Asia's 'little divergence' in the 20th century: Evidence from PPP-based direct estimates of GDP per capita

Abstract

This article uses expenditure-based purchasing power parities (PPPs) to estimateGDP per capita in comparable prices for 12 Asian countries for six benchmark yearsduring the period 1913-69. The article finds that in 1913 levels of real GDP percapita in several countries were comparable to those in Japan. GDP per capita inJapan and other Asian countries diverged during and after the First World War.The article questions whether Asia's 'little divergence' between Japan and otherAsian countries dates back to the late eighteenth century. It draws attention to thedifferent resource endowments of Japan, China, and India compared to other Asiancountries, and their implications for the development trajectories of Asian countries.The article demonstrates that using historical PPP estimates yields estimates of GDPper capita that diverge from those based on retropolations of the single 1990 PPP-converted benchmark year. It concludes that historical estimates of PPPs are needed toconfirm analyses of comparative economic performance based on available GDP percapita data. Show more