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Unformatted text preview: W O R L D V I E W W O R L D V I E W W O R L D V I E W Long-Run Economic Growth 641 >> 25 TALL TALES chapter: HINA IS GROWING—AND SO ARE THE CHINESE. According to official statistics, children in China are almost 2 1 / 2 inches taller now than they were 30 years ago. The average Chinese citizen is still a lot shorter than the average American, but at the current rate of growth the difference may be largely gone in a couple of generations. If that does happen, China will be following in Japan’s footsteps. Older Americans tend to think of the Japanese as short, but today young Japanese men are more than 5 inches taller on average than they were in 1900, which makes them al- most as tall as their American coun- terparts (and taller, on average, than either author of this book). There’s no mystery about why the Japanese grew taller—it’s be- cause they grew richer. In the early twentieth century, Japan was a rel- atively poor country in which many families couldn’t afford to give their children adequate nutri- tion. As a result, their children grew up to be short adults. How- ever, since World War II, Japan has become an economic powerhouse in which food is ample and young adults are much taller than before. The same phenomenon is now happening in China. Although it is still a relatively poor country, China has made great economic strides over the past 30 years. Its re- cent history is probably the world’s most dramatic exam- ple of long-run economic growth—a sustained increase in output per capita. Yet despite its impressive performance, China is currently playing catch-up with economically advanced coun- tries like the United States and Japan. It’s still a relatively poor country because these other na- tions began their own processes of long-run growth many decades ago—and in the case of the United States and European countries, more than a century ago. Many economists have argued that long-run growth—why it hap- pens and how to achieve it—is the single most important issue in macroeconomics. In this chapter, we present some facts about long- run growth, look at the factors that economists believe determine the pace at which long-run growth takes place, examine how govern- ment policies can help or hinder growth, and address questions about the environmental sustainability of long-run growth. C At 7’6”, China’s Yao Ming, illustrates the positive relationship between a country’s rate of long-run economic growth and its everage population height. BillBaptist/N BAEviaGettyImages 642 PA R T 4 LONG-RUN ECONOMIC GROWTH Comparing Economies Across Time and Space Before we analyze the sources of long-run economic growth, it’s useful to have a sense of just how much the U.S. economy has grown over time and how large the gaps are between wealthy countries like the United States and countries that have yet to achieve comparable growth. So let’s take a look at the numbers....
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