hi today we're going to begin with some in the basic facts about growth and
development
the most basic fact divall is that there are rich countries
and there are poor countries and the differences between them
are extreme so the United States
it up the world's richest economy in terms of GDP per capita
but as the world's richest large economy and we see the GB per capita in the
United States is about forty seven thousand dollars per year
no over here in the poorest 10 countries in the world
the very poorest Congo and Burundi competing for
the bottom spot we see here is a GDP per capita in these countries
it's not 10 times lower isn't even a hundred times lower it a little bit more
than a hundred times lower than in the United States
but a hundred times lower than in summer the European economies
so the differences in GDP per capita
or extreme now these differences in GDP per capita
as much as possible we have tried to correct
for differences in prices and so forth to make these comparative figures
so these are what we call PPP adjusted figures
and for more on that adjustment which is not always perfect
but as close as we can get do check out our video
on purchasing power parity nothing to notice
is that most the poorest countries in the world not all of them but most for
the poorest countries in the world
Arain Africa are they team I'll attached
team or last is in use to be part of Indonesia
and of course there are other poor countries in the world but the varies
poorest countries
tend to cluster in Africa
now why is the united states so much richer than these other countries
with the most basic reason is that the united states has grown
consistently for a very long period of time
so with this graph shows is GDP per capita
real GDP per capita over the last two hundred and ten years from 1820
10 now this graph
I we've grafted in an interesting way notice you on a vertical
access we have dublin's so this is
a call the ratio scale so from 1000 to 2000 as
is a doubling from 2000 to 4000 as a doubling from four-day
is a doubling and so forth one of the reasons we have done that
is that it makes it easier to compare growth rates
what this means is that a straight line
on this graph is a line of constant growth
in fact we can do little bit better than that
let's look at a doubling time so GDP per capita in the United States hit about
two thousand dollars
somewhere around 1840 1845
it doubled to 4,000 by 18 eighty
so that's a difference a doubling time of 35 years
will be no immediately from ruler 7e that means that real GDP per capita in
the United States
or this time span was about 2 percent
per year now that seems a little bit %ah
a confusing to you not sure where I get that and got that number
do check out our video the rule 70 what we can also see is that growth rate in
the United States has been about 2 percent per year
for about two hundred years with some obvious exceptions
this year is the Great Depression for example
really marketed I even larger than the Great Recession
which we've had more recently much larger than that okay
what else can we do with this graph but we can also use this graph to get kind
of another
intuitive sense are the differences in welter in GDP per capita
between different countries let's take a look at that
soon I'm superimposed here the GDP per capita
in some other countries in 2010 so we see down here
is Bangladesh Uganda Malawi and
Bangladesh Uganda are about is rich today as the United States was in
1800 Malawi is actually a little bit
poor again these comparisons are not perfect
because we're making them over very long time period nevertheless this gives us
an intuitive sense
of how people in other countries are living
here is Nigeria but as rich is the typical person in the United States was
in 1850
India per capita income about that at the united states and
18 70
China has a GDP per capita but the same
as in the United States did in nineteen twenty Peru GDP per capita
about the US levels at nineteen 40
is mexico en Argentina today about is rich in the United States was
in 1960
Italy about where the United States was in nineteen
eighty I remember nineteen eighty it was pretty good so life in Italy is not so
bad at all
is not a picture taken from my tax book with Tyler modern principles
illustrating that the differences in wealth between countries is something a
fairly recent
origin so if you go back to the timer
Christ in your your wine or you go back to your thousand
or even two year 1500 there's not very many
differences in GDP per capita between different regions of the world
beginning however perhaps with the
Industrial Revolution and picking up in the 1870s and
eighteen hundreds but we begin to see is divergence
divergence big-time in other words a
favors paper by land project so
you begin to see some countries going on this growth path like the United States
little bit last Western Europe and they just
%ah take off be on anything that anyone has ever seen before
I in the world this is where we get the big differences
in wealth you can also see in this graph
that perhaps in the last few decades that China
okay and summer the other countries in
I Asia particularly India are maybe beginning to catch up
so there's in principle it seems no reason why there ought to be such big
differences in wealth
it's merely that some countries got started on this growth path
before the other countries did but now these other countries may begin to catch
up
