knowt logo

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

  • economic growth: 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”

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

  • economic growth: 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”