Asia’s ‘Little Divergence’ in the 20th Century:
Evidence from PPP-based direct estimates of GDP per capita, 1913—1969

Abstract:

This paper uses expenditure-based PPPs to create direct estimates of GDP per capita for 12 Asian countries in comparable prices for six benchmark years during 1913—1969. The paper finds that levels of real GDP per capita were in several countries comparable to those in Japan in 1913. GDP per capita of Japan and other Asian countries diverged during and after World War I. The paper questions whether Asia’s ‘little divergence’ between Japan and other Asian countries dates back to the late-18th century. It draws attention to the different resource endowments of Japan, China and India compared to other Asian countries, and their implications for the development trajectories of Asian countries. The paper also demonstrates that using historical PPP estimates yields estimates of GDP per capita that diverge from hose based on retropolations of the single 1990 PPP-converted benchmark year. It concludes that historical estimates of PPPs are needed to confirm analyses of comparative economic performance based on GDP per capita data.