Chapter
Seventeen:
How Economies
Grow and Develop
Development and Economic
Growth
Figure 17.1: Economic Growth in the AS/AD Model
AS1
Inflation rate
(π)
AS0
AD1
AD0
Expanded
maximum
capacity
Output (Y )
Table 17.1: Per Capita Annual Real GDP Growth in
Select Latin American Countries, 1980-2010 (%)
Bolivia
Brazil
Chile
Colombia
Ecuador
Mexico
Peru
Venezuela
Middle Income
Source: World Bank, World Development Indicators Database, 2013
0.5%
1.0%
3.2%
1.6%
0.8%
0.7%
1.1%
-0.2%
3.5%
Country Growth Experiences
Figure 17.2: World Economic Growth, 1971-2011
4.0
3.5
Gross World Product
3.0
Index (1970=1)
Food Production
2.5
Energy Use
2.0
Population
1.5
1.0
0.5
0.0
1971
1976
1981
1986
Source: World Bank, World Development Indicators Database 2013
1991
1996
2001
2006
2011
Table 17.2: Income, Growth, and Population
Comparisons, Selected Countries and Country Groups
Country or
Category
High Income
Hong Kong
United States
Japan
France
South Korea
Middle Income
Russia
Turkey
Brazil
China
India
Low Income
Bangladesh
Nepal
Haiti
Ethiopia
Congo, DR
Percent Growth in
GDP per Capita (PPP,
GDP per Capita, 2011 Annual Average, 1990(PPP, 2005, US $s)
2011)
33,566
1.5%
44,640
3.0%
42,486
1.4%
30,660
0.7%
29,819
1.0%
27,541
4.3%
6,245
3.5%
14,821
0.8%
13,468
2.5%
10,279
1.7%
7,418
9.5%
3,203
4.7%
1,182
1.9%
1,569
3.6%
1,106
2.1%
1,034
-1.4%
979
2.8%
329
-3.0%
Percent of World
Population (2011)
16.3%
0.1%
4.5%
1.8%
0.9%
0.7%
72.0%
2.0%
0.8%
2.8%
19.3%
17.8%
11.7%
2.2%
0.3%
0.1%
1.2%
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)
Source: World Bank, World Development Indicators Database, 2012
Figure 17.4a: Per Capita GDP Expressed as a
Percentage of per-Capita GDP in High-Income Countries
90%
South Korea
GDP per capita, PPP
Percent of High-Income GDP
80%
70%
60%
50%
Botswana
40%
30%
China
20%
India
10%
0%
1980
1985
1990
Source: World Bank, World Development Indicators Database, 2013
1995
2000
2005
2010
Figure 17.4b
45.0%
GDP per capita, PPP
Percent of High-Income GDP
40.0%
35.0%
Brazil
30.0%
25.0%
20.0%
Bolivia
15.0%
10.0%
Nigeria
5.0%
Congo, Dem. Rep.
0.0%
1980
1985
1990
Source: World Bank, World Development Indicators Database, 2013
1995
2000
2005
2010
Figure 17.5: Growth and Income Relationship with
Area Proportional to Population
12.0%
Growth of Real GDP per
Capita, Average 1980-2011
(Percent per Year)
10.0%
China
8.0%
6.0%
India
South Korea
4.0%
United States
2.0%
0.0%
(5,000)
-2.0%
5,000
15,000
Cote d’Ivoire
25,000
35,000
Congo, DR
-4.0%
GDP per Capita, 2011
(Chained 2005 PPP Dollars)
Source: World Bank, World Development Indicators Database, 2013
45,000
55,000
Table 17.3: Growth Rates and Changes in Poverty
Rates, Select Countries
Period
Bangladesh 1984-2010
Brazil
1981-2009
China
1981-2009
Egypt
1991-2008
Ethiopia
1982-2011
India
1978-2010
Indonesia 1984-2010
Mexico
1984-2010
Nigeria
1986-2010
Philippines 1985-2009
South
Africa
Thailand
1993-2009
1981-2010
Annual Growth Rate in per Capita
GDP, %
2.9
1.1
9.1
2.9
1.8
3.9
3.6
0.8
2.3
1.6
1.5
4.2
Source: World Bank, World Development Indicators Database, 2013.
Note: The poverty rate is based on a poverty line of $1.25 per day.
Poverty Rate at
Poverty Rate at End of
Beginning of Period, %
Period, %
60.6
43.3
13.6
6.1
84.0
11.8
4.5
1.7
66.2
30.7
65.9
32.7
62.8
18.1
12.8
0.7
53.9
68.0
34.9
18.4
24.3
22.0
13.8
0.4
Inequality
Figure 17.6: The Unequal Distribution of the
World’s Income, 2007
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
Source: I. Ortiz and M. Cummings, “Global Inequality: Beyond the Bottom Billion,” UNICEF Social and Economic Policy Working Paper, April 2011.
Figure 17.7: Shares of U.S. Income Going to Top
10 Percent and Top 1 percent, 1920-2012
60
50
Top 10 Percent
Percent
40
30
20
Top 1 Percent
10
0
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
90
Life Expectancy in 2011 (Years)
Japan
85
Mexico
80
75
Western Europe
United States
70
China
65
India
60
Nigeria
55
South Africa
50
45
40
-
5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 55,000
GDP per Capita, 2011
(Chained 2005 PPP Dollars)
Source: World Bank, World Development Indicators Database, 2013