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This paper first analyzes the question why did Czarist Russia and Ottoman Turkey fall behind the West? It is argued that interstate rivalry forced West European rulers to respect the private property rights of producers and subjects earlier and to a greater degree than czars or sultans ruling over huge contiguous territories ever had to. Incentives to work were better in Europe than elsewhere. The mobilization of available knowledge for productive purposes was easier than elsewhere. Limited government implied less political obstacles to innovation. Comparatively secure private property ownership in the means of production made the establishment of scarcity prices and the rational allocation of resources easier than elsewhere. Whereas the Western past was feudal, the Russian or Turkish past was patrimonial or even sultanistic. Feudalism is a much better starting point for establishing the rule of law and safe property rights than patrimonialism. The second issue has been the question why Czarist Russia could outperform Ottoman Turkey. Here the political consequences of the Muslim tolerance of slavery and polygyny matter. Being slaves, many members of Ottoman ruling elites were at the mercy of their owner, the sultan. Therefore, they became tools of arbitrary rule. Moreover, the practice of polygyny generated downward social mobility and political instability and thereby added another obstacle to the establishment of safe property rights for producers or merchants. The final issue is the economic prospects of Russia or Turkey. Economic freedom is better in Turkey than in Russia. Moreover, Russia is graying, whereas Turkey may look forward to a growing labor force. Although a rich endowment in natural resources seems to favor Russia, the resource curse has prevented other resource rich countries from developing. Therefore, the Turkish prospect looks much brighter than the Russian one. [ABSTRACT FROM AUTHOR]

Three hundred years ago China and Europe were about equally poor. Then the West forged ahead of Asian societies, thereby generating rising global income disparities until the end of the 20th century. Since 1979 the Chinese have raised per capita incomes sevenfold. This history of economic performance poses two explanatory challenges. Why did China fall behind Europe or the West? Why has China started to close the income gap recently? Here, a unitary explanatory framework is suggested for answering both questions. Because of weak property rights, lack of scarcity prices, and too little economic freedom, China grew much more slowly than the West. The West benefited from better institutions than China because of political fragmentation resulting in limited government and comparatively free markets. Similarly, China could start its attempt to catch-up with the West only after climbing out of the socialist trap by a de facto improvement of property rights and economic freedom, by 'market-preserving federalism' and by vigorously joining the capitalist world economy. This account of Western and Chinese performance ultimately rests on geopolitics. Interstate rivalry between European states, kingdoms and principalities contributed to safe property rights and the European miracle. Competition between European states forced them to establish limited instead of absolutist government and therefore to provide space for the commercial and industrial revolutions in the West. Similarly, rivalry between the People's Republic of China on the Mainland and the Republic of China on Taiwan, the hostile competition between Communist China and the Soviet Union, the historical rivalry between China and Japan, and the geographical closeness of US troop deployments to China forced the People's Republic of China leadership in the late 1970s to consider the consequences of falling further and further behind the West, Japan, and Taiwan. Thus, geopolitical threat perception has been the midwife of Chinese economic reform policies. The current financial and economic crisis is likely to increase government interference with the economy and to reduce economic freedom in China as well as in the West. [ABSTRACT FROM AUTHOR]

The article focuses on the gulf between the Europe and the U.S. and the factors responsible for widening the gulf in the future. It states that by 1990, U.S. and Europe were industrially interdependent, that led to the signing of the North Atlantic Treaty Organization by both the countries. It discusses various trends that affected the western societies, which include their public spending, fertility rate, and pension liabilities. It suspects that the increasing gap between The U.S. and Europe can constitute to a future security problem and stresses on the importance of narrowing the gulf.