Chapter Seventeen: How Economies Grow and Develop.

Chapter Seventeen:

How Economies Grow and Develop

Development and Economic Growth

Infl

atio

n r

ate

(π)

Output (Y )

AS0 AS1

Expanded maximum capacity

AD0

AD1

Figure 17.1: Economic Growth in the AS/AD Model

Bolivia 0.5%

Brazil 1.0%

Chile 3.2%

Colombia 1.6%

Ecuador 0.8%

Mexico 0.7%

Peru 1.1%

Venezuela -0.2%

Middle Income 3.5%

Table 17.1: Per Capita Annual Real GDP Growth in Select Latin American Countries, 1980-2010 (%)

Source: World Bank, World Development Indicators Database, 2013

Country Growth Experiences

Figure 17.2: World Economic Growth, 1971-2011

Source: World Bank, World Development Indicators Database 2013

Table 17.2: Income, Growth, and Population Comparisons, Selected Countries and Country Groups

Country or Category

GDP per Capita, 2011 (PPP, 2005, US $s)

Percent Growth in GDP per Capita (PPP,

Annual Average, 1990-2011)

Percent of World Population (2011)

High Income 33,566 1.5% 16.3% Hong Kong 44,640 3.0% 0.1% United States 42,486 1.4% 4.5% Japan 30,660 0.7% 1.8% France 29,819 1.0% 0.9% South Korea 27,541 4.3% 0.7%Middle Income 6,245 3.5% 72.0% Russia 14,821 0.8% 2.0% Turkey 13,468 2.5% 0.8% Brazil 10,279 1.7% 2.8% China 7,418 9.5% 19.3% India 3,203 4.7% 17.8%Low Income 1,182 1.9% 11.7% Bangladesh 1,569 3.6% 2.2% Nepal 1,106 2.1% 0.3% Haiti 1,034 -1.4% 0.1% Ethiopia 979 2.8% 1.2% Congo, DR 329 -3.0% 1.0%

Source: World Bank, World Development Indicators Database, 2013. * Data for Haiti growth rate is for 1991–2011.

Figure 17.3: GDP per Capita in 2011 (in constant 2005 PPP $ per person)


South Korea

Botswana

China

India

GD

P p

er c

apit

a, P

PP

Per

cen

t o

f H

igh

-In

com

e G

DP

Figure 17.4a: Per Capita GDP Expressed as a Percentage of per-Capita GDP in High-Income Countries


GD

P p

er c

apit

a, P

PP

Per

cen

t o

f H

igh

-In

com

e G

DP

Figure 17.4b


Figure 17.5: Growth and Income Relationship with Area Proportional to Population


Table 17.3: Growth Rates and Changes in Poverty Rates, Select Countries

Period Annual Growth Rate in per Capita

GDP, % Poverty Rate at

Beginning of Period, % Poverty Rate at End of

Period, %

Bangladesh 1984-2010 2.9 60.6 43.3

Brazil 1981-2009 1.1 13.6 6.1

China 1981-2009 9.1 84.0 11.8

Egypt 1991-2008 2.9 4.5 1.7

Ethiopia 1982-2011 1.8 66.2 30.7

India 1978-2010 3.9 65.9 32.7

Indonesia 1984-2010 3.6 62.8 18.1

Mexico 1984-2010 0.8 12.8 0.7

Nigeria 1986-2010 2.3 53.9 68.0

Philippines 1985-2009 1.6 34.9 18.4

South Africa 1993-2009 1.5 24.3 13.8

Thailand 1981-2010 4.2 22.0 0.4

Source: World Bank, World Development Indicators Database, 2013.Note: The poverty rate is based on a poverty line of $1.25 per day.

Inequality

Top 20%: 82.8%of world income

Next 20%: 9.9%of world income

Third 20%: 4.2%of world income

Fourth 20%: 2.1%of world income

Poorest 20%: 1.0%of world income

Figure 17.6: The Unequal Distribution of the World’s Income, 2007

Source: I. Ortiz and M. Cummings, “Global Inequality: Beyond the Bottom Billion,” UNICEF Social and Economic Policy Working Paper, April 2011.

Top 10 Percent

Top 1 Percent

Figure 17.7: Shares of U.S. Income Going to Top 10 Percent and Top 1 percent, 1920-2012

Source: Thomas Pickett and Emmanuel Saez U.S. incomes series, http://elsa.berkeley.edu/~saez/TabFig2012prel.xls

Figure 17.8: The Relation Between Life Expectancy and Income, with Area Proportional to Population


Chapter Seventeen: How Economies Grow and Develop.

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