Download China`s remarkable economic turnaround

The Rise and Fall of modern empires
Part IIIb
What drives economic growth: population vs. income per capita improvement
Countries’ analysis
Created by the Forecasting Net
www.forecastingnet.com
August 2013
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“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 selected countries**, 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 country
and gain valuable insights about their growth dynamics
*
All figures are relative to corresponding Global GDP/Population/GDP per capita growth figures
** We have included the eight largest countries, in terms of 2010 GDP percentage contribution. The Russian Federation has been excluded from this analysis as it did not exist before 1992
*** 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!
Countries’ GDP growth performance
1950-2010
 As we had expected Asian countries exhibit the largest GDP growth followed only by Brazil
…and what drives countries’ GDP growth
Larger than the World’s average
Smaller than the World’s average
GDP per capita growth
1950 – 2010
Western countries exhibit
below average
Germany
is thegrowth
only
mainly
duewith
to
exception
low
population
relatively
large growth
and near
average
GDP
GDP
per capita
growth
per capita growth
And the top performer is:
China
Despite popular belief
China’s growth is entirely based
on GDP per capita and not
population growth
On theIndia,
other
hand,
Japan,
and
Brazil
However,
India’s
growth
Japan’s
growth
Brazil’s
they
all growth
share
similar,to
is
attributed
based
on aentirely
mixture
is attributed
almost
entirely
greatly
above
average,
its
of
population
second
best
and
to population
growth
growth
rates!
GDP
per
capita
growth
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
1985
2000
2010
1980
1975
1970
1990
1995
2005
Smaller than World’s population growth
Larger than World’s population growth
Population growth
 China
Let’s summarize

Is by far leading the way in GDP growth for the period 1950-2010

Started to stand out after 1980 and especially after 2000

Contrary to the popular belief, its growth is entirely based on GDP per Capita improvement-not population growth

On the contrary, population growth has been below average due to the one child policy

This unveils important growth dynamics implying significant developments in living standards, productivity, and
innovation on an individual basis
 Japan

Has the second best GDP per capita growth, next to China

Led the way in GDP growth until 1995. It was then succeeded by China
 India

Has the second best GDP growth rate, next to China

Growth is based on a mixture of population and GDP p.c. growth (not impressive though compared to China and Japan)
 Brazil

Brazil has a well above average GDP growth attributed almost entirely to population growth
 The West

Western countries exhibit below average GDP growth rates, low population growth and near average GDP p.c. growth

The only exception is Germany exhibiting significant GDP per capita growth
The Rise and Fall of modern empires
Part IIIb
What drives economic growth: population vs. income per capita improvement
Countries’ analysis
Created by the Forecasting Net
www.forecastingnet.com
August 2013
Follow us on LinkedIn: Forecasting Net Group
Like us on Facebook: Forecasting Net page