GrowthFacts - Why Economic Growth Matters Link with Hunger...

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Unformatted text preview: Why Economic Growth Matters? Link with: Hunger, Mortality and Poverty flow? These three variables improve as GDP per capita rises World Bank Data (Ravallion and Chen) (1981- 99, 65 Developing Countries) Percentage change Percent change in average incomes in poverty rate per year per year Strong contraction ~9.8 23.9 Moderate contraction —l.9 1.5 Moderate expamiOn 1.6 —0.6 Strong expansion 8.2 —6.1 I do not see how one can look at figures like these without seeing them as representing possibilities. Is there some action a government of India could take that would lead the Indian economy to grow like Indonesia's or Egypt's? If so, what exactly? If not, what is it about the “nature of lndia" that makes it so? The consequences for human welfare involved in questions like these are simply staggering: Once one starts to think about them, it is hard to think about anything else (Lucas 1988. p. 5). TABLE 1.1 STATISTICS ON GROWTH AND DEVELOPMENT Average GDP per GDP per Labor force annual Years capita, worker, _parficipation growth rate, to 1997 1997 rate, 1997 1960—97 double “Rich” countries U.S.A. $20,049 $40,834 0.49 1.4 50 Japan 16,003 25,264 0.63 4.4 16 France 14,650 31,986 0.46 2.3 30 U.I_<. 14,472 29,295 0.49 1.9 37 Spain 10,685 29,396 0.36 3.5 20 “Poor'Vcountries, China " _- 2,387 3,946 0.60 3.5 20 Ihdia; . _ ' 1,624 4,156 0.39 2.3 30 'Zimb'abwe- 1,242 2,561 ' 0.49 0.4 192 Uganda. _ . -6_97 1,437 0.49 0.5 146 "‘Gr0wth'1_11ira_cle_s" . ' 'HongKong' _ 19,811 28,918 0.65 5.2 '. 13 Singapore; ‘. 17,559 36,541 . 0.4a 5.4 - 13 Taiwan: _ 11,729 26,779. 0.44 _ 5.6 12 _-South area :.1-0.,131, 24,325 0.42 _5_.9 12 FIGURE 1.3 WOHLO PEH CAPITA II]? All] GROWTH HATES, 1500-1980 no carrra oer mu Datum. L00 scam 4.000 2,000 1.000 750 500 1500 1600 1700 1800 1900 2000 YEAR SOURCE: Computed from Lucas (1998) and Maddison (1995). Note: The numbers above each line segment are average annual growth rates. - FIGURE 1.5 GROWTH iii THAOE AND GDP. 1980-90 AVERAGE ANN-ML GROWTH MT! of man: VOLUME 0.1 4 0.1 2 0.1 0.08 0.06 0.04 0.02 -— 0.02 0 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09 AVERAGE ANNUAL GROWTH RATE OF GDP SOU'RE: Penn World Tables Mark 5.6. Summers and Heston (1991). # FACT # 5 In the United States over the last century, 1. the real rate ofreturn to capital, r, shows no trend upward or downward; 2. the shares of income devoted to capital, rK/Y. and labor, wL/Y, show no trend; and 3. the average growth rate of outp ut per person has been pos- itive and relatively constant over time -— i.e.. the United States exhibits steady, sustained per capita income growth. m FACT #1 There is enormous variation in per capita income across economies. The poorest countries have per capita in- comes that are less than 5 percent of per capita incomes in the richest countries. FACT fl 2 Rates of economic growth vary substantially across countries. FACT #3 Growth rates are not generally constant over time. For the world as a whole, growth rates were close to zero over most of history but have increased sharply in the twentieth cen‘ tury. For individual countries, growth rates also change over time. FACT #4 A country’s relative position in the world distribu- tion of per capita incomes is not immutable. Countries can move from being “poor” to being "rich," and vice-verse.“ FA CT #5 Growth in output and growth in the .volume of in- ternational trade are closely related. FACT #7 Both skilled and unskilled workers tend to migrate from poor to rich countries or regions. , FIGURE 1.4 HEAL PER CAPITA GDP IN THE UHITEIJ STATES, 1870-1994 an cum one «no oouaas. Loo DOM) $25,000 $20,000 $15,000 $10,000 $5,000 $2,500 1860 1 880 1900 1920 1940 1960 1980 2032 - v SOURCE: Maddison (1995) and author's calculations. ...
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GrowthFacts - Why Economic Growth Matters Link with Hunger...

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