The “Asian miracle”, as Paul Krugman once said, had nothing miraculous about it. At the time, Asia took advantage of rural labor –which was underutilized– and applied it to a modern capitalist economy. Thus, the industrialization of the Asian economy began. Those were years of inevitable and unparalleled economic growth. The productivity and efficiency of Asians workers were, with reason, incredibly high. However, as Krugman said, it wasn’t unexpected.
Nowadays, China is considered the economic successor of the United States. At first sight, it would seem like it. Growth rates, employment, and financial resources are thriving. However, if we look deeper into the Chinese economy and labor market, we can witness a troubling reality: China’s productivity is decreasing and, comparison to the U.S. and other major economies, it’s struggling to compete. According to Bloomberg, “in 2015 each employed worker in China generated only 19 percent of the amount of GDP an American worker did”.
In a time when China is seen as an economic titan, those statistics are, clearly, discouraging. While China has to take immediate measures, other countries also have to see the repercussions of this trend on the Asian market.
One of the possible solutions for Chinese decreasing productivity is immigration. History has proved that immigrants, if they fit the country’s needs, can develop an interesting and profitable relation with the economy. As China has opened its doors for commercial and financial agreements with Latin American countries –shown in recent signings to institutions such as the Asian Infrastructure Investment Bank–, it could also ease the entrance of workers to increase productivity and efficiency.
Even though this hypothesis has various elements to put into question, China’s productivity problem has to be seen as a potential opportunity for Latin America. Not only does it make China more open –due to its vulnerability– to trade agreements, but it also leads to interesting opportunities for the labor market.
Aside from the potential repercussion, it’s important for Latin American countries to learn from the Chinese economic mishap. While rural workers move to an industrial environment, they also have to improve their education and focus on innovation.
LatinAmerican post | Juan Sebastian Torres