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The Rise and Fall of modern empires Part IIIa What drives economic growth: population vs. income per capita improvement Regions’ analysis Created by the Forecasting Net www.forecastingnet.com July 2013 Follow us on LinkedIn: Forecasting Net Group Like us on Facebook: Forecasting Net page “The energy of the mind is the essence of life” Aristotle, Greek philosopher 384 BC – 322 BC What we discovered in Part I and Part II The Rise and Fall of modern empires From the United States to China: a journey of global economic dominance from 1950 to 2010 Economic power “moves” from the West to the East Japan, China, and India lead the way This is a long term trend initiated many decades ago Income gap is shrinking BUT inequality still holds strong So, economic power is shifting from the West to the East However… Is this shift of power attributed to the growing and much larger population of Asia and especially China and India? …or is it based on the improvement of living standards, productivity, and innovation on an individual basis? Let’s do the following: We will analyze GDP growth* of different geographical regions, between 1950 and 2010, based on two growth drivers: Population growth* Income per capita growth* By performing this analysis, we will identify the dominant elements for every region and gain valuable insights about their growth dynamics * All figures are relative to corresponding Global GDP/Population/GDP per capita growth figures ** Source of actual GDP (in millions of 1990 US$, converted at Geary Khamis PPPs) and population data used in this analysis is: “The Conference Board Total Economy Database, January 2011, http://www.conference-board.org/data/economydatabase/” Let’s start! Regions’ GDP growth performance 1950-2010 As we had expected the East outperforms all other regions including the West in terms of GDP growth …and what drives regions’ GDP growth Larger than the World’s average Smaller than the World’s average GDP per capita growth 1950 – 2010 Western Europe is a place of contradiction as it enjoys the second best GDP per capita growth rate, East Europe & Central Asia region hence, improved living standards, Overall, the West has below isbut thealso worst performer thegrowth lowest World’s average growth performance mainly due to low population growth mainly due to low rate population growth population growth And the top performer is: Asia Middle East has the Despite popular belief second best GDP growth Asia’s growth is mainly performance; however, based on GDP per capita this is based solely on and not population growth population growth Latin America However, theyand depend Africa solely at grow onalmost population the same growth rate as World GDP World Bubble size = GDP growth Smaller than World’s population growth Larger than World’s population growth Population growth But how did we get there? Larger than the World’s average Smaller than the World’s average GDP per capita growth 1990 1980 1995 2010 2005 2000 1975 1985 1970 Smaller than World’s population growth Larger than World’s population growth Population growth Asia Let’s summarize Is leading the way in GDP growth for the period 1950-2010 The region started to stand out after 1980 Contrary to the popular belief, its growth is mainly based on GDP per Capita improvement-not population growth This unveils important growth dynamics implying significant developments in living standards, productivity, and innovation on an individual basis The West Below World’s average GDP growth rate for the period 1950-2010 Growth performance deteriorates after 2000 Poor population growth performance Near average GDP per capita performance, with the exception of Western Europe that enjoys the second best performance for 2010 due to improved living standards The rest of the World Eastern Europe & Central Asia region has the worst growth performance due to losing momentum after the dissolution of the Soviet Union in 1991 Latin America and Africa have growth rates near World’s average entirely based on population growth Middle East has the second best GDP growth rate entirely based on population growth Coming soon ... The Rise and Fall of modern empires Part IIIb What drives economic growth: population vs. income per capita improvement Countries’ analysis By the Forecasting Net www.forecastingnet.com Follow us on LinkedIn: Forecasting Net Group Like us on Facebook: Forecasting Net page
