0.2 Historic perspectives: economic and population growth  (Page 2/10)

Consider these figures in Maddison's work: by 1820, China’s population reached 381 million, tripling between the 17 ^th and 18 ^th centuries. With such rapid population growth GDP per capita in China grew very little, not only from 1700 to 1820, but until 1982 (See Figure 2-2 ).

Tiny Britain in 1700 had 8.6 million people producing only 3% of world output. But Britain dominated world trade by 1900, by which time the City of London’s population had reached 6 million, and by 1900, Britain ruled one quarter of the world’s people.

Now consider, what happened AFTER 1820, the past two centuries of human history.

From 1800-1990, there was a “great divergence”, between economic growth in China on the one hand and Europe and North America on the other. Brandt, Loren, Debin Ma&Thomas G. Rawski. 2014. "From Divergence to Convergence: Reevaluating the History behind China's Economic Boom." Journal of Economic Literature , 52(1): 45-123.

But after 1990, there was a “Great Convergence.” (see Michael Spence). Michael Spence (2012), The Next Convergence: The Future of Growth in a Multispeed World . New York, NY: Picador Press. Convergence was widely expected in 1950, but did not begin until 1990. Meaning the period 1790-1990 was a period of acceleration of technological change in Europe and U.S., and to an extent Japan after 1880). This led to divergence, not convergence.

Result - by 1990, per capita income in the West reached very large multiples of India, China and Brazil (multiples of 20, 25).

The great divergence lasted for 2 centuries. Recently another historic change has been shaking up the world order. A great convergence has been underway. Convergence in living standards, health, longevity, technology, and to some, but by no means all, in political freedom.

Why has there been an economic convergence? Because many countries that were poor before 1990 learned how to speedily adopt and adapt technology and know-how, and abandoned policies that inhibit or slow growth.

Of course, some nations have experienced little growth since 1950. In 1950 Japan’s per capita GDP was about 1/3 that of Argentina. By 2011 the ratio was reversed. Argentina’s per capita GDP is now 1/3 that of Japan, for reasons discussed in several chapters of this book. A major question in economics is will the great convergence prove to be lasting or merely temporary? We will touch upon the question at several intervals in this book.

It may be useful to examine some relative magnitudes for a moment, involving industrial nations and emerging nations. Source: CIA World Factbook

First: Consider that emerging economies (developing nations) in 2013 had 85% of the worlds’ population.