[61][62], Much of this literature was built on the success story of the British state after the Glorious Revolution of 1688, in which high fiscal capacity combined with constraints on the power of the king generated some respect for the rule of law. Growth increases with GDP reaches its maximum and then begins to decline. Although the rate of investment in the model is exogenous, under certain conditions the model implicitly predicts convergence in the rates of investment across countries. [33] In contrast growth in Asia has been strong since then, starting with Japan and spreading to Four Asian Tigers, China, Southeast Asia, the Indian subcontinent and Asia Pacific. This is one of hundreds of datasets that are required to construct the time series in the chart above. [129][130] In the words of the Secretary General of the United Nations Ban Ki-Moon: "While economic growth is necessary, it is not sufficient for progress on reducing poverty. CSIRO Working Paper Series, (2010). In contrast, GDP growth caused only by increases in the amount of inputs available for use (increased population, for example, or new territory) counts as extensive growth. However, we think it should still give a fairly reasonable basis of the early 2000s to use as an earlier estimate and the direction of progress trends. The following chart plots, for each country, the national income in 1960 against the corresponding national income in 2014.

The prices that we see on the price tags in the shop are the nominal prices and since we almost always have some inflation these prices tend to go up.Nominal prices and incomes are expressed in terms of money, in this case British Pound, and in income statistics nominal incomes are reported as incomes in ‘current prices’.

Wilson, in International Encyclopedia of the Social & Behavioral Sciences, 2001. The main objective is to apply a methodology that reconstructs this metric consistently over time and across countries. Do poverty traps exist? In a global economy with a global financial capital market, financial capital flows to the countries with the highest return on investment. It is arguably the most reliable, long-run data available on PPP-adjusted GDP. The data for several European countries for the time period 1870–2000 is available online at Broadberry’s website here. Full wealth includes the value of the household's human wealth, as well as the household's tangible and financial wealth. For example, ignoring property rights, the Zimbabwe government embarked on a massive program of expropriation and redistribution of agricultural land that has led to the collapse of the economy which has fallen by around 50% since the program started. In fact, when comparing financial flows, PPP-adjustments are meaningless and GDP evaluated at the market exchange rate is the most appropriate measure. According to the theory, while technologically advanced economies over this epoch were characterized by higher population density, their level of income per capita was not different than those among technologically regressed society. [63][64][65][60] However, others have questioned that this institutional formula is not so easily replicable elsewhere as a change in the Constitution—and the type of institutions created by that change—does not necessarily create a change in political power if the economic powers of that society are not aligned with the new set of rule of law institutions. Secondly, the GDP deflator covers capital goods, goods that are not bought by consumers. Looking at the bottom panel we see the spike of incomes that was associated with the killing of half of the population in the Black Death.