GDP Growth over the Very Long Run

From the long-term perspective of social history, we know that economic prosperity and lasting economic growth is a very recent achievement for humanity. In this section we will look at this more recent time and will also study the inequality between different regions – both in respect to the unequal levels of prosperity today and the unequal economic starting points for leaving the poverty of the pre-growth past.

Economic prosperity is measured as via growth domestic product (GDP) per capita, the the value of all goods and services produced by a country in one year divided by the country’s population. Economic growth is the measure of the change of GDP from one year to the next. This entry shows that the current experience of economic growth is an absolute exception in the very long-run perspective of social history.

# Empirical View

# GDP per Capita Growth around the World Since the Year 1 CE

There are many reconstructions of GDP per capita over the last centuries; here I will focus on the reconstructions by the British economist Angus Maddison who was working in Groningen (Netherlands) and where, after his death in 2010, younger colleagues are advancing his work in the ‘Maddison Project’.1

The following graph shows Maddison’s reconstructions for eight major world regions.

# Real GDP (absolute levels) by major world region in 1990 Int. $, 1-2008 CE – Max Roser2

Click on ‘Expanded’ to see the share of the world GDP produced by each world region over time.

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Maddison’s data confirms what he have learned from the very long-run perspective before: before the onset of modern economic growth, every region in the world was extremely poor. But there are also important insights gained from Maddison’s data: The starting points of economic growth are very different from region to region. Until the year 1000, everyone was equally poor but we learn that as early as the year 1500 Western Europe had achieved some very limited economic prosperity; until the early 19th century the region could slowly increase the economic wealth. But the wealth enjoyed at the time is still incomparably low with the level that Europe enjoys now at the beginning of the 21st century. Starting from 772 Int. $ in 1500, it doubled until 1820 but since has increased more than 12-fold!3

In 1700 the ‘Western Offshoots’ of Australia, New Zealand, Canada, and the US were as poor as any region except Western Europe. But although they had a later start leaving poverty behind, they caught up quickly with Western Europe and surpassed it by 1900.

It is often the case that progress creates inequality between regions because it is not happening equally as fast everywhere, but if we compare the economic prosperity of every region in 2003 with any earlier time we see that every single region is richer than ever before in its history. Though some regions are more productive than others, every region is doing better than ever before – much better.

After looking back on more than a million years of world poverty the question arises: why did economic growth not happen before? Why were our ancestors kept in poverty for millennia after millennia? To answer this question it is helpful to look at just a single country.

# World maps of GDP per capita, 1-2008 – Max Roser4

 

# Over the Last Millennia until Now

Data on economic growth is now routinely published by statistical offices, but researchers have had to reconstruct accounts of the economic productivity for the past. These reconstructions are arguably very uncertain. Nevertheless it is absolutely clear that compared to the prolonged growth of economic productivity in the last centuries, the productivity was always very low before: The difference of prosperity is much greater than the uncertainty of the exact values.

I have included one reconstruction of GDP per capita over the very long run: the last 1,002,000 years. The economist J. Bradford DeLong has constructed the data that I have visualized in this interactive graph.

It is not easy to show more than 1 million years on the x-axis of a single graph when all the action happens in the very last couple of centuries. If I would have chosen to give each year the same space on the axis the graph would simply look like this: ˩ , practically a right angle.

For this reason I reverted to give years very unequal spacing – admittedly a not so precise way of showing this data either.

Average world GDP per capita 1 million BCE until now (in 1990 International Dollars) – Bradford DeLong5

What we learn from this chart is that on average the people of the past were many times poorer than we are today. For all the thousands and thousands of years before 1800, the average GDP per capita was lower than just 200 Dollars (1990 International Dollars).6 Prosperity is a very recent achievement that distinguishes the last 10 or 20 generations from all of their ancestors. In 2000, the average GDP was 6539$ – more than 30 times the average of the past.

# The Last 2000 Years

From the data that we have discussed previously, we know that with respect to economic growth all the action really just happened very recently. It is true that in the pre-growth era some people were very well off – but this was a very tiny elite, from tribal leaders to the pharaohs to kings and popes. Yet the average person was very much worse off in these unequal societies.

The destitution of the common man only changed with the onset of economic growth. The time when this change happened is depicted in the following graph – this time again on a regular time axis. From this it becomes clear that economic prosperity was only achieved over the course of the last millennium – really just over the last couple of hundred years. In fact, it was mostly achieved over the second half of the last hundred years.

# The last 2,000 years of growth in world income (GDP per capita) and population – Visualizing Economics7

Last 2,000 Years of Growth in World Income (GDP per Capita) and Population - Visualizing Economics0

 

 

# Data Sources

I have collected all data sources on GDP, GDP per capita, and incomes at a dedicated entry on GDP Data here on ‘Our World in Data’.