Researchers find a country's wealth correlates with its collective knowledge
October 26, 2011 by Lisa Zyga
This figure shows the relationship between economic complexity and income per capita for 128 countries after controlling for each country’s natural resource exports. Economic complexity and natural resources explain 73% of the variance in per capita income across countries. Image credit: The Atlas of Economic Complexity
(PhysOrg.com) -- What causes the large gap between rich and poor countries has been a long-debated question. Previous research has found some correlation between a nations economic prosperity and factors such as how the country is governed, the average amount of formal education each individual receives, and the country's overall competiveness. But now a team of researchers from Harvard and MIT has discovered that a new measure based on a country's collective knowledge can account for the enormous income differences between the nations of the world better than any other factor.
The researchers, led by Ricardo Hausmann, director of Harvards Center for International Development and former Minister of Planning for Venezuela, and Cesar A. Hidalgo, assistant professor at MITs Media Laboratory and faculty associate at Harvards Center for International Development, have published a book called The Atlas of Economic Complexity. Starting today, the book is free to download at http://atlas.media.mit.edu.
The authors plan to launch the book during an exclusive event at Harvard's Center for International Development on October 27th. Attendees will include chief economists of the World Bank and the Asian Development Bank, among other guests.
In the book, the authors show how the total amount of knowledge embedded in a countrys economy can be measured by a factor they call economic complexity. From this perspective, the more diverse and specialized jobs a countrys citizens have, the greater the countrys ability to produce complex products that few other countries can produce, making the country more prosperous.
The total amount of knowledge embedded in a hunter-gatherer society is not very different from that which is embedded in each one of its members, the researchers write in their book. The secret of modern societies is not that each person holds much more productive knowledge than those in a more traditional society. The secret to modernity is that we collectively use large volumes of knowledge, while each one of us holds only a few bits of it. Society functions because its members form webs that allow them to specialize and share their knowledge with others.
The researchers measured a nations collective knowledge in terms of the types of products it produces. Countries that produce lots of products that few other countries produce (such as medical imaging devices and jet engines) have more collective knowledge than countries that produce mainly ubiquitous products (such as cotton and soy).
This network shows the product space of the US. Image credit: The Atlas of Economic Complexity
The amount of knowledge that is required to make a product can vary enormously from one good to the next, the authors write. Most modern products require more knowledge than what a single person can hold. Nobody in this world, not even the savviest geek nor the most knowledgeable entrepreneur, knows how to make a computer. He has to rely on others who know about battery technology, liquid crystals, microprocessor design, software development, metallurgy, milling, lean manufacturing and human resource management, among many other skills. That is why the average worker in a rich country works in a firm that is much larger and more connected than firms in poor countries.But getting poorer countries to begin producing more complex products is not as simple as offering individuals a formal education in which they learn facts and figures - what the authors refer to as explicit knowledge. Instead, the most productive knowledge is the tacit kind (for example, how to run a business), which is much harder to teach. For this reason, countries tend to expand their production capabilities by moving from the products they already produce to others that require a similar set of embedded knowledge capabilities.
After measuring the Economic Complexity Index (ECI) of 128 countries by analyzing their products, the researchers found a strong relationship between ECI and income per capita, at least for countries that have limited natural resource exports. (Countries with, for example, large oil reserves tend to be wealthier than expected, since mining oil reserves depends more on geology than large amounts of knowledge.) For the 75 countries for which natural resources account for less than 10% of exports, the researchers found that economic complexity accounts for 75% of the variance in income per capita. After controlling for natural resource exports, economic complexity and natural resources explain 73% of the variance in per capita income across all countries.
Using this data, the researchers generated a ranking of the 128 countries in which Japan had the highest ECI, followed by Germany and Switzerland. The US was 13th.
The authors then predicted each countrys future economic growth by comparing each countrys ECI with its level of income (GDP per capita). If a country had a lower level of income than was expected for its level of complexity, the researchers predicted that the country would experience more growth in order to catch up. In other countries, the level of income was higher than expected based on their level of complexity, suggesting that these countries would not experience strong future growth.
Based on this analysis, the top three countries with the highest expected growth were China, India, and Thailand. The US was 91st. As the researchers explained, complex economies tend to have few remaining opportunities because they already produce many complex products. Meanwhile, countries with an intermediate level of complexity differ largely in their potential for expanding to make more complex products.
The researchers hope that this ability to measure a countrys prosperity and predict its future economic growth reveals some key areas that might be addressed and used to accelerate the process of economic development.
© 2011 PhysOrg.com
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Oct 26, 2011
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Oct 26, 2011
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and: ""Based on this analysis, the top three countries with the highest expected growth were China, India, and Thailand. The US was 91st.""
