Tsong-MinWuNationalTaiwanUniversitySeptember2005 EstimatesoftheLong-runEconomicGrowthofTaiwanBasedonRevisedSNAStatistics Commentson

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What do we get from the GDP estimation? An interpretation A data set that might be used to improve the estimation References

Comments on

Estimates of the Long-run Economic Growth of Taiwan Based on Revised SNA Statistics

Tsong-Min Wu National Taiwan University

September 2005

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Prof. Mizoguchi’s paper:

I Summarizing Taiwan’s long-run GDP estimation

I Revising Mizoguchi and Umemura (1988) and other series

I GDP time series are extended to 1901–2000 (was 1903–1938)

Tsong-Min Wu Comments on Prof. Mizoguchi

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There are many estimation details in this paper, but we would:

I Provide an interpretation of why the estimates are important. It is also a way of checking the estimates

I Suggest a data set that might improve on the estimation

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Taiwan’s Per Capita GDP (1960 NT$)

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Per capita GDP increase by 29.3 times

I Per capita GDP was2,466 dollars in 1905(in 1960 NT$), it increased to 72,264.7 dollars in 2000.

An increase of29.3 times.

I The link of pre-WWII GDP series to the post-War series makes it possible for international

comparison

I Converting the unit to Maddison’s (2001) GDP data set [1951–1999], per capita GDP in 1905 was536.5 dollars(in 1990 international dollars)

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Per capita GDP increase by 29.3 times

comparison

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Per capita GDP increase by 29.3 times

comparison

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A traditional agricultural economy

I Maddison (2001): per capita GDP of a traditional agricultural economy was about 600 dollars

I Lucas (2002): 600 dollars plus or minus 200 dollars

I Pritchett (1997): the lowest subsistence level in any human society was about 300 dollars. For example, Tanzania in 1998: 553 dollars.

I Per capita GDP was 536.5 dollars in 1905, so Taiwan was a traditional agriculture economy in 1900

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A traditional agricultural economy

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A traditional agricultural economy

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A traditional agricultural economy

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A traditional agricultural economy

I The conclusion is not surprising, but . . .

I Growth rate of per capita GDP is near zero for a tratidional economy. So . . .

I Assuming that per capita GDP in 1624 (Dutch period) was 500 dollars, then the average growth rate from 1624 to 1900 was 0.026%.

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A traditional agricultural economy

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A traditional agricultural economy

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Per capita GDP and growth

1624–1900 1902–1940 1950–2000

0.026% 1.73% 6.21%

I There wasA structural change in 1900(or modern economic growth) in the beginning of the Japanese administration

I How did it happen?

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Per capita GDP and growth

1624–1900 1902–1940 1950–2000

0.026% 1.73% 6.21%

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Per capita GDP and growth

1624–1900 1902–1940 1950–2000

0.026% 1.73% 6.21%

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Per capita GDP

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Comparing with Fukien or Kwangtung

I In 1895, per capita GDP was the same

I In 1940, Taiwan was twice of Fukien or Kwangtung

I In 2000, Taiwan was four times of Fukien or Kwangtung

I Why?Institutional changeby the colonial government? For example, land tax reform of 1898–1904.

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Comparing with Fukien or Kwangtung

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Comparing with Fukien or Kwangtung

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Comparing with Fukien or Kwangtung

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A data set

I The above interpretation depends on the accuracy of the GDP estimation

I Mizoguchi (2005): “Data are scarce and less reliable for period [1901–1911], so our estimates here remain preliminary.”

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Land Tax Reform: 1898–1904

I Taiwan was ceded to Japan in 1895

I Land Survey Bureau was established in 1898

I To assign a tax rate to a land, the Bureau had to estimate the crop value of the land

I Survey was done in 1903–1904, price data from 1898–1902, and we have crop value of each paddy and dry field in Taiwan

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Land Tax Reform: 1898–1904

I Taiwan was ceded to Japan in 1895

I Land Survey Bureau was established in 1898

I To assign a tax rate to a land, the Bureau had to estimate the crop value of the land

I Survey was done in 1903–1904, price data from 1898–1902, and we have crop value of each paddy and dry field in Taiwan

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Comparing crop production of 1904

total paddy field dry field Mizoguchi (2005) 36.13

Wu (2001) 38.58 23.90* –

Land survey 50.72 33.13 17.60

I Both Mizoguchi (2005) and Wu (2001) useAnnual Statistics of TGG

I A puzzle: Why Land survey estimate was so much bigger?

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How the interpretation affected?

I Using the estimate of Land Survey Bureau for crop value, per capita GDP in 1905 would be 606.7 dollars.

So the interpretation about the structural change is still valid.

I There were four surveys in 1898–1945, and the data might be used to improve the GDP estimation.

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How the interpretation affected?

I Using the estimate of Land Survey Bureau for crop value, per capita GDP in 1905 would be 606.7 dollars.

So the interpretation about the structural change is still valid.

I There were four surveys in 1898–1945, and the data might be used to improve the GDP estimation.

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Mizoguchi, Toshiyuki and Umemura, Mataji (1988),Basic Economic Statistics of Former Japanese Colonies,

1895–1938, Tokyo: Toyo Keizai Shinposha.