Growth Miracles and Growth Disasters

Growth Miracles and Growth Disasters


♪ [music] ♪ [Alex] Are poor countries
catching up to rich countries, or are they falling further behind? Said another way,
is there divergence or convergence between standards of living
in different countries over time? Let’s start with what economic
historian Deirdre McCloskey calls “The Great Fact”
about the modern world. If you graph global economic output
over the past 2000 years, you’ll see this —
what we’ve referred to earlier as the hockey stick
of human prosperity. Now let’s look at that same data, not at a global level,
but by region. Since the Industrial Revolution, the growth paths
taken by different regions have diverged dramatically. The U.S. and Western Europe
experienced the hockey stick path of growth, while other regions have stagnated. This was described as
“Divergence, Big Time” in a famous economics paper. But that’s not
the whole story either. Let’s dive into this data
even further, down to the country level. Here’s Argentina in 1950. It’s a relatively successful economy
with a standard of living similar to many
Western European economies. Now here’s Japan. At the time, they’re quite poor, with a standard of living
similar to Mexico. But let’s move forward in time. Japan begins growing
at an astonishing pace, doubling their living standards
about every eight years. Argentina, on the other hand, experienced periods
of negative growth. They managed to double
their living standard just once in 65 years. By 2015, Japan — it’s one of the most
prosperous countries on Earth. Argentina, on the other hand —
it stagnated. It went from double the standard
of living in Japan in 1950 to Japan being twice as prosperous
as Argentina today. Japan is a growth miracle,
with a standard of living over 10 times higher now
than in 1950. Other growth miracles have occurred
in South Korea and China. And India today looks like
it may have started down the hockey stick path
of prosperity. So the good news is that
with the right factors in place, a poor country can not only grow,
but it can grow quickly and catch up to developed countries. What took the United States
200 years of steady growth can be achieved in other countries
by rapid growth, in about 40 years. Catch up can happen
in a generation or two. The bad news is
that it’s not guaranteed. Some countries, like Argentina —
they grow well for a time and then they stall. Even worse are countries
such as Niger or Chad which have never experienced
significant growth. They’re the worst kind
of growth disasters –- extreme poverty
with very little growth at all. And it’s important to remember that these are
more than just numbers. A growth miracle means not just
more goods and services, but better health
and greater happiness for millions of people. See our earlier video showing
how GDP per capita is a good summary measure
of a country’s standard of living. On the other hand, a growth disaster —
it means the opposite. People are less prosperous and they live shorter,
and less happy lives. So growth miracles and growth
disasters — they’re possible. But what are the causes? What are the factors
that lead to growth, prosperity, health,
and better lives? That’s the topic
we’re going to turn to next. [Narrator] If you want
to test yourself, click “Practice Questions.” Or, if you’re ready to move on, you can click
“Go to the Next Video.” You can also visit MRUniversity.com to see our entire library
of videos and resources. ♪ [music] ♪

23 thoughts on “Growth Miracles and Growth Disasters

  1. I fairly understand the concepts of economic disasters and miracles, there needs to be a context on why you are talking about it. Check Hans Rosling https://www.youtube.com/watch?v=hVimVzgtD6w

  2. You guys get a kick out of comparing Mexico's GDP per capita today in comparison with Japan more than half a century ago. Pitiful youtube channel.

  3. The reason of Japanese Growth Miracle is American will. And don`t forget about 20 years recession after that miracle (since 1990s to now).

  4. Divergence, you lie big time. There is a whole history which says UR a big fat liar.
    The west is rich today because they ROBBED the rest of the world for over 400 years.
    i.e. What was the Europeans doing in China for over 200 years? Selling them opium?
    And Africa? The love boat tour? American capitalism was created from the stolen labor of millions of African slaves. Why is Benin and Chad et al not a post industrial society?
    Mssrs.Cowen and Tabbarok go ahead and lie some more with your answers.

  5. As an Argentinian, this is so sad. Let me get political for a second. If it hadn't been for USA's Operation Condor in Latin America all the region would be much better right now. Take a look at this graph, the dictatorship with support of the USA de-industralized our country and left us with a crippling debt and an increase from 10% poverty to 30%. Thank you Bernie for being the only one with the balls to criticize regime change in a national debate. North Americans must now that both Trump and Hillary will continue to bring death and poverty abroad. Thank you.

    http://www.economonitor.com/wp-content/uploads/2014/02/arg1.png

  6. brainwashing session. if some countries are growing a whole bunch of them are in decline. there are no win win situation. this is a game of musical chairs.

  7. It's some countries just 40 years to achieve what it took America 200 years only if the countries like the US spends 200 years building what other countries then imitate.

  8. It's so sad that in the comment section of the best economics channel on YouTube is filled with people who understand nothing about economics.

  9. I like most of your videos, but not this one… Japan a Happy country???? Have you been to Japan? Most Japanese are so depressed! They have excellent physical health, but not mental health. I have been to Japan several times (in the last ten years) on business trips and I have observed every time that Japan is pretty much an unhappy place…

  10. Watch video "Princes of the Yen" with Richard Werner and it will explain the monetary allocation influence in the miracle of Japan and post miracle monetary policy and its influence.

  11. Why don't the show the ripe an countries that had no growth only the ones that did undercover racists all ways showing the worst of others and the best of of your own

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