Growth and Development

Income here is PPP adjusted that is the relative income differences take into account the difference in purchasing power in different countries, so that income is a pretty good measure of the standards of living. As you will see countries have experienced dramatically different fortunes. For example that Argentina that had a per capita income that was more than 60% of US income in 1950 has collapsed to around 30% in 2004. That is like having a great depression that last for 50 years. Singapore on the other hand has displayed a miraculous growth going from being 20% of US to almost the same level while Mexico, starting at about the same level has had a much less impressive performance. Ireland and Venezuela looked pretty similar in the early 60s but have experienced very different paths since then; similarly South Korea, Zambia and Romania or China, India and Nigeria.

The consequences of such different levels and performances are so staggering that the question that comes immediately to mind is why? Understanding why it is important from three point of views.

1) People living in those countries (quite obviously)

2) People living in other countries (if they are considering investing or doing business with that country)

3)The policy maker (if you are someone involved with economic policy in that country). At the end of these class you should have an idea of what are the main determinants of these large differences in the level of income and in growth performances. Is it because of luck (i.e. geography), policies or both? For now if you are interested in looking the macroeconomic history of other countries check the Penn World tables or the World bank WDI on the information sources listed in the class page.