What Makes An Economic Miracle? What Prevents It?

This weblog was created to obtain a better understanding of economic principles, among other subjects, with global trade and the rise of developing nations becoming of special interest. Now Wired Top Stories in an article by Spencer Reiss back in April takes a look at the economic miracle of China and asks whether it, once the World's Great Factory, is the Next Great Innovator?

The world's notorious source of low-cost labor is generating mountains of capital, tons of hot new companies and even some signs of technological innovation.

diigo tags: innovator, economics, China, global, creative-destruction

Everyone knows about China's emergence as a global manufacturing power. Well, guess what: the People's Capitalist Republic isn't just emerging or ascending — it's exploding. The world's go-to source for low-cost labor is generating mountains of capital, squads of hot new companies, and — surprise! — glimmers of innovation.

For inspiration, would-be entrepreneurs can look to homegrown rock-star CEOs like Alibaba Group's Jack Ma (age 43), Tencent's Pony Ma (36), and Baidu's US-schooled Robin Li (39).

Even China's notorious environmental meltdown has an upside: It's both a sharp spur to innovation and the driver of a huge homegrown market for green technologies. The country will soon be the number one maker of windmills and solar cells.

Marginal Revolution's Tyler Cowen looked at another part of the globe back in February to determne the new roots for the Irish miracle? Professor Cowen puts forth the idea that

Ireland found a more complementary economic partner, namely the United States. The Irish economic miracle is in part the American economic miracle.

By the turn of the century [2000], according to some reckonings, 70 percent of Irish manufactured exports were by US-owned firms...This was, of course, encouraged by tax breaks and a form of industrial policy. But part of this process was a shift away from English investment:

Between 1960 and 1970 British-owned companies represented 22 percent of new industrial enterprises in Ireland. But by 1980 they accounted for less than 2 percent. Significantly, the proportion of exports to Britain from Ireland halved between 1956 and 1981.

Both countries have put a great deal of effort in becoming more innovative and providing services and products to other countries. Both countries could have been catergorized as at best 2nd world economies. Both countries have their own foreign aid programs with China making significant inroads into Africa. Both have arguably benefitted from Free Trade. The question I have is how did they or do they differ from other third world countries. Those answers are not, I am finding out, as obvious as I might have thought before working on this blog. This post will have to be satisfied with just raising the question.