Little Divergence: Evidence from Cotton Textiles in Japan and China 1868–1930

21 Pages Posted: 7 Oct 2015

See all articles by Baomin Dong

Baomin Dong

Henan University; University of International Business and Economics (UIBE)

Jiong Gong

University of International Business and Economics (UIBE)

Kaixiang Peng

Henan University

Zhongxiu Zhao

University of International Business and Economics (UIBE) - School of International Trade and Economics

Date Written: November 2015

Abstract

This paper looks at the role of textile exports in Japan and China's economic development in the period of 1868–1930 as a major explanation for the “Little Divergence” between the two countries in the context of the “Great Divergence” between Europe and Asia. Because of textiles' large weighting in proto‐industrialization gross domestic product (GDP), we postulate that China's initial 20‐year lag in textiles vis‐à‐vis Japan turns out to be fatal for its industry and that it eventually ordains totally different development patterns for the textile industry in the two countries, which ultimately led to different growth patterns for the overall economy. Although both countries saw rapid growth of textile exports, the nature of those exports and the entailed position of each country in the industry value chain of trade were quite different. We then use Granger causality tests to show that in one case (Japan) it is in support of the export‐led‐growth hypothesis (ELG) while in another (China) it is not. Our study then also explains why Japan's industrial revolution took place much earlier than China's.

Suggested Citation

Dong, Baomin and Gong, Jiong and Peng, Kaixiang and Zhao, Zhongxiu, Little Divergence: Evidence from Cotton Textiles in Japan and China 1868–1930 (November 2015). Review of Development Economics, Vol. 19, Issue 4, pp. 776-796, 2015, Available at SSRN: https://ssrn.com/abstract=2670324 or http://dx.doi.org/10.1111/rode.12186

Baomin Dong (Contact Author)

Henan University ( email )

85 Minglun St. Shunhe
Kaifeng, Henan 475001
China

University of International Business and Economics (UIBE) ( email )

10, Huixin Dongjie
Changyang District
Beijing, Beijing 100029
China

Jiong Gong

University of International Business and Economics (UIBE) ( email )

10, Huixin Dongjie
Changyang District
Beijing, Beijing 100029
China

Kaixiang Peng

Henan University

85 Minglun St. Shunhe
Kaifeng, 475001
China

Zhongxiu Zhao

University of International Business and Economics (UIBE) - School of International Trade and Economics ( email )

10 East Huixin Street
Chaouang District
Beijing, 100029
China

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