Every Country Has Gotten Richer - China To Surpass U.S. Soon

economicgrowthZozulinskyi:dreamstimeThat's the conclusion that one reaches by perusing the data provided by the updated Penn World Tables. Created by researchers at the University of Pennsylvania the Tables compare data such as income, consumption, market baskets, and labor costs among the countries of the world. The idea is to tease out over time how each economy has changed relative to one another. BloombergBusinessweek takes a look at the new results and reports some fascinating and mostly heartening trends:

According to the Penn World Tables, China’s expenditure-side GDP was $10.1 trillion in 2010. Under the old methodology, it was between $9.3 trillion and $9.8 trillion; the latest World Bank 2010 GDP estimate for China is $9.1 trillion. U.S. GDP was $13.1 trillion in 2010, according to the Penn World Tables.

The good news for America-firsters: According to the new estimates, China’s economy was still smaller than the U.S.’s in 2010. The bad news: China was somewhere between $300 billion and $1 trillion closer to overtaking the U.S. than we thought. The worse news: If the growth rates of 2000-10 reported by the Penn Tables continue until 2020 for each country, China’s GDP will be $23 trillion compared with the U.S.’s $15 trillion. If China’s economy isn’t already the largest today, it is probably a matter of months, not years, before it rises to the top.

But more importantly, the new data reveal how much larger all the word’s economies have become over time. The Penn Tables provide GDP data for both 1960 and 2010, providing a 50 year window to view global economic progress. It has been considerable. Looking at absolute GDP, no country anywhere in the world for which we have data is smaller today than it was in 1960. The countries that saw the size of their economies less than double since 1960 contain just 80 million people—a little more than 1 percent of the planet’s population. A further 1 billion people lived in countries where GDP climbed by somewhere between two- and fivefold. That leaves 4.9 billion people—the considerable majority of the planet—living in countries where GDP has increased more than fivefold over 50 years. Those countries include India, with an economy nearly 10 times larger than it was in 1960, Indonesia (13 times), China (17 times), and Thailand (22 times larger than in 1960).

Around 5.1 billion people live in countries where we know incomes have more than doubled since 1960, and 4.1 billion—well more than half the planet—live in countries where average incomes have tripled or more. Nearly 2.2 billion people are in countries where average incomes have more than quintupled over the past 50 years. This includes the citizens of China, Japan, Egypt, and Thailand—all of whom have seen around an eightfold increase in average incomes since 1960.

Such long-run growth rates are unprecedented. Compare the crucible of the Industrial Revolution: Between 1820 and 1870, U.K. GDP per capita increased from $1,706 to $3,190, according to data from Angus Maddison. That’s an increase of 87 percent. If the U.K. had seen the same performance between 1960 and 2010, it would place the country 34th lowest in terms of growth out of the 107 countries for which the Penn Tables have data. The U.K.’s 1820-70 income growth is weaker than the performance over the past half-century of such countries as the Philippines, Zimbabwe, and Syria—rarely thought of as economic powerhouses.

Nearly 1.7 billion people planet-wide live in countries where the average income per capita was above $10,000 in 2010. That’s above the average income in France, Germany, the Netherlands and Belgium in 1960. And more than 3.5 billion people worldwide—around half the planet—live in countries with a 2010 average income of $6,000 or above according to the Penn Tables. That’s nearly as high as the GDP per capita of Italy in 1960 and above that of Ireland or Spain in the same year.

Go here to read the whole article. For some insight into the sorts of political, social, and economic institutions that foster economic growth and development see my review article, "The Cure of Humanity's Natural State of Abject Poverty."

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  • Gladstone||

    So Shriek is right about King Zero?

  • ||

    The larger the economies become, the more money there is to steal, and the larger the governments become. The parasite grows with the host.

  • WTF||

    And if my 3 year-old nephew keeps growing at his current rate, he'll be 20 feet tall in 30 years.

  • PapayaSF||

    +1

  • The Immaculate Trouser||

    This. China's growth is largely explained by convergence and government malinvestment.

  • Stormy Dragon||

    Given China has more than four times our population, why am I supposed to be horrified by the fact their total GDP is just barely passing ours? It still means they only have 25% of our productivity.

  • KDN||

    It only becomes a problem if we get into a shooting war with the Chinese. So long as trade stays open between us there isn't much of an issue, save for our leaders clamoring for increased authoritarianism in order to get our economy growing like theirs (i.e. getting things backwards, as usual).

  • robc||

    If we get into a shooting war, we default on all the debt to China and screw them over.

