The Rise and Fall of modern empires

Part IIIaWhat drives economic growth: population vs. income per capita improvement

Regions’ analysis

Created by the Forecasting Net

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July 2013

“The energy of the mind is the essence of life”

Aristotle, Greek philosopher384 BC – 322 BC

What we discovered inPart I and Part II

Economic power “moves” from the