Week 1: Economic Growth Flashcards
Describe the historical population, GDP and GDP per capita trend over the last 1,000 years.
POPULATION:
-Rose 22-fold
-since 1820 fivefold
GDP:
-Grew 300-fold
GDP PER CAPITA:
-Rose 50% between 1000 and 1820
-Since 1820 eightfold
How did income levels differ between the West and the rest of the world in 1820 and 1998?
1820: Income levels were twice as high
1998: Income levels were at a ratio of 7:1
What 3 processes have caused advances in income/population.
1) Conquest/settlement of empty areas. New land, resources and crops.
2) International trade and capital movement
3) Technological and institutional innovation
What is the Malthusian world view of history?
BEFORE INDUSTRIAL REVOLUTION:
-Countries are very similar
-People lived near subsistence
-No growth in output per capita
POST INDSUTRIAL REVOLUTION:
-‘Take-offs’ were staggered around 19th century Europe
What is the Gradualist view of world history?
BEFORE INDUSTRIAL REVOLUTION:
-Countries developed in idiosyncratic (unusual) ways
-People began living above subsistence
-Slow but gradual growth in GDP per capita
POST INDUSTRIAL REVOLUTION
-Growth became much more rapid but only recently
-Europe has been much richer and more developed for a long time
Why was the 19th century the period of economic divergence?
1) Build up of global factors.
Pre-15th century- Empires
15th century- Great discoveries
19th century- Transport revolution/British Liberalism
20th century- Global trade liberalisation
Why wasn’t trade solely sufficient for growth in the 1st epoch?
-Increased trade needed price convergence
-Early trade tended to be luxury goods and non-competing
-Trade was more about arbitrage (little profits from selling in different markets) than increasing standards
