Exploring Root Causes
Chapter 2: The Great Divergence: An Account of the Growth Miracles and Growth Debacles Since AD 1000
2. The Great Divergence: an account of the growth miracles and growth debacles since AD 1000 As I have illustrated in the introduction with the Tanzania and Luxembourg example, living standards do vary enormously across countries. Let’s take stock of the situation by subjecting this empirical fact to close examination. In Figure 2.1, I plot the trend in per capita income in seven different countries over the period 1950 to 2004 using data from the Penn World Table version 6.2. What I notice is, indeed, a significant variation in standard of living across countries. China, India and Brazil seem to be part of a completely different club when compared with the living standards in the United States, Australia and the United Kingdom. The other important point to note is that the difference across countries is persistent and there is very little change in relative positions since 1950. Therefore, it is quite 11 USA Australia UK 10 Log GDP per capita 9 Brazil China 8 India 7 Ghana 6 1950 1960 1970 1980 Year 1990 2000 2010 Figure 2.1 Evolution of per capita income in USA, Australia, UK, Brazil, China, India and Ghana over the period 1950 to 2005 9 M2545 - BHATTACHARYYA PRINT.indd 9 02/03/2011 10:09 10 Growth miracles and growth debacles USA 10 9 Log GDP per capita Japan China 8 Netherlands UK 7 India Africa 6 0 200 400 600 800 1000 Year 1200 1400 1600 1800 2000 Source: Author’s plot using data from Maddison (2004). Figure...
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