Growth Miracles, Disasters, and Rates
Growth Miracles
- the US is one of the world’s wealthiest countries because it grew slowly but consistently for over 200 years
- from 1950 to 1970, Japan grew 8.5% per year * now it’s one of the richest countries in the world
- in 1950, South Korea had a GDP per capita that was about the same as that of Nigeria * from 1970 to 1990, it grew at a rate of 7.2% per year * today, South Korea is on par with many European economies
- Argentina had double the standard of living of Japan * Japan now doubles them today * have a standard of living 10 times higher than the one it had in 1950 * Japan is the growth miracle
- Italy became fully integrated int European trade and took an increasingly active in Middle Eastern oil exploration and engineering development * had industrial growth rates of more than 8 percent per year
Growth Disasters
- Nigeria has really grown since 1950 * it was poorer in 2005 than in 1974 when high oil prices briefly bumped up its per capita GDP
- in 1900, Argentina was one of the richest countries in the world, with GDP per capita almost as large as the US * by 1950, Argentina’s per capita GDP had fallen to half that of the US * by 2000, Argentina’s per capita GDP was less than 1/3 of that of the US
Summary
- most of the world is poor
- more than 1 billion people live on incomes of less than $3 per day * these people have greatly reduced prospects for health, happiness, and peace
- the good news: * despite being recent, economic growth has transformed the world * it has raised the standard of living of most people in developed nations many times above historical norms * understanding the wealth of nations is critical if we are to improve human conditions
A Primer on Growth Rates
- measured as growth rate of real GDP per capita
- even slow growth, sustained over time, produces big differences in welath
- growth builds on top of growth through”compounding” or “exponential growth”
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