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The chart shows GDP per person (worldwide) relative to the year 1,000 BC. So by
the year 2000, for instance, it shows that GDP per person was more than 50 times
greater than three millennia before.
Around that time saw the dawn of the Industrial Revolution. Since this point in
time, the world economy has expanded for nearly the entire time.
Of course, growth has not been constant. History has been marked with wars,
depressions and financial crises, causing growth to stall – and sometimes to fall.
And growth has not been even across countries or across individuals within a
country.
But on average, GDP growth per person since 1750 has been 1.5% per year.
This means that each generation has been around a third better off than the one
before it, on average.
That’s a massive contrast with the earlier period of history. One way to see this is
to compare how long it takes for the economy to double in size in each of these
two periods. Between 1750 and now, based on the average growth rates, this
would take around 50 years. Before 1750, it would have taken 6,000 years for the
economy to double in size!
The Industrial Revolution, which started in the middle of the 18th century, saw the
invention of the steam engine, cotton spinning and railways. Next, around a
century later, was the era of mass industrialisation, with rising use of electricity
and indoor water supply. Then we had the IT revolution – starting in the second
half of the 20th century. This gave us, among other things, personal computers and
the internet.
Take, for example, the IT revolution. This transformed business processes across
many industries, leading to sweeping changes to the structure of the UK economy.
And the result? The ‘service economy’ that we have today. In contrast to physical
‘stuff’ that you might buy, services involve the exchange of money for everything
from accounting to advertising.
The charts below show the shift in the UK economy over time. In 1950, services
accounted for around 50% of total output in the UK; manufacturing, construction
and agriculture made up the rest.
Fast forward to the latest data: services now account for 80% of total output. This
means that £8 out of every £10 spent in the UK is on services. Meanwhile,
manufacturing has declined as a share in total output from around one third in
1950, to just over 10% today.