Adrian Kreuzspiegl

Europe has plenty of policy issues, but if we look at Europe combined, I don’t see any clear macro imbalance.

This is science fiction! The world’s largest high-speed train station. Chongqing East - in China 🇨🇳.

South Korea and Poland present two distinct solutions to the challenges of late development shaped by their unique contexts. Korea, and other East Asian economies, protected their nascent industries before exposing them to global competition. The aim was to create domestic champions that would become the engine of domestic growth and innovation, bringing the countries to the global technological frontier. They were able to do so in the context of their Western alignment in the Cold War. Iconic global brands from South Korea and Taiwan emerged as a result, though many other countries attempting this path have failed. In contrast, Poland and other Central and Eastern European (CEE) economies underwent a turbulent transition from centrally planned to market economies while facing strict constraints from EU accession and membership rules, which precluded protectionist measures. In this setting, foreign direct investment (FDI) became the primary solution. Rather than complementing or building local capabilities, FDI largely supplanted them. CEE countries integrated deeply into global value chains, typically in lower-value, downstream segments dominated by foreign multinationals. Hence, there are no Polish or Romanian global champions; where local successes exist, they largely function as suppliers for these multinationals. An open question for CEE’s “hyper-integrationist” development model is whether it can achieve full convergence with Western living standards, given its structural reliance on external agents of modernization and limited indigenous innovation capacity (the differences in R&D spending versus Korea a great example). Can an economy attain high-income status without developing globally competitive firms and reaching the technological frontier? This challenge differs qualitatively from that confronting stagnant Western European economies (eg. Germany, France, and the UK). The latter must sustain growth and competitiveness at the technological frontier amid a host of new domestic and global challenges. As a result, CEE experiences offer few direct lessons for Western Europe, which explains their limited prominence in reports such as Mario Draghi’s on restoring EU competitiveness.

I've now visited three provinces and two municipalities in China, and based on what I've seen, there's no clear gap in quality of life between the West and China. Some things are generally better in the West: air quality, real wages, work-life balance. Some things are generally better in China: infrastructure, urban modernity, safety. Overall, the gap that many Westerners assume exists has largely closed.