'Industrial Revolution' is a misnomer. Industry was just a thing to do after agriculture became easier. China and India are about half way through their 'Agricultural Revolution'. According to the CIA World Factbook, a 45% of the 800 million labor force out of China's 1.3 billion and 60% of India's 500 million labor force out of 1.1 billion still work in agriculture. In the US, France and Poland the comparable numbers are 0.7%, 4.1%, and 16.1%. In the next couple of decades, we can expect Chinese and Indian algricultural sectors to achieve 100% labor efficiency improvements putting a total of 350 million people into manufacturing and services which will be a 50% rise. Over the next 100 years, we can expect them to catch up to France and put 96% of their labor forces away from agriculture. These are conservative predictions.

The corresponding aggressive predictions follow. If China's per capita GDP continues to grow at 10% per year, it will catch up to the US in per capita GDP in about 20 years. If that happens in both China and India, we can expect a total of 600 million Chinese and Indian more people to be in the global non-farm labor force at that time. That latter number is an optimistic assessment which would require a 10,000% improvement in agricultural labor productivity (100x) from these two countries to bring them by 2027 to up to US 2007 agricultural productivity.

I also noticed that total fertility per woman in China is 1.75 and India is 2.75. Life expectancy is about six years lower in India, but 2.75*68 is a lot more than 1.75*73. If you throw in Hong Kong and Macao, China is even further ahead in life expectancy and income. Like the old Chinese curse, we may live in interesting times.

"These are conservative predictions."

Great, just great, that means Bill White will have a field day trying to tear them apart!

All kidding aside these number are staggering. Think about it, the 350 million is greater than the current total population of the U.S., not just the part of the population in the workforce.

What does "100% efficiency improvement" mean?

100% efficiency improvement means they produce all the food with half as many people involved. I should have said labor factor productivity. Kind of like in the US where we produce enough food to feed 100% of our population with about 1.1% of what India uses--0.7% vs. 60%.

"What does "100% efficiency improvement" mean?"

I would assume that it means they expect to double the amount of yeild per acre of farm land. That would of course assume the amount of farmland stays constant. If the amount decreases then they would need to greater than double the yeild per acre. The bottom line, I think they mean that agricultural output will double due to impoved efficiency in the next couple of decades.

Use of more modern farming western style techniques could easily accomplish this.

In the next couple of decades, we can expect Chinese and Indian algricultural sectors to achieve 100% labor efficiency improvements putting a total of 350 million people into manufacturing and services...

Tiger Woods may still be putting but this requires a demand, in the next couple of decades, for an additional 350 million people in manufacturing and services.

JAH: China and India can still use all the land they are using now for agriculture, but just fewer people. They will likely improve land productivity too and the US has used less acreage even as it produced more food (which is reversing with ethanol from corn).

D Anghelone: The manufacturing and services demand is already there. We're talking only $3 trillion a year of labor demand to buy 300 million Chinese and Indian workers at $10,000/year. The US demand alone will increase by that much in 20 years as we grow from a $12.5 trillion economy to a $25 trillion economy. But even if no one else wanted anything, the Chinese could just sell to each other. They would have to focus more on what they want than what we want. Don't worry--prices for farm labor, industrial labor and service labor will equilibrate and throttle labor force transformation. If too many people leave agriculture, wages will rise there as prices for food rise and stem the flow of labor out of the industry and so on. There won't be 300 million unemployed people.

Actual demand will be much rosier and probably push up Chinese per capita GDP to $30,000/year or more which would be about half of US per capita GDP in 2027. That would leave total China GDP ($50 trillion/year) at twice US GDP and equal to the entire world's GDP a couple years ago. Interesting times indeed.

Sam,

I was writing my post while you were writing yours so I did not see it. Once I saw yours I understood what you were saying. Based on developments here and other places in the west I would assume that they will become efficient enough to cut down on the amount of land needed but you are right all they need to do initially is become efficient enough to free up people for manufacturing jobs. Great post.

I'd thought homo economus to have lost his head to the Islamists but I guess not.

Frightening.

Right, every inch of China is covered with them growing something. Terraced hillsides are standard. As we whisk by on the train you can see them farming the way their grandparents did. Often you see the cliff dotted with caves. What are those? They live there. It is fascinating to watch and incredibly sad.

Meanwhile, government officials talk about how they are lifting a million people a year out of poverty. A million people a year! That is staggering. Even more so when you realize that they are over 1000 years away from lifting everyone in China out of poverty at that rate.

