A Bit More Detail

Assorted Personal Notations, Essays, and Other Jottings

Archive for January 2008

[BRIEF NOTE] Southeast Asian economic balances

From John Drabble’s economic history of Malaysia, hosted at eh.net, a chart comparing economic growth in selected South and East Asian countries over 1900-1990, including Malaysia and Indonesia.

GDP per Capita: Selected Asian Countries, 1900-1990
(in 1985 international dollars)

  1900 1929 1950 1973 1990
Malaya/Malaysia1 6002 1910 1828 3088 5775
Singapore 22763 5372 14441
Burma 523 651 304 446 562
Thailand 594 623 652 1559 3694
Indonesia 617 1009 727 1253 2118
Philippines 735 1106 943 1629 1934
South Korea 568 945 565 1782 6012
Japan 724 1192 1208 7133 13197

Notes: Malaya to 19631; Guesstimate2; 19603

Source: van der Eng (1994).

The future Malaysia’s economic lead over the rest of Southeast Asia is traced by Drabble to resources booms, with technology improving the efficiency of tin mining and growing international demand for the rubber promoting growth in the agricultural sector. The other countries in the sample have experienced varying fates. Burma, which until the Second World War seems to have closely followed Thailand, has since fallen far behind; South Korea and, especially, Japan have leapt far ahead of the pack; Indonesia, after recording annual rates of economic growth per capita not much above 1% over 1950-1973, eventually surpassed the Philippines.

On the topic of the Indonesia-Malaysia comparison, economic growth in Indonesia and Malaysia averaged 3.5 and 6.5% per annum over 1960-1969, 7.9 and 8.0% over 1971-1980 and 5.2 and 5.4% over 1981-1989. According to Globalis, Malaysia consistently experienced higher rates of population growth than Indonesia, undermining Malaysia’s relative advantage in per capita terms. As documented by the Penn World Tables, the 1997 economic crash revealed the fragility of the Indonesian economy and overturned its growth advantage: Whereas Malaysia regained its 1997 position in GDP per capita relative to the United States, Indonesia still hadn’t pulled out of its relative decline by 2004.

Written by Randy McDonald

January 31, 2008 at 7:24 pm

[LINK] “Frugal Norway saves for life after the boom”

Doug Saunders’ article in today’s edition of The Globe and Mail explores Norway’s success, in a world economy that offers very high prices for oil, in not catching the Dutch disease.

Across Norway, the oil boom is being paralleled by record growth in the non-petroleum, export-driven economy. In November, Norway’s non-oil private-sector economy reported quarterly growth of 1.9 per cent, the equivalent of a 7.6-per-cent annual growth – an astonishing economic performance, beating even the growth of oil and gas exports.

And that is the real surprise here. While it isn’t hard for nations and provinces to get rich from oil, it is exceptionally hard – almost impossible, by conventional economic reasoning – for them to make money off anything else while the oil boom is taking place.

Everywhere else in the world – including Canada – a boom in oil has led to a decline, if not a complete devastation, of conventional businesses. It’s a phenomenon known to economists as “Dutch disease,” after the tragic experience of the Netherlands, which discovered oil in the 1970s. As oil exports boomed, the flood of money into the domestic economy inflated the currency, provoked price increases and destroyed exports, leading to a decade of joblessness and rising inequality.

The same thing happened, on an even larger scale, in Britain in the 1980s. After North Sea oil was discovered, the British industrial economy was virtually obliterated, leaving four million people jobless. Poor countries, from Nigeria to Venezuela, have also discovered the economy-smothering nature of oil windfalls.

Among oil economies, Norway – the world’s third-largest exporter and 10th-largest producer in 2006 – is almost alone in having avoided this fate. As oil has boomed, so has everything else, and it has boomed in areas that will continue to generate economic growth when the oil revenues are gone. This is no accident: For Norwegians, this is a story of planning, self-discipline and a long learning process.

In the world of sovereign wealth funds, Norway’s Government Pension Fund is a key player in Norway’s economy, saving nearly four hundred billion dollars and administering this fund more effectively than oil-rich Alberta’s Heritage Fund. Alberta’s government saves only one-eighth of Alberta’s oil revenues (versus 96% in Norway), preferring to divert the bulk of its funds to the general public to maximize domestic consumption. Norway’s much icher sovereign wealth fund puts its money into long-term investments outside of Norway to help insulate the Norwegian economy over the long-term from economic shocks like the one that hit Alberta in the 1980s with falling oil prices. The main problem facing the Norwegian economy, in Saunders’ recounting, is the country’s ongoing labour shortages and the need for immigrants. Alberta doesn’t have any problems on that front, at least.

Written by Randy McDonald

January 31, 2008 at 1:09 pm

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[BRIEF NOTE] Indonesia before and after Suharto

A recent post by John Quiggin at Crooked Timber highlighting the relative strength of democratic Indonesia in dealing with the late dictator Suharto and his many negative consequences managed to tailspin into a debate about positive consequences of his rule. Douglas Muir of Halfway Down the Danube argued that, under Suharto’s tenure, Indonesia’s economic and development indices–GDP per capita, life expectancy, literacy rates–did improve sharply, and more quickly than in any of Indonesia’s peers. Out of curiosity, I went to the Penn World Tables to compare the relevant figure of GDP per capita in the two largest countries in the Malay world–Indonesia and the Philippines–starting from 1960 and continuing to 2003.

  • In the Philippines, a country integrated into the wider world through its very close post-colonial and Cold War-era links with the United States, GDP per capita as a percentage of the United States declined more or less consistently, from 15.8% in 1960 to 10.5% in 2003.
  • In Indonesia, GDP per capita began at 5.4% of the United States’ in 1960, stagnated at that level until the mid-1970s, and then sharply rose to reach a peak of 13% by 1997, thereafter slumping to the Filipino level.

