Economic growth inequality across globe by bhawani nandan prasad

1. Economic Growth
Around the World
Bhawani Nandan Prasad
MBA Marketing and Strategy

2. Effects of Growth
• Astounding material progress
in the last 100 years
• Change reflects sustained
growth of incomes per head
2

3. GDP or National Product
• National Income is measured
by a country’s GDP or ‘Output’
• Facts about GDP and GDP
growth:
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4. 4

5. 5
Looking Across Two Millennia
Agreed findings:
• From the end of the Roman Empire to
roughly year 1500, there was essentially no
growth of output per capita in Europe.
• From about 1500 to 1700, growth of output
per capita turned positive, about 0.1% per
year
• On the scale of human history, the growth of
output per capita is a recent phenomenon.

6. 6

7. 7
Modern Economic Growth
Period Richest g
1580 – 1820 Netherlands 0.2%
1820 – 1890 U.K. 1.2%
1890 - U.S.A. 2.2%

8. 8
Post World War II
• 1948 -1972
Japan 8.2% Germany 5.7% U.S. 2.2%
• 1965-1990
Asian Tigers:
Japan, S. Korea, Singapore, HK, Thailand,
Malaysia, Indonesia, Taiwan:
g = 5.5% for the group

9. 9
Comparing Economies Across Time and Space

10. China-India comparison
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11. 11
Growth Arithmetic
The magic of compounding:
Even a small increase in the
growth rate makes a big
difference if it is sustained

12. Why growth matters
Anything that affects the long-run rate of economic
growth – even by a tiny amount – will have huge
effects on living standards in the long run.
1,081.4%243.7%85.4%
624.5%169.2%64.0%
2.5%
2.0%
…100 years…50 years…25 years
percentage increase in
standard of living after…
annual
growth rate
of income per
capita
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13. What is GDP, PPP?
• Use of GDP deflator to correct for nominal
changes
• Use of PPP to correct for price inequalities
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14. 14

15. 15

16. Rapidly Increasing Inequality
• Most important fact about global incomes:
• Enormous differences
• Growth rate differentials responsible for rapid
increases in disparity
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18. 18

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20. 20

21. 21

22. Table 7.1
Mankiw:
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26. Useful Links
• http://www.imf.org/external/datamapper/ind
ex.php
• http://data.worldbank.org/indicator/NY.GDP.P
CAP.CD/countries/XD-XO?display=graph
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