Kids on the farm on making their way to the city and finding it a hard row to hoe -- especially since it is technically illegal to move like that without permission. We watched a documentary that followed one kid. Someone else in the village had gone to the city for a year and came home with enough money to get married and buy a house for his new wife. Off this young man -- an only son -- went where he worked illegally on a high rise construction project and slept in a worker's dorm with no heat. He eventually went home because he couldn't take the bitter winter cold.

We already hear of riots everywhere in China. Well, some details and statistics/conjecture leak out from foreign websites. Chinese government officals admitted to about 74,000 in 2004. Many rural people have television and they watch it filled with commercials for stuff they can't afford (like pretty much everything as the average peasant makes about $150 a year) and modern TV soaps showing spoiled rich young people fighting over the prettiest girl. At the same time there is such a disparity between boy/girl births -- especially in rural areas reaching sometimes 120 boys to 80 girls -- that a poor (and heaven forbid stupid or ugly) village boy has little chance of marriage. It is made even worse by the fact that women are now getting into college and excelling. Why worse? Well, those boys are even more out in the cold then they were before. The women in China are going to experience a power shift in this generation like no other in history. I hope they live through it. I've seen any number of stories about girls kidnapped and sold as "wives." My own wife was almost kidnapped off the street when she was younger.

How much longer can the condition continue? Especially when the people see the endless corruption. Guanxi, or relationships, are everything. I know one guy whose group paid a $10,000 bribe to be allowed to exploit an oil well his group owned. Someone else paid more, and had better relationship, and they were forced to sell for almost for pennies on the dollar. Now the people with more money and guanxi are running the oil well and getting richer. He lost much of his family's life savings in that debacle.

I want to be optimistic but the situation is so inherently unstable. Imagine the gleaming cities of 20 years from now with hundreds upon hundreds of millions of peasants knowing they and their children are shut out. Or even worse know that they will know the shame of being a "branchless tree" (Chinese description of a man without a family.) Interesting times indeed. If anyone can give me a reasonable explanation of how this can end well short of a singularity -- and molecular manufacturing to instantly provide economic parity -- I'd love to hear it.

Imagine the gleaming cities...

I've read that the gleaming buildings in those gleaming cities are currently much gleamingly empty. Any insights there?

Many of those same buildings were financed by loans that will never be repaid. The chinese economy stands on two pillars: exports and construction. Neither of those can be sustained in the current manner. Building empty buildings through fraudulent lending can't last forever.
An export driven economy that focuses more heavily on price than on value added can't sustain rapid growth either. Always, there is a cheaper labor pool to exploit somewhere else. Maintaining an artificially pegged currency, as China does, compounds the problem further. When the renimbi finally unravels the Chinese will lose much of the price advantage they enjoy in manufacturing.

Many of those same buildings were financed by loans that will never be repaid.

Thanks. I've read that as well but of course have no idea what is true.

That's roughly analogous to the Japanese overvaluation of real estate back when Pat Choate still drew income as an alarmist. :-)

I really think that moving from an agricultural economy to an industrial one is more of a political transition rather than an economic one - and as such, I would expect it to take much longer than predicted.

For example, once one person has made it big in China, they will presumably work to maintain the difference between their pay and others rather than try to pull others up to their pay. I believe this would be true of any country that imports luxury goods.

This is not really true in the US, because the US is the luxury goods market - so if you are a billionaire in the US your best option is to raise everyone up to millionaires to leverage demand side economics to get you more stuff. (Rides to space are currently hard to get, because not enough people can afford them. If you are a billionaire, one way to get to space in your lifetime is to increase the number of millionaires in the US)

Or maybe not...

For example, once one person has made it big in China, they will presumably work to maintain the difference between their pay and others rather than try to pull others up to their pay. I believe this would be true of any country that imports luxury goods.

I don't understand the reasoning behind this statement.

My take is that the main obstacle to a transition to low labor agriculture is a combination of cost of labor and the ability to create large industrial farms. At a glance, it appears to me that most farmland is still not privately owned, which greatly inhibits creation of such farms.

Further, there may be competition from state-owned farming cooperatives too and various large political landmines. The rural political landscape sounds particularly treacherous and corrupt. One could lose one's farm either from the authorities or from competing too effectively with the local peasants.

Even if farm size stays small, it can be worked with more efficient technology with input of capital such as mechanization and fertilizer. This will transition naturally as the priced for urban labor rises and the price for rural labor falls (relatively) with falling food prices due to efficient practices of the rest of the market. Envy will bring major urban migration if the urban wage is $15/hr and the rural wage is $5/hr. China need not reform their agricultural sector to benefit if they become so good at manufacturing for export that it is cheaper to import food that is produced with modern methods than it is to grow it locally. That would still result in a huge influx into the cities' service and industrial sectors.