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Wednesday, April 25, 2012

Growth in China

Today in the NYT Ruchir Sharma  writes that China is slowing down. He wrote a book: Breakout Nations. If you follow this blog, you may know that I am reading Daron Acemoglu et al.'s book : Why Nations Fail.

I see a pattern here.

To advance, a country needs Inclusive Institutions, as opposed to Exclusive ones. Britain, Canada, Australia, New Zealand, and the US, have Inclusive Institutions. In a nutshell, almost everybody benefits by the rule of law. Laws apply to everybody. Kings and Presidents do not get a pass. Check Richard Milhous Nixon in Wikipedia.

Therefore China has to slow down, like Japan before,

Investors will come back to the US!

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