These are outrageous statistics for the United States. Perhaps the present and past "dumbing-down" of American children by Socialist-inspired teachers and professors have worked their magic to decrease the knowledge required for expansion in ALL areas. It must be agreed that the school curriculum at all levels of primary and secondary education has been railroaded to include ridiculous topics such as: how to put a condom on a cucumber or banana; and other politically correct topics arbitrarily taught in classrooms.by educators, many of whom are steeped in radical Socialism, who have themselves been taught by radical Socialist teachers and professors.
Oct 26, 2011
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Oct 26, 2011
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Methinks you have perhaps been watching a bit too much of Fox News. Might want to expand your horizons.
Oct 26, 2011
Rank: 1.5 / 5 (26)
For our nation to improve greatly, BAD educators MUST be removed from the school systems. They have been poisoned by their predecessors, and are continuing the poisoning of innocent minds of present and future generations. The Unions that support them should be stripped of their powers to maintain the presence of BAD teachers in the schools.
Oct 26, 2011
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Oct 26, 2011
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Oct 26, 2011
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the article says: ""But now a team of researchers from Harvard and MIT has discovered that a new measure based on a country's collective knowledge can account for the enormous income differences between the nations of the world better than any other factor.""
Maybe I'm wrong, but somehow I don't think that MIT and Harvard have anything to do with Fox News. Perhaps you are less of a free-market Conservative thinker than you realize.
Oct 26, 2011
Rank: 1.6 / 5 (20)
Maybe next time they should measure how freely that knowledge is communicated and how free individuals are to act upon that knowledge without significant govt interference: taxes, regulation and corruption.
Oct 26, 2011
Rank: 5 / 5 (7)
Though to be fair: Straight A students in the US would barely be average students anywhere else (I have been to US highschool 2 years when I was young and the standards are laughably low - even taking all honors/AP classes. By all accounts the demands on students haven't risen much since then (if at all).)
Oct 26, 2011
Rank: 3.7 / 5 (3)
Oct 26, 2011
Rank: not rated yet
Needed correction. Harvard&MIT overlooked their own typo.
Your welcome. See above corrected quote.
Oct 26, 2011
Rank: 3.7 / 5 (6)
You know why other countries are surpassing us? Because thier citizens do things for the greatness of thier WHOLE COUNTRY, not just themselves! Also, change for the better is stifled by greedy corporations!
Oct 26, 2011
Rank: 1.7 / 5 (18)
What country does that and how has that worked out for them?
After all, those greedy Americans saved millions from German, Japanese and Soviet tyranny.
When there is a natural disaster, to whom does the world look to save them?
Oct 26, 2011
Rank: 1 / 5 (4)
We were told socialism is illegal in the U.S. That is why they must privatized SS. A terrible mistake from the past.
Oct 26, 2011
Rank: 3 / 5 (2)
As someone who attended primary and secondary schools in US and abroad, I can attest with certainty that the US education problem is not teachers, per se, but the lack of concise and integrated textbooks, low teacher pay and low regard for the young people by the establishment. You stop exploitation of public schools by the eye-candy textbook publishers, you introduce male teacher presence to focus the mind of young people, and you stop undermining the self-esteem of public school attendees and performance will take care of itself.
Oct 26, 2011
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Oct 26, 2011
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I've heard this opinion stated before. To be honest, I know little about it. How it's measured, is it apples-to-apples, etc.
I've always been a bit surprised when I hear that, though. I went to grade school and college (through a master's) in the U.S. My kids are in school now. So, I've been able to compare/contrast public school curriculum within my own lifetime. I find that my children are very adequately challenged (I do include extra-curricular academic-type work as well) and that the workload is even higher than I had.
Oct 26, 2011
Rank: 4 / 5 (16)
This amounts to zero fact, lots of bad opinion. You know literally nothing about my children, their iq, their schools, the curriculum, etc. So, to spout out this nonsensical claptrap above as if it were somehow scientifically valid is a bit like saying "U.S. teachers are socialists".
Oct 26, 2011
Rank: 1.8 / 5 (5)
Factually incorrect ridiculousness.
Oct 26, 2011
Rank: 4.6 / 5 (10)
A sexual ed programme is usually delivered as part of P.E (Physical Education, maybe 'Gym' in U.S) and will comprise only a small part of curriculum i.e if students are taught to put a condom on a banana/cucumber they will probably only spend one lesson - big laugh for the kids but they'll remember the lesson (which, being contraception, is rather important).
Ignorance, prejudice and religion distort education programmes, not socialism.
