That'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."