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Unformatted text preview: ates, by a factor of 4.4 in France, and by a factor of 11.2 in Japan.
These numbers show what is sometimes called the force of compounding.
e.g. Suppose the annual growth rate is 1% per year. This would lead, after 40
years, to a standard of living 48% higher than its initial state.
1X(1+0.01)40 -1=1.48-1=48% 12 Macroeconomics by Yao Li 10.2 GROWTH IN RICH COUNTRIES SINCE 1950
The Convergence of Output per Person since 1950
Figure 10 - 2 Growth Rate of GDP per
Person since 1950
versus GDP per Person
in 1950, OECD Countries Countries with lower
levels of output per
person in 1950 have
typically grown faster. The convergence of levels of output per capita across countries
is not specific to the four countries we are looking at, it also
extends to the set of OECD countries.
13 Macroeconomics by Yao Li 10.3 A BROADER LOOK AT GROWTH ACROSS TIME AND SPACE
Looking at Growth Across Two Millennia
There is agreement among economic historians about the main economic
evolutions over the last 2,000 years:
From the end of the Roman Empire to roughly the year 1500, there was
essentially no growth of output per person in Europe.
From about 1500 to 1700, growth of output per person turned positive,
about 0.1% per year. It increased to 0.2% per year from 1700 to 1820. This period of stagnation of output per person is often called the
Malthusian era. Europe was in a Malthusian trap, unable to increase its
output per person.
On the scale of human history, the growth of output per capita is a recent
phenomenon. 14 Macroeconomics by Yao Li 10.3 A BROADER LOOK AT GROWTH ACROSS TIME AND SPACE Looking at Growth Across Many Countries
Figure 10 - 3 Growth Rate of GDP per
Person since 1960
versus GDP per Person
in 1960 (2000 dollars) for
70 Countries There is no clear relation
between per person the
growth rate of output
since 1960 and the level
of output per person in
1960. 15 Macroeconomics by Yao Li 10.3 A BROADER LOOK AT GROWTH ACROSS TIME AND SPACE
Looking at Growth Across Many Countries
Looking at patterns by groups yields three main conclusions:
1. Nearly all OECD countries start at high levels...
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This note was uploaded on 03/05/2014 for the course ECON 2123 taught by Professor Yanyu during the Fall '13 term at HKUST.
- Fall '13