Oct 26, 2011
Rank: 1.4 / 5 (19)
Fortunately US schools are trending towards charters and home schools bypassing the socialist teacher unions. Even Sweden is using competition by using vouchers.
Oct 26, 2011
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Oct 26, 2011
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Clearly, there are problems in U.S. schools. Certainly there could be improvements. True, teachers unions have made some utterly baffling decisions, tend to have a liberal bent, and play politics with many issues for their own gain (vs. the students). But, the same could be said of many large institutions.
All problems with public schools in the U.S. are not caused by unions. And not all teachers are even liberals, let alone socialists.
As gareth put it, eloquently, "Surely U.S. schools teach facts..." And I say, he's right on the money.
Oct 26, 2011
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Oct 26, 2011
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According to the Drudge Report, the evil socialists who are behind Sex Education in America are now starting to teach children how to engage in acts of bestiality.
Of course Conservative DittoTards swallow every drop of the Conservative/Libertarian lie.
Oct 26, 2011
Rank: 3.9 / 5 (14)
There. I fixed it for you Tard Boy.
Money = (-All Evil)**.5 where (All Evil) > 0.
Oct 26, 2011
Rank: 4.3 / 5 (17)
The failure of America to adequately educate it's young is directly related to the failure of America to adequately socialize it's young and the failure of America to adequately parent it's young.
The failure of America's school system is not a failure of America's school system. It is a feature of America's Capitalist - Me, Me, Me - Culture of greed.
In a nation that worships money above all else, only saps get an education when drug dealing and being a teenage hooker provides all the money you need.
Oct 26, 2011
Rank: 1.7 / 5 (18)
What is baseless? Who occupied the WI state house a few months ago? Teachers from teacher unions. They even lied about skipping classes.
What politicians are supported by the NEA dues? Socialist ones.
"Socialism is not too far to the left for the Chicago Teachers Union."
Oct 26, 2011
Rank: 4.2 / 5 (20)
And the Russians saved tens of millions from German, Japanese and American Tyranny.
Without Russia Americans would be speaking German today.
Oct 26, 2011
Rank: 4.2 / 5 (19)
The U.N. typically.
Oct 26, 2011
Rank: 3.9 / 5 (16)
The average American work week is longer now than it was 50 years ago and now there are generally 2 or 3 earners in the family and they still can't stop going broke by spending money they don't have to purchase items they don't need.
Loooooosers
Oct 26, 2011
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Oct 26, 2011
Rank: 2.6 / 5 (5)
If it wasnt for the british america would be speaking dutch.
pointless arguments about alternate realities.
Oct 26, 2011
Rank: 3.9 / 5 (16)
The great challenges facing our nation and our planet cannot be solved by such petty and narrow minded arguments.
Using this study as fodder for an intellectually dishonest campaign against your political rivals only serves to lower the bar even further.
Oct 26, 2011
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Oct 26, 2011
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Oct 26, 2011
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It's similar to our problem with illegals from Mexico and other places who come to the States and take our resources. The major difference is: that the United States is a big melting pot of all different races, ethnic groups, and religions, and many of them are looking to benefit themselves with our tax money. Too many are only looking out for themselves against the common good. Like the teachers' unions, for instance.
Oct 26, 2011
Rank: 1.3 / 5 (15)
beerbarian says:
intellectually dishonest campaign against my political rivals?? What the hell are you talking about? Get your story straight before you accuse me. I HAVE NO POLITICAL RIVALS, dimwit.
Oct 27, 2011
Rank: 1.6 / 5 (14)
Oct 27, 2011
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Oct 27, 2011
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Just to give you an idea: The amount I learned in those 2 years of high school with straight 'A's was the equivalent of one year back home (germany). I had to be reinserted one year below my age level.
When I talked to friends from asian countries then the discrepancy there is even more extreme (to them the european school systems are barely challenging)
The 'challenge' in US school systems as oposed to other systems is non-existent. If you feel your kids are being challenged adequately then maybe you should arrange for them to spend some time abroad and see what the real world is like.
Oct 27, 2011
Rank: 4.3 / 5 (3)
Oct 27, 2011
Rank: 4.3 / 5 (11)
lmfao. Thank you. Made my day.
Oct 27, 2011
Rank: 4.1 / 5 (13)
There may be some truth to what you say, and I do believe there is adequate room for improvement in our school system. However, I maintain that simply by stating the case from a couple of personal experiences, you are not in reality making an apples-to-apples comparison.
For example, I have been fortunate enough to have a high enough standard of living that the schools my children attend are in safe, comfortable suburban areas. So, on the one hand, you have schools like my son's elementary where his Odyssey of the Mind team competed internationally against schools from around the world and won a second place award. This is a public school.
