating the decline. These findings align with the outcomes from experiments using a Ramsey model calibrated to stand for South Korea and subjected to North Korean shocks. The productivity divergence resulted primarily from the increasingly despotic North Korea’s failure to shed misallocation as rapidly the democratizing South Korea did. 

Keywords: North Korea, total factor productivity, savings, defense burden

JEL Classification: N15, O11, O41, O43, O47

The Growth Consequences of Confucianism: Evidence from Qing, Republican, Maoist, and Reformist China

A recent paper of mine available at:

https://dx.doi.org/10.2139/ssrn.5353328

This study analyzes county level datasets of China to isolate the growth consequences of Confucianism, measuring the prevalence of the worldview with the density of Confucian academies and instrumenting it with the state involvement in academy establishment. IV regressions show that the philosophy discouraged both thrift and ingenuity, which is confirmed by OLS results based on an extensive set of controls. Under Mao’s rule, more Confucian, hence less affluent counties tended to grow and industrialize faster because the state supported them to boost regime stability. Estimated effects, which are empirically consistent and theoretically coherent, accounted for one quarter of the Great Divergence, although the rapid growth of reformist China far surpassed them. 

Keywords: Culture, Confucianism, Growth, China

JEL Classification: N15, N35, O11, O15, O53

An AI Review of The Making of Korea’s Liberty and Prosperity

Formerly titled as The Escape from Oppression and Poverty: A Developmental History of Korea

General Overview

The manuscript, “The Escape from Oppression and Poverty: A Developmental History of Korea,” provides a sweeping historical and analytical account of Korea’s transformation from a barely modernized state to a high-growth economy with consolidated democracy. The author’s main contribution is to propose a two-fold argument: (1) Japanese colonial rule laid an institutional foundation for growth on the peninsula, and (2) post-1945 conditions—particularly U.S. influence—were pivotal in converting those foundations into an environment supportive of democracy and open markets. This process is argued to have generated “twin miracles” of rapid growth and democratization in South Korea, while conditions in the North failed to meet both the “necessary” and “sufficient” criteria for sustained development.

Overall, the text is well-organized into ten chapters, each focusing on distinct yet interconnected elements of Korea’s development. The structure moves from macro-level forces (e.g., population growth, improved property rights, shifts in state capacity) to more micro-level and policy-specific drivers (e.g., mass education, financial market liberalization, fertility decisions). This layered approach provides the reader with a coherent progression of the arguments.


Strengths of the Manuscript

1. Comprehensive Historical Scope

The manuscript excels in showing how each historical period in Korea contributed to contemporary social and economic structures. By providing context for the colonial era, immediate post-colonial policies, and the diverging paths of North and South, the author makes a compelling case for the long-term impacts of institutional continuity and rupture.

2. Integration of Demographic and Economic Analyses

A notable strength lies in the detailed treatment of demographic factors—particularly fertility transitions—in the broader socio-economic narrative. By tying fertility decline to rising savings rates and human capital formation, the author offers a nuanced explanation of the virtuous cycle linking family decisions to national growth outcomes.

3. Examination of Misallocation and Efficiency

Chapters on misallocation and the efficiency gains from market-oriented reforms are particularly instructive. They clarify how repression of labor and capital markets affected productivity levels, and how gradual liberalization improved allocative efficiency. Highlighting both North Korea’s command-driven misallocation and South Korea’s evolving approach to deregulation gives the reader a comparative understanding of divergent growth trajectories.

4. Theoretical Anchoring

Although the manuscript marshals extensive empirical detail, it also maintains a theoretical orientation. The narrative draws on growth theory, political economy models, and institutional economics to anchor its empirical observations, lending rigor to the argument that both democracy and growth in South Korea were contingent on profound shifts in power relations and external support.


Points for Further Consideration

  1. ■ Clarity on Geopolitical Contingency
    The manuscript underscores how accidents of geopolitics shaped Korea’s trajectory. The text could benefit from sharper distinctions between external interventions that were deliberately sought by Korean actors versus those that were purely happenstance. This would clarify the extent to which domestic political agency played a role in leveraging or resisting outside influences.
  2. ■ Distributional Effects of Reform
    While inequality trends receive some attention, readers might benefit from a more comparative look at how changing inequality levels affected political alliances or societal pressures. Linking shifts in distributional outcomes to specific policy episodes (e.g., land reform, financial regulation changes, educational expansion) might further illuminate the puzzle of how social inequality interacts with democratization.
  3. ■ North-South Comparison and Institutional Detail
    The text gives a thorough overview of where North Korea diverged—especially regarding misallocation—but the examination of North Korea’s early institutional mechanisms could be elaborated. For instance, identifying the specific points of institutional calcification might show more precisely why the North was unable to pivot toward market-friendly or democratizing reforms in the post-Cold War era.
  4. ■ Methodological Rigor in Empirical Sections
    The manuscript references various datasets (e.g., genealogical records, county-level panels). For readers interested in replicating or extending the analysis, a brief clarification of data sources and any methodological assumptions (e.g., time-series regressions, growth-accounting frameworks) would enhance transparency. A dedicated appendix might serve well in ensuring the analyses are clearly documented.
  5. ■ Intersection with Broader East Asian Debates
    The argument might benefit from lighter touchpoints comparing South Korea’s experience with that of other East Asian successes (e.g., Taiwan or Japan). Doing so could strengthen the claim that certain processes—like land reforms enacted under Cold War pressures—were region-wide phenomena with distinct local adoptions.

