Growth Report

A wise man once said, Quote: Statistics are the science of producing unreliable facts from reliable figures. Unquote. Today I have a handful of statistics encompassing over the developed and the developing countries and how their roles have gained momentum postWorld War II. The statistics in all cover the following aspects: Evolution of global GDP and per capita GDP Population Trends Poverty Socio-Economic Indicators Infrastructure Throughout my analysis, it was surprising to see the evolution in the developing countries. Before World War II, the developed countries dominated the world. However, you will see for yourself how this has changed. But, prior to commencing with the stats, it is imperative for me to explain that these statistics also contain an element of doubt for the fact that information availability is compromised especially in the sectors of Infrastructure, Education and Public Sector Spending. Subject to this you may find data contradicting previous facts and figures. Some countries have compilation issues too because of which all data presented here cannot be 100% accurate. To start off, first we have the analysis of the Evolution of Global and Per Capita GDP from the last 2,000 years. A school of thought believed that economic growth started with the Industrial Revolution. But actually it started off quite earlier than that. The spread of universities in the 14th and 15th century resulted in a series of scientific and technological innovations, especially the printing press, navigational instruments, ship engineering etc. These developments coupled with the favorable conditions in Western Europe facilitated trade and accelerated economic growth before the Industrial Revolution. After years of negligible economic growth, growth accelerated in 1,000 A.D, and again in the 19th century and most recently in the past two decades. The next chart explains the Global GDP since 1960 where majority of the developing countries started to grow at an increasing rate to be at par with the developed nations. This is one of the major reasons why you may see a consequent increase in every decade. For further clarity, you may see for yourself that since 1960, the United States, the European Union and Japan account for more than half of the global GDP. However, this proportion has been declining due to the continual contributions of developing nations like India and China. Another eye-opener is the economy of Japan, that was one of the developing nations in the 1950s, 60s and 70s but after the World War, Japan has been able to cope up and is now an industrialized economy with its GDP ranking among the worlds largest GDPs. Next we have is the growth in 25 largest developing countries. Out of an aggregate of 150 developing countries, the 10 largest countries account for 70% of the developing nations GDP and the 25 countries account for 90%. However, the growth performance remains uneven for the fact that the countries need to grow at a much higher pace than they are now, to be at par with the industrialized nations. Japan and the Republic of Korea are the only two developing nations that have managed to come at par with the industrialized countries because of which they are not present in this table. Since 1960, only 6 countries grew faster than 3% and 10 countries had a growth rate of less than 2% implying a much slower growth as compared to the industrialized nations. The chart we can see next is of the divergence of Economic Performance from 1960-2006, where it is evident in countries of Africa and Latin America where growth is stagnating whereas in comparison we can see how China has made its way up through steady growth acing to the level of industrialized countries. The next analysis is of the developing countries and the required rate of growth needed to reach the level of the industrialized countries by 2050 and 2100. Current trends persisting, China is one country who has the leverage of slowing their growth to an average of 5.7% compared to the current 8.3% to catch up with the industrialized countries by 2050. However, if it remains at the same pace, it may be able to catch up before 2050. Brazil on the other hand needs to ace their performance 5 folds to meet the growth rate required to catch up with the developed countries by 2050. The last column indicates the aggregate number of years; the countries would approximately take to catch up with the industrialized countries. Venezuela is one of those countries that experience large fluctuations which could mean unexpectedly higher growth rates, reason to which lower number of years have been assigned.

