Abstract
A first principal component combines several indicators so as to maximize their internal consistency for measuring a construct. First principal components are extracted here from Swiss Economic Institute and World Bank datasets containing yearly societal indicators for China. These indicators are input to population-weighted regressions without recourse to survey sampling or probabilistic inference. The results demonstrate Chomskyan globalization and domestic credit as strong exogenous and endogenous predictors of Chinese per capita GDP. These encouraging findings, easily extendable to other nations, are brought by two new societal indexes with assured unidimensionality.
Highlights
This economic turn from low-cost exports toward a higher standard of living for the Chinese people is paralleled by a political transition from communism to socialism. These economic and political trends in China, aided by the International Monetary Fund (IMF), World Bank, and New Development Bank, could reduce the currently dangerous trade imbalances anticipated by Keynes
We find that over the period from 1992–2013, Chomskyan globalization has increased Chinese domestic credit and per capita gross domestic product (GDP)
The KOF Index of globalization [6] is produced by the KOF Swiss Economic Institute at ETH Zurich, who define globalization by the following indicators: Actual flows (% of GDP) include trade, foreign direct investment, portfolio investment, and income payments to foreign nationals
Summary
Varoufakis [1] portrayed the United States of America as The Global Minotaur, receiving foreign. This economic turn from low-cost exports toward a higher standard of living for the Chinese people is paralleled by a political transition from communism to socialism These economic and political trends in China, aided by the International Monetary Fund (IMF), World Bank, and New Development Bank, could reduce the currently dangerous trade imbalances anticipated by Keynes. We find that over the period from 1992–2013, Chomskyan globalization has increased Chinese domestic credit and per capita gross domestic product (GDP) These results demonstrate the usefulness of unidimensional indexes for monitoring the sovereign performance of important economies. This assessment demonstrates, without recourse to sample surveys or probabilistic inference, that Chomskyan globalization has had a positive exogenous effect upon China
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