In a piece, he wrote for ‘Project Syndicate’, Prof. Kaushik Basu, former Chief Economic Advisor to the Government of India made the following prediction:
in 50 years, I predict that the world economy is likely (though not guaranteed) to be thriving, with global GDP growing by as much as 20% per year, and income and consumption doubling every four years or so. [Link]
I am happy to take the other side of the bet, if there is one.
But more than that, what caught my eye was this:
From 1500 to 1820, according to data collected by the late Angus Maddison, the world’s annual growth rate was just 0.32%, with large sections of the world experiencing no growth at all….Industrial Revolution, which lifted average annual global growth to 2.25% from 1820 to 2003?
The Angus Maddison database at the website of Groningen Growth and Development Centre did not give me information for the year 1500. Second, it only gave me per capita GDP for individual countries and regions measured in 1990 PPP GK (Geary-Khamis) dollars. The Excel sheet I could download had information starting only from the year 1820 (see link above).
On that basis, world per capita GDP (1990 GK $) experienced a CAGR of 1.27% from 1820 to 2010. Asia’s number 1.26%. For the world, the pre-WW I (1820-1913) growth rate was 0.84% and post-WW I (1913-2010), including the war periods, the growth rate was 1.69%. Double.
For Asia, the difference is more striking. The comparable figures were 0.15% and 2.34%.
It gets even more interesting if one split the data into two periods, 1820-1950 and 1950-2010. For the world, the growth rate in per capita GDP (in 1990 GK $) for the first 130 years since 1820 was 0.84% per annum. For the next 60 years, it was 2.21%.
It is more striking for Asia. The comparable figures are 0.10% and 3.84% respectively. Amazing speed of growth and catch-up. Put it down to Japan and China, post-1950. Roughly, the first thirty years from 1950 was the story of Japan and the next thirty years, it has been the story of China. What comes next? Who comes next?