Item — HN Reader

GDP and GDP PPP both quantify production, not income and living standard metrics. While there is often a correlation between production and rising living standards, it is a lossy indicator that fails to take into account inequality and differing regional CoLs. For this reason Median income plus HDI is the standard metric used in developmental economics to gauge QoL, as they give you insights on access to healthcare, education, inequality, and other metrics critical to the functioning of societies.

Countries can have cutting edge industries AND still lag behind in development - Brazil (Defense, Aerospace, ONG, Automotive), South Africa (Defense), Turkey (Defense, Automotive, ONG), Mexico (Defense, Automotive, ONG), Russia (ONG, Defense, Aerospace, Automotive), Malaysia (Automotive, ONG, Electronics), etc are all countries that are major innovators and even leaders in STEM/innovtion heavy industries, yet still have significant issues with spreading development across their countries. The PRC is facing a similar issue, and it is a hard nut to crack - I can't think of a single middle income to upper income economy that didn't also

1. receive a massive subsidy from either the EU (southern Europe, eastern Europe, Ireland) or the US (South Korea, Israel, Taiwan)

2. have a small population (<30mil at time of transition)

It is harder to lift a nation of 400 million poor (using PRC poverty definition) people than to lift a poor nation of 30-40 million.

Also, this same trap that China is in is something that India, Vietnam, Indonesia, and the Phillipines will face in 20 years

1 comments

>GDP and GDP PPP both quantify production, not income and living standard metrics.

Purchasing power parity (PPP) allows for economists to compare economic productivity and standards of living between countries.

https://www.investopedia.com/updates/purchasing-power-parity...

>Countries can have cutting edge industries AND still lag behind in development - Brazil (Defense, Aerospace, ONG, Automotive), South Africa (Defense), Turkey (Defense, Automotive, ONG), Mexico (Defense, Automotive, ONG), Russia (ONG, Defense, Aerospace, Automotive), Malaysia (Automotive, ONG, Electronics), etc are all countries that are major innovators and even leaders in STEM/innovtion heavy industries, yet still have significant issues with spreading development across their countries. The PRC is facing a similar issue, and it is a hard nut to crack - I can't think of a single middle income to upper income economy that didn't also

Brazil does not lead in Aerospace, ONG, Automotive. South Africa does not lead in defense. And so on. They do not possess technology that other countries depend on. For example, Embraer's revenue in 2021 was 4.2 billion. Puny compared to Airbus' 52 billion. If Embraer stopped operating tomorrow, the world would not notice.

We're talking about actual innovation and a technology advantage. You mentioned that Mexico leads in automotive. What? Mexico does not have any cutting edge automotive technology that other nations depend on. Mexico is a hub for car manufacturing because it's close to the US and provides cheap labor. They do not produce any car tech that other countries cannot produce.

Real innovation is something like China's CATY new car battery which outcompeted Tesla's 4680 battery. https://medium.com/predict/tesla-is-about-to-lose-its-tech-a...

Before Tump's ban, Huawei was set to provide 5G technology to the UK, a country that could not produce 5G equipment on its own. A true middle-income country could never do this.