Contribution and Concluding Thoughts

This manuscript offers a rich, multidisciplinary approach to understanding how historical shocks, state interventions, and evolving social norms converged to propel South Korea’s trajectory toward democracy and economic prosperity. Locating Korea’s case within a broader narrative of institutional transformation and market development is a strong addition to existing scholarship on developmental states and democratization. The detailed empirical evidence, paired with the conceptual framework, will be of great interest to scholars of economic history, political economy, and East Asian studies.

By articulating how colonial legacies, Cold War geopolitics, and internal policy choices interacted across multiple decades, the author persuasively shows that Korea’s “miracles” cannot be reduced to any single cause. Instead, the manuscript underscores the interplay between institutional preconditions and ongoing policy reforms, resonating with multiple theoretical strands and encouraging further dialogue on the dynamic relationship between political freedom and sustained economic growth.

Why Does North Korea Starve?

Chapter 9 of The Escape from Oppression and Poverty: A Developmental History of Korea

This chapter models North Korea as a Solow economy to measure the role of different causes driving the country’s growth underperformance vis-a-vis South Korea. Counterfactual experiments show that North Korea’s nonperformance resulted primarily from productivity failure from 1958-
2018, with the disintegration of the Soviet Union and high defense burden aggravating the failure. These findings align with the outcomes from
experiments using a Ramsey model calibrated to stand for South Korea and subjected to North Korean shocks. The productivity performance gap
resulted primarily from North Korea’sfailure to shed misallocation as rapidly South Korea did.


Keywords: North Korea; total factor productivity; savings; defense burden

Preface

The Contingent Rise of Divergent Koreas

Korea’s modern history is part of an ongoing reality, with the prevailing balance of power affecting historiography and vice versa. Impassioned debates on what happened in the past century are in progress because “who controls the past controls the future; who controls the present controls the past,” as George Orwell quipped.

Different power groups in the Korean peninsula promote seemingly incompatible narratives to establish legitimacy and blame opponents for treason. One camp in the South Korean political landscape describes the other as descendants of pro-Japanese collaborators, an insult, which, in the latter’s eyes, is a corollary of the romanticization of Pyongyang aristocracy’s resistance past under Chinese command. Bruce Cumings, a history professor at Chicago University, revived the North Korean perspective, to portray the Korean War as a civil war between patriots and traitors. According to Henry Kissinger’s alternative viewpoint, the unfinalized conflict represents a consequence of Stalin mistakenly deciding to pursue imperialist projects through Kim Il Sung. As many within and without Korea believe, sex workers, known as “comfort women,” were enslaved into prostitution serving Japanese troops, but, according to Mark Ramseyer, a Harvard Law School professor, they were indentured servants, with not a single Korean girl being mobilized under coercion. As the conventional wisdom says, Japanese exploitation resulted in declining living standards in colonial Korea, while in recent revisionism, Japanese incursion reversed the Malthusian deterioration of the pre-colonial centuries. These three debates have a great potential to threaten the diplomatic relations between Japan and South Korea, hence intensify the confrontation between America and China. 

This book presents structured narratives of the Korean divergence that are controversy-driven, evidence-based and theory-guided. Historiography of modern Korea is charged not just politically but also emotionally because the Japanese occupation left deep scars on Koreans’ self-esteem and because the English-speaking world fought cruel battles with Japan during WWII. This book represents the outcome of conscious efforts to overcome bitterness.

As the accumulation of quantitative evidence indicates, a large majority of Koreans enjoyed rising incomes and expanding opportunities until the Japanese Imperial Military rose, destroying nascent democracy in Japan, taking the entire empire into WWII, transforming a market into a command system, neutralizing the income gains made in the preceding decades, and setting up military brothels. As scrutiny of testimonial evidence shows, the documented instances of coerced enlistment of comfort women were typically authentic rather than contrived for financial reparations. The two Cold War superpowers established client states, instituting former independence activists of their choosing, neither of whom could afford to dispense with colonial elites with a collaborationist past in their quest for the reunification of the peninsula. Pyongyang implemented land reforms, prompting the South to follow suit, which sharply reduced inequality, but contrary to what many with opposing political inclinations have asserted, lowered productivity. Impatient to overthrow adversaries militarily, the leaders of the two Koreas escalated confrontation, embroiling the patron states and transforming a civil war into an international war, although Russian archives left little doubt that North Korea moved first. As recent statistical evidence shows, North Korea, which had a significant income advantage over South Korea in 1945, quickly lost ground against its rival in the following decades primarily due to the inefficiency caused by Stalinist interventions, while incomes grew rapidly in South Korea because U.S. pressure and democratic transition forced the state to deregulate. 

Well-publicized nighttime satellite images of the Korean peninsula have been often cited as evidence that “institutions matter.” This book contends that the Korean divergence was a contingent event, ultimately driven by geopolitics, which determined institutions, policymaking, and the defense burden. The post-1945 reversal of fortunes between the two Koreas resulted less from the inherent flaws of the command system than from the very different fortunes due to their establishment by the two distinct patron states with vastly different capacities. Had South Korea been forced to bear as high a defense burden as North Korea and to adopt the Stalinist strategy to boost self-sufficiency in munitions supply, the country’s living standards today would differ trivially from those prevailing in the North. This amounts to rejecting the Great Man Theory of the South Korean growth miracle, which represents either South Korean policymakers’ act of hubris or a flawed inference based on apophenia, namely, the tendency to perceive causation between unrelated events. South Korea’s growth miracle would not have happened had Park Chung Hee been allowed to persist in his industrial policy in the absence of U.S. intervention to establish the country as a showcase of the democratic market economy.