Growth Report
This chart again explains the rise of two largest developing economies, India and China that have been outweighing the significant impact of the United States, Canada, the European Union and Japan, since the 1980s. Moving on to the second aspect of the statistics is the Population growth trends. This chart exhibits that post World War II, the developing countries have become a larger nation in terms of population compared to the developed countries. In specific, India and China seem to have greater population growth over the period of years. Moving on to the demographics, the countries indicate the age structure of the population from 1950 to 2050 forecasts. Ignoring the future migration flows, all the countries and regions will have a declining birth rate which for some countries may mean a high age category. Likewise as shown in the figures, the populations in the industrialized countries will age rapidly, similar ageing is likely to occur but to a lesser extent in countries such as Japan, Russia and China. But even lesser ageing would be evident more in India. The next graph explains the female participation into the labor force since 1980. Although these rates have increased in the industrialized nations, countries such as India, China and Russia have experienced mild declines in the same. Due to the shortfalls in compilation of the data, a reason for this could be completion of studies due to which these women had to leave the labor force. Also that the decline could not be compared to the figures of other countries due to the differences in culture, social values and norms. Here we are also unaware of the fact if the data includes informal work by women, such as working for family enterprises without pay and other domestic chores. Next we have the growth incidence curves for both India and China. The growth incidence curves basically measures the income distribution for each household. For China, the growth incidence curve explains the annual per capita growth rate close to 7% per year which could mean that the ones above the 7% per capita growth were better off than those less than 7% indicating that the higher income groups may be possessing skills and assets that are shorter in supply and hence more valuable. Similarly, the growth incidence curve for India, which looks comparatively far more difficult to interpret. Here you can see an example of contradictory data where the national accounts of India suggest an annual per capita income of 4% excess, whereas the household surveys negate this piece of information showing dramatically low increases in the consumption expenditure. The next aspect under consideration is the socio-economic indicators. Analyzing the data for the sanitation and Water sources as an example. In this one aspect, the industrialized countries stand high above all developing countries providing unmatched quality of services ensuring health and hygiene. On the contrary, the developing countries have yet to explore these opportunities, since most of their population is deprived of the basic necessities such as food and potable water. However, it is recognizable that the countries are undoubtedly struggling to improve their standards of living. The literacy rates as they are shown here explain for themselves that the developing countries apart from China and India are still comparatively low. This could primarily be the reason for low enrollment which eventually translates into such a result. Even India has lower rates of literacy like the other developing nations. Investment in Infrastructure is key to growth and development as it ensures access to key public services such as water, public transportation and urban amenities. However collection of data in this particular field was cumbersome for the fact that these expenditures are borne by various levels of government and agencies whose expenditures are not part of the budget. Secondly any private investment in infrastructure is rarely fully recorded. In all the three examples of Latin America, India and Pakistan, the public spending is far greater than the private investments in infrastructure. Now, the post-World War II period had a number of important global trends, some that are totally contrasting with the previous statistics. The inflation rates in the industrialized nations fell drastically after 1986 followed by the developing countries 10 years later. The real interest rates according to this graph indicates that domestic interest rates increased significantly since in most developing countries, the nominal interest rates fell, but less than the decline in inflation rates. Now, the global savings rates for the Developed and the Developing countries as a percentage of GDP illustrate that savings in the developed nations have seen a declining trends towards 2001, whereas the developing countries on the other hand, have shown an increasing trend. Research also suggests that the developing countries have become net exporters of capital.

Growth Report
The global Investment rates for the developed and the developing countries share a similar trend as a result of the savings. In this particular graph, since there is a decline in the savings in the developed countries, so has the investment graph indicated through a downward slope. On the contrary, the developing countries are in a better-off condition as their incremental savings have resulted in increments in investments. However, it is important to note that countries like Latin America and Africa remain stagnant in terms of growth and investments. Since World War II, world trade has increased rapidly as indicated in all the three graphs. While world exports experienced a growth of 10% since 1975, the developing countries share in global exports increased by 6%. Keeping in view the contributions of the developing countries towards savings, GDP and investments, the same behavior is illustrated in the acceptance to technology. These developing countries have become technologically more sophisticated than the industrialized group of countries. These figures as evident have been led by the efforts of China, followed by the other Asian economies. Similar to the technological acceptance by the developing countries, this has enabled them to explore various aspects that have resulted in the developing countries being recognized as the more important innovators. Now, since the mid-1990s private capital inflows into the developing countries have declined, reasons being that the developing countries have now become the net savers. However, the FDIs are an exception. The inflows of FDI have remained high for about a decade with Latin America and China being the largest recipients. Although despite this, the trend remains highly volatile, as it is evident how the FDIs fell by 25% between 1995 and 2000. However, after 2000, it has recovered and the FDIs are now in their recovery phase reaching almost 30% by the end of 2005. Keeping in mind the substantial efforts made by the developing countries, to come at par with the industrialized nations, it is evident by these graphs how the developing countries are paving their way through building substantial reserves to aid their growth. Over the years, economies like China have managed to collect substantial reserve, almost 20% in 15 years, where after 2001, the figures multiplied.