  • KDN||

    I was referring more to the wartime potential of the two countries. China was tough enough when they were a terribly backwards country. With their population they should wipe the floor with us once they close the GDP gap (assuming a conventional conflict).

    Fortunately, we have large and wealthy allies in their backyard. They can't say the same about us.

  • robc||

    We would we get into a convention conflict with anyone?

    Havent we learned our lesson yet?

  • KDN||

    I never underestimate any government's capacity for stupidity or evil.

  • robc||

    This.

    Per capita is what matters.

  • Hawk Spitui||

    Good for China. China getting rich is a problem - exactly why?

  • ||

    Ming the Merciless

  • LynchPin1477||

    I guess it could be a problem if their wealth gives that much more political and military influence on the world stage. Even that would be a mix bag. It could suck to have such a freedom-averse country with even more power, but it could also help to balance U.S. adventurism.

    Still, the U.S. has been *relatively* responsible in our use of power. We've general limited the use of our military to regional conflicts of strategic or humanitarian interest (real or imaginary). To say that it hasn't always worked out is an understatement, but it could have been worse. We could have tried to become an expansionist, conquering empire, like pretty much every other superpower in the history of the world (at least that I know of). China has shown little interest in that sort of thing so far, but there is no guarantee it will stay that way.

  • Agammamon||

    The only problem with extrapolating from these numbers is that, typically, no attention is paid to *why* China has had such a rapid economic rise.

    China's been riding on the efficiency advances that the US and other modern economies have *already* made. Its not surprising to see hige jumps over the last 2 decades as they replaces obsolete infrastructure and management practices but their rate of increase is slowing as the move towards state-of-the-art.

    Given that they have a much larger population than we do it shouldn't be too surprising that they would catch up but I would bet that by 202 their economy is *only* as large as ours at that time and not significantly larger.

  • PapayaSF||

    More importantly I don't think "China’s expenditure-side GDP" means what Bailey thinks it means. China is notorious for pumping up economic statistics with government-ordered "investments" that make little sense, like all their empty cities. "China is building new cities at an estimated rate of up to 12 to 24 a year - but while they are full of brand new homes and facilities, nobody wants to live there." Add in the cronyism, corruption, massive pollution, and civil unrest, and China is a headed for a fall.

  • KDN||

    Yes, this. And it's not just the Chinese government, their private sector often pulls the same shit. A great deal of China's growth has been real and impressive, but add in the coming demographic issue and there's some serious house of cards potential there as well.

  • Tybus||

    My impression of China is that once you get out of the city and into the country, it becomes a third world shithole.

  • Stormy Dragon||

    That's true about a lot of the US too. Ever seen rural West Virginia?

  • ||

    Rural West Virginia isn't a lot of the country and even still I suspect it is not comparable. I love China but there is a distinct difference between their rural areas and ours.

  • Tybus||

    Yes...I'm also very familiar with the Mississippi delta. It's relative. China has a lot of catching up to do.

  • ||

    Rural West Virginia has cars and TVs and refrigerators...

    Just because people in West Virginia keep that stuff on their front lawn does not mean they are poor as rural china.

  • Pro Libertate||

    It's not even close. Absolute poverty is extremely rare in the U.S. It's not in China.

  • Killazontherun||

    My niece is teaching English in one of those shitholes.

    The pic link I was going to provide ran into the 50 characterlimit, it showed the boondock living standards of the town she is living in is quite tolerable if you can put up with Asian beer and no box stores.

  • PapayaSF||

  • Killazontherun||

    See if this works --

    http://goo.gl/D1Th8r

    And here is my little cutie pie with a unrelated toothy English woman.

    http://goo.gl/r4Ym4v

  • PH2050||

    Nice hand gesture. I hope your niece enjoys her stay.

  • Killazontherun||

    Thanks a bunches for that link, much simpler than the tinyurl convertor I'm use to using. Prove my sentience with captcha and a way we go!

  • PapayaSF||

    You're welcome, and she is cute.

  • ||

    It should be pointed out this is not the first time China was the richest in the world.

  • Doctor Whom||

    But ... but ... the growth isn't sustainable because we're just about to run out of resources. The progs have been saying that for the past several decades; why won't anyone listen?

  • PH2050||

    Wealth is zero-sum!!!!!!11

    /proggie

  • LynchPin1477||

    Damn, profit is so super evil.

  • LynchPin1477||

    I don't see North Korea in their tables. So I'd say there may be at least one country that hasn't gotten richer over the last 50 years.

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