This could take anything from a vanity up to an entire textbook to cover.
I'll give not just Cliff's Notes, but the Cliff's Notes to the Cliff's Notes.
During the time you speak of, there was no industry--everything was at a handcart/oxen/small farmer level.
So the countries with the biggest populations, had the biggest GDP.
You are correct that the Industrial Revolution changed things, but that sounds too much like the liberal "oh, woe to the poor indigenous peoples, cruelly repressed by the evil capitalist exploitative Christian white males who are probably heterosexual, too" (OWTTPIPCRBTECECWMWAPHT).
Several other things come in, too, such as:
A strong system of law to allow intellectual and physical property rights.
Well-maintained systems of transport for trade.
An educated populace.
Enough food.
Willingness on the part of the government to get out of the way and not regulate and crony-ize things out of existence.
Access to capital to wield, given the above factors.
China and India have until *very* recently, not had all of these things--e.g. Robert Erlich in his ecofreak bible The Population Bomb predicted in 1974 that India would be cut off from food aid by the United States by the new millenium. He was wrong, of course, but the fact that one of the cognoscenti, the annointed, thought so, indicates that they weren't necessarily on very good ground.
And of course the Socialist or Communist governments did not do much to encourage economic efficiency.
...The OECD could manouvre to slwo them down, create rifts and turbulence, grind them to a halt and IMO, the OECD retains such an option to exercise later at an ‘appropriate’ time, perhaps. A sudden banking system collapse in China or the volcano of the HIV crisis in India suddenly erupting is actually more a matter of focusing press attention at the right parts of the Chinadia edifice than of anything else.
You are quite right; but again, this sounds like OWTTPIPCRBTECECWMWAPHT. There are structural flaws in the societies of India and China; the question is if those countries can become economically self sustaining rather than low-cost cesspools, before the societal problems overtake them. (In China's case, with the surplus of unmarried young men, and their extreme nationalism, I think that they will shift from Communism to Fascism, if they have not already done so. All of their economic growth is geared towards militarism, and they are far more xenophobic and racist than David Duke ever drreamed of being. See here and here here for examples. (Thanks to FReeper Lucius Vorenus for the latter link.) (*)
Thirdly, is it reasonable to believe that a McKinset would sellout for whatever peanuts some impoverished indian state could hand out? The downside is that iof McK activities are exposed, what happens to their 98% or some such number of business that resides even today in the OECD?
Pushing India is not "selling out" for them; this is touched on in one of the Vanities below, "A Falling Tide Grounds All Boats"--it is more like an "old boys network" of executives from companies who first started the outsourcing wave, cashing in on their connections.
Fourthly, how does our wealth transfer to the mideast for its oil comapre to that to India? China i actually pumping wealth back into the US by buying US bonds in return for tangible physical goods.
Two points. First, the old saying, "If you owe the bank $1000 and can't pay them back, you are up the creek. If you owe the bank $200,000 and can't pay them back, the bank is up the creek."
What if you the Chinese DUMP all the US bonds, causing a financial crisis in the US, just as they take all their Clinton-acquired missile technology and go for Taiwan, combined with biological warfare attacks (see the link above, and consider the recent pet-food debacle with, say, H5N1 laced into HUMAN foodstocks) combined with a massive internet attack from all of the Lenovo-created PC's which had trojan horses installed at the factory?
Second point, going to the Adam Smith's "hidden hand" argument. From what I have read, China requires 5 times the amount of oil for a single unit of GDP produced, than does the United States. This means one of two things--either the US does much more "finished product" and value added work, or China is grossly inefficient.
If the former, good for the US, except if we suddenly need manufacturing capacity--one strike on Boeing and most of the US airforce is out of business. IF the latter, it means US executives are screwing with the hidden hand, by forcing everyone *else* to pay the price of inefficiently manufactured goods and higher oil prices, just so they can save a few bucks on cheaper labor, and so get higher bonuses.
Whatever the outcome, I wouldn’t grudge India’s rise. A billion aspirations cannot be forever kept pinned down.
I don't grudge India it's rise--I am upset that the US executives lie through their teeth that they cannot find qualified US workers, and then force the US workers who are being fired to train their own replacements. If the US workers were really unqualified, they would be asking the Indians for training. I could give many other examples, but it is clear that it is not the talent of the Indians which is driving this, but merely wage arbitrage by the executives.
Cheers! (*) I have a series of vanities on outsourcing and such; and another series on the decline of the west.
(Vanity) Another Look at Outsourcing
(Vanity) A Falling Tide Grounds All Boats
(Vanity) The New Colonialism, or, Out of One, Many
(Vanity) As the World Turns, or The Wild, Wild East
(Vanity) As the World Turns, Part II, or Back to the Future
(Vanity) As the World Turns, Part III, or, The Year of Lipstick on a Pig
Bump! Great post and more links - thanks!