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”