CHINA, AND INDIA come to that, will grow much less rapidly than is currently anticipated. That forecast comes from former U.S. Treasury secretary Larry Summers and Lant Pritchett, a colleague of Summers at Harvard’s Kennedy School of Government, in a newly published working paper from the National Bureau of Economic Research in the U.S.
The pair say that regression to the mean is the strongest predictor of long-term economic growth; witness other fast-growing countries such as Japan. Pritchett and Summers expect China’s growth rate to slow to 3.9% over the next two decades, and India’s to 3%.
High levels of authoritarian political rule, corruption and extensive government meddling in business, the authors also argue, make slower growth even more likely. They also note that while “China’s growth in the past 35 years has been remarkable, and that nothing in our analysis suggests that a sharp slowdown is inevitable,” such phases of super-rapid growth tend to end “abruptly.”