More, as this 2004 ranking of countries by Gini index suggests, wealth in Indonesia was more equally distributed than in the Philippines, with reported Gini index figures of 37.0 and 48.1, respectively.

A strong case can be made that the average Indonesian does lives better than the average Filipino, or at least enjoys more wealth, the timing of economic growth and decline in the two countries. The timing of growth and decline in these countries also makes a good case that Suharto’s kleptocracy did a better job at economic development than Marcos’ kleptocracy and many of the democratic regimes that followed it. Whether Suharto’s kleptocracy was the best regime realistically available to Indonesia is a separate question entirely, although its worth noting that the problems of Indonesia’s occupation regimes in Papua and East Timor could have been averted if the Netherlands and Portugal had done a better job of decolonization and not unwittingly collaborated with Indonesian nationalist expansionism.

Written by Randy McDonald

January 31, 2008 at 12:56 pm

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Some months ago, I made a bet of $1C with an American-born co-worker that Rudy Guiliani would take the Republican nomination. I wasn’t looking forward to the prospect, but I thought that Guiliani’s strong national security credentials and the optics of 9/11 would give him an edge.

That didn’t work out.

I conceded my bet a couple of weeks ago, when it became clear that even a victory in Florida wouldn’t be enough to salvage his campaign. Where, I asked, would my $1C go?

“I’ll give it to John Edwardscampaign.”

So far, the American election has been quite interesting to follow.

Written by Randy McDonald

January 31, 2008 at 9:43 am

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[BRIEF NOT] The Albertan baby boom

The Calgary Sun is one of many Albertan news outlets carrying this news.

Oh baby, Alberta has another boom to deal with.

The province yesterday released the most popular names for newborns in 2007 as Alberta appears to be in the midst of a baby boom, smashing the previous record number of births set 24 years ago. Amorous Albertans produced 48,589 children — 24,748 boys and 23,841 girls — last year, a 20% increase from the number recorded four years ago and 3,000 more than the record figure hit in 1983.

Provincial spokesman Eoin Kenny said the numbers show the boom occurring in the rest of Alberta is being reflected in maternity wards.

“It certainly mirrors the prosperity of the province,” he said.

“We’re in the middle of a baby boom.

“The last time we saw this many babies was in 1983.”

Going to Statistics Canada‘s not directly comparable statistics, I do find that the number of recorded births in Alberta has risen quite substantially over the past five years, from 39 450 births in 2002/2003 to 44 611 births in 2006/2007. For comparison, in the neighbouring province of British Columbia, home to nearly a million more people, over the same people the number of recorded births increased from 40 534 to 42 306. Clearly, Alberta’s population is reproducing itself at a high rate.

Not to replacement, though. As this Statistics Canada chart shows, Alberta’s TFR has declined only slightly, from 1.85 children born per woman if trends continued in 1981 to 1.75 in 2005, possibly followed by a slight rise in the couple of years since. Alberta’s crude birth rate has dropped sharply: A quick look at the statistics reveals that the same number of births occurred in Alberta in 1983 as in 2006, but back in 1983 Alberta’s population was nearly one-third smaller than today’s 3.2 million. Alberta’s young population and relatively high fertility rate might be enough to allow headcounts to grow more quickly than elsewhere in Canada, but it’s premature to call what’s going on a baby boom. At best, it’s a deceleration of the aging process.

Written by Randy McDonald

January 30, 2008 at 7:25 pm

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[LINK] “Whose problem is it?”

Drew Thompson and Nikolas Gvosdev wonder in the International Times Herald if Kosovo might significantly complicate China-Taiwan relations. Not only could Kosovar independence provide a model for a Taiwanese unilateral declaration of independence from China, but it would create a poor independent state that might be susceptible to Taiwan’s often controversial policy of using investment and aid funds to gain foreign recognition of its independence. It’s an interesting speculation, although it’s open to question whether the current Taiwanese government would try anything so bold, that is, if it had thought of it at all.

Written by Randy McDonald

January 30, 2008 at 3:25 pm

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[URBAN NOTE] 69 Stations

David Topping, editor-in-chief of Torontoist and photographer, has managed to gain a fair amount of his attention with his 69 Stations project, photographing the 69 different stations of the Toronto Transit Commission. The University of Toronto Magazine has more.

Topping, a second-year English student, has created a set of images that cast the overfamiliar stations in a new light.When you look at the photos, you don’t find yourself thinking of stale air, aggravating delays, zombie riders or mint green tiles. He manages to make even the ultra-drab hallway between the east-west and north-south portions of Spadina Station worth looking at.Topping’s lens seems to locate the beauty in
the ordinary, homing in on overlooked design features, hidden bits of personality, colour and contrast in each station. His eye for formal composition projects a sense of a system – and
a city – well-built and well-functioning.

During his travels,Topping discovered a cross-section of the city he’s lived in his whole life but knew little about – except for a well-worn path between Dundas West (where he grew up) and Bay (near his Victoria
College residence).As part of his project, Topping left the subway stations and explored the adjacent neighbourhoods.“The areas you expect to be bad aren’t bad at all and the areas you expect to be good aren’t that good,” he says.

And while he swears the TTC isn’t paying him for the promo,he did have a tête-à-tête with TTC top boss Howard Moscoe who admitted that even he had not been to all 69 stations.

So which Toronto subway station, after so much dedicated study, is Topping’s favourite? Dundas West. It may not feature art or lots of natural light, but it’s home, he says.

See also the Spacing blog and Urbanphoto for more information.

Written by Randy McDonald

January 30, 2008 at 3:17 pm

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