that we can see that in this graph also taken from the
modern principles that there are growth miracles
and growth disasters let's talk about growth miracles first
what are the very first was Japan so here's Japan
in the time after world war two japan is one of the poorest countries
I in the world me very very poor country
not much richer than Nigeria K
about certainly far less rich than the United States very poor country
but in the nineteen fifties nineteen sixties
it has a tremendous catch up period until by the nineteen seventies in 1982
is growing as fast as the United States is
and is caught up okay a tremendous amount
in the United States with the same thing happening in south korea
again after the Korean War a terribly poor
in poverty country maybe even a little bit poorer
then Nigeria and yet we see the beginning in the 1960s and 1970s
tremendous growth
catching up either we call growth miracles
to this kansas that with the right
institutions with the right factors in place
a country which is behind the frontier can
catch up much much more quickly to US levels of growth
so it took the United States two hundred years to get to where
the US raid GDP per capita is today
but other countries seem to be able to do this at least to catch up
within forty years the catch up phases about a generation
we also see in this picture that their growth as answers there's nothing
automatic about growth so in terms of GDP per capita
Nigeria has not grown in fifty years
some ups and downs often do the price of oil
but basically has not grown at all we also see Argentina
Argentina used to be the 19th century one of the richest countries in the
world close to that of the United States
in yet it has failed to grow even in this period
had a declining growth
rate out so that today argentina is poor that South Korea
and poorer than Japan even though for much of its history
argentina was richer so it is possible if you don't install the right policies
for a country to fail to grow
know why do we care so much a GDP per capita will first by definition this
means we're good in that tends to be a good thing
so more automobiles bigger and better houses more computers
are more books were ice cream these are all good things especially the ice cream
in addition however
GDP per capita tends to correlate with a whole variety of desirable attributes
things like more leisure more time to do yoga more time to devote to charity in
the family
and so forth it's also more fun to live in a society
with greater GDP per capita also weekend have more democracy
their tents be greater rights for women in societies with higher GDP per capita
and life expectancy tends to be a lot higher in societies with higher GDP per
capita
and that's when I wanna look at now life expectancy I'm gonna do so using this
video from Gap minor
by the way go check out get mind a lot of interesting data
what a fun videos and things that you can create okay let's take a look
movie scenes videos income per person on the horizontal axis that's our GDP per
capita as in PPP adjusted terms
and life expectancy in the vertical axis now on 1800
life expectancy I everywhere in the world was less than 40 years
it was forty years in the world's richest economy at the time
in the United Kingdom everywhere else less than that
this is not because everyone is dying at age 45
is primarily because you had lot of people dying
at very young ages between the ages you know 0
and I age five or so okay
let's get this video going and see what happens over time
by the way the Big Red Dot that China the Big Blue Dot that India these dots
are proportional
to population okay let's get the video going
we can see that overtime
countries are slowly increasing in GDP per capita
notice that the ups and downs those are often
I'll wars times real distress so
here we have things are beginning to improve in the eighteen seventies
a world where one is coming watch out for World War one
and influenza big drop there comes right there
in the Western economies here comes will work you gonna see a big drop
here comes the nineteen fifties in China take a look at china bowl
great leap forward there was a great leap downward in
I life expectancy because it masks starvation
all right here we come to the modern world once again we see there's a
positive relationship between income per person
and life expectancy we also see that the very poorest countries in the world
basically have not grown at all
but their life expectancy is much higher
so these very poor countries they have managed to get some gains from growth
elsewhere in the world
primarily in things like back scenes in vitamins
and other factors which increase life expectancy
to life expectancy is higher even though these countries in fact or not that much
richer
what else do we see well we can see that
our life expectancy increases as I mentioned
in GDP per capita but also that within a constant level a GDP per capita
life expectancy can differ so here's India
his vietnam the higher life expectancy their Sudan a lower life expectancy
despite the same GDP per capita so countries
can devote more or fewer resources to things like
healthcare to things like education and two other factors which increase
GDP per capita okay so those are some
on the very basic factors about economic growth
and one other reasons were interest in economic growth is its
positively correlated with life expectancy with fun with leisure
the whole bunch of good things okay thanks