On the other hand, you have schools in this same city which are in very poor, inner city neighborhoods. Huge dropout rates. Guns, drugs, etc.
The problem with this kind of study is, we are simply lumping both of these types of schools together.
Oct 27, 2011
Rank: 4.2 / 5 (15)
How in the world could you possibly know this? Answer: you don't, so you simply make it up.
Pirouette, I suspect that you are having trouble understanding the difference between wild, paranoid speculation and actual fact. Meds and counseling can help you my friend.
Oct 27, 2011
Rank: 1.9 / 5 (11)
We need other countries to export teachers (and decent parents) to our country... we are the impoverished nation in terms of education...
(I'm assuming you are American)
Oct 27, 2011
Rank: 1 / 5 (12)
Would you expect any better from a country where 40% of the population believe that humans rode dinosaurs 5000 years ago?
Oct 27, 2011
Rank: 2.5 / 5 (4)
When I was there that sort of 'belief' wasn't as wide spread (or at least it wasn't in any kind of evidence at the school I was at.)
From experience and correspondence with fellow researchers on the subject of education I'd say anything up to and including college (and also most non-internationally known universities) is a laugh.
There are some extremely good universities, though (MIT, Cal-Tech, Stanford ...) so all is not lost. Anyone who has attended any of those will attest to the fact that the level of difficulty jumps orders of magnitude from college/high school.
But if you believe that having a US highschool diploma or a college degree is worth anything outside the US then you're just kidding yourself.
Oct 27, 2011
Rank: 3.7 / 5 (15)
First, they were called "Jesus Chariots" and second, it was closer to 5500 years ago. It took 500 or so years for Adam and Eve to get the whole civilization thing going.
Oct 28, 2011
Rank: 3 / 5 (4)
I suspect that MarkyMark most likely believes that Nazis are lurking in every corner, waiting to pounce on the Socialists and take their powers away.
LOL. . .get over your fear of Nationalists, MM. . .you have nothing to worry about whether in the U.S. or in Europe. You are ASSUMING by your dumb statement about dinosaurs that I am a Creationist. I am not, but YOU need to get over them also.
Oct 28, 2011
Rank: 3 / 5 (2)
Oct 28, 2011
Rank: 3 / 5 (4)
That is a mistake.
My grandfather had an 8th grade education and knew FDR was a socialist and knew much more about life than the 'educated' of today.
Oct 28, 2011
Rank: 2.3 / 5 (3)
It's apparent that MM and Nerdyguy don't believe that that Socialist system is also being championed here in the USA. Their heads are in the sand regarding the evils of Socialism and will most likely jump for joy when the U.S. Constitution is circumvented and ignored by Socialists already in power here.
Oct 28, 2011
Rank: 3 / 5 (2)
You're absolutely right. Even a college education is no guarantee that the student has actually LEARNED AND RETAINED the knowledge taught him/her. But the point is also that the CURRICULUM that is being taught to students, depending on the subject, may have been convoluted to reflect a Socialist point of view, of which many students are not aware of, and are trusting of their teachers and professors to teach them the true facts, rather than lies and innuendo that are in keeping with Socialist values. History books are much more affected by this system of wholesale lies being thrust on kids intent on learning.
Oct 28, 2011
Rank: 2.3 / 5 (6)
I am deeply curious to know, as it seems to me that the vast majority of you have staked out an opinion and spend most of your time ridiculing anyone who challenges it. It's obvious that neither side of this debate is learning a damn thing from the other.
I'm clearly on the fence with this and would like to see more definitive information and whole lot less name-calling. Am I the only one?
So, again, what information would suffice? Is there such a beast?
Oct 28, 2011
Rank: 3 / 5 (4)
LMAO! How did I get into your crazy rants this time? You know nothing of me, my motives, my interests, or my beliefs, so hush. If you're interested, let's have a conversation, but don't quote an individual unknown to you in regards to their personal views.
If you stick to the facts, and what I actually said, you would clearly understand that what bothers me is not your opinion, when stated as such, but your use of a broad brush to paint all people in a specific group.
Oct 28, 2011
Rank: 3 / 5 (2)
Oct 28, 2011
Rank: 2 / 5 (2)
"Food for thought: what information, exactly, would suffice to convince the massive egos on here who are so certain of their own infallibility? ........."
Oct 28, 2011
Rank: 5 / 5 (1)
I'm clearly on the fence with this and would like to see more definitive information and whole lot less name-calling. Am I the only one?""
You need to reread your own comments as well as the comments that MarkyMark made which you agreed with. You are the pot that's calling the kettle black. You have said in an earlier comment that you didn't like or approve of my comments on Socialist teachers and professors because YOUR kids get straight A's and that you have never met a Socialist or radical teacher.
You have based your comment against mine solely on YOUR experience with possibly very dedicated teachers, and I expressed that already.
Oct 28, 2011
Rank: 5 / 5 (1)
Oct 28, 2011
Rank: 2.3 / 5 (3)
You need to learn more about what is truly going on in this country and in Europe and Asia.
Unless your mind is dense and full of the rhetoric that Socialism espouses, you MIGHT wake up one day and realize there is more to the story than what's in your own little world.
Oct 28, 2011
Rank: 2 / 5 (4)
Naw, you're just making things up again. Could there be individuals out there who do such things? Sure. Is what you describe here ALL that exists within American education. NO.
Oct 28, 2011
Rank: 3 / 5 (6)
Nope. Wrong again. Don't like to see a science-based site perverted by radical comments based on zero evidence. Your opinion, stated as a political rant, does not equate with proof of anything. Logic, my friend, logic. Try it.
Oct 29, 2011
Rank: 5 / 5 (3)
Agreed. Here's my anecdote: I struggled through the boredom that is the US honors/AP system for 8 years. Everyone I've ever talked to that went through the same (100s of individuals) have identified this problem. Some of them have or are starting private schools or are on school boards. The US is figuring out the problem. I have no doubts that it will improve.
That said, the US is still near the top-right of the graph. The article is saying this is the case because we are specialized. This article tries to explain the economic advantage of NOT stressing well-rounded education. Let's find the most valuable balance, shall we?
Oct 29, 2011
Rank: 5 / 5 (2)
There are very good reasons why I remember most of my HS chemistry class. Continuation is the big one, but a close second is that my teacher stressed understanding how it all fits together rather than just memorizing facts on their own.
I don't know about other countries, but this is well understood in the US. It's a recent revelation on the national level, however, so it's going to take half a generation for the improvements to manifest themselves into greater productivity and higher aggregate knowledge in the population.
Oct 29, 2011
Rank: 1.8 / 5 (5)
So America has the British to blame for it's lower standard of life and lack of civilized culture.
Thanx for clearing that up.
Oct 29, 2011
Rank: 2.7 / 5 (7)
How is it then that the Socialist European states typically have higher living standards and a universally higher standard of Education than the bankrupt American state?
If what you claim wasn't a lie, then we would expect to see those Socialist European "hell holes", as you put it, ranked below the U.S. in quality of life and education.
Yet the opposite is true.
How sad for you.
I have never encountered a Conservative who wasn't a congenital and perpetual liar.
You are no exception to that observation Spirochete.
Oct 29, 2011
Rank: 2.3 / 5 (6)
It is good to learn such truths.
Oct 29, 2011
Rank: 2.3 / 5 (6)
Isn't this the same America that restricts it's citizens to "protest zones" when they dared try to protest the criminal acts of their previous Conservative - war criminal - President?
Ya... It is, isn't it?
"The United States is lacking in enough of them and that is why Socialists wish to render the nation as ineffective as possible and destroyed as a bastion of freedom." - Spirochete
Oct 29, 2011
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Oct 29, 2011
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Oct 30, 2011
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Oct 30, 2011
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Oct 30, 2011
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Translation - "My Libertarian ideology doesn't permit me to comprehend reality."
And it never will.
Oct 30, 2011
Rank: 3 / 5 (2)
And they STILL don't make sense.
Oct 30, 2011
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Oct 30, 2011
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Oct 30, 2011
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Asian parents are not interested in a "football scholarship", which is a joke to them, anyway. Another group that surpasses most American children in scholastic achievement are the Jewish kids. Their parents push them hard also, to excel. Both Jewish and Asian parents are generally more involved with checking homework than other ethnic groups in the U.S.
In Israel and Asian countries, the competition is even harder and, in many cases, failure is not an option because it is too embarrassing for the parents and kids don't want to let them down.
Oct 30, 2011
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Oct 30, 2011
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The only wealth that could not be stolen is their education.
Oct 30, 2011
Rank: 1 / 5 (2)
If you consider murdering Palestinian children "realism".
Oct 30, 2011
Rank: 3.7 / 5 (3)
And yet look how things have turned out. Israel's economy is a shambles and without the influx of billions of dollars in donations from Jews all around the world would fall apart completely.
China on the other hand has an economy that is growing by 10 percent per year, and pretty much has the high tech world in it's pocket.
The future for Israel is Oblivion.
The future for China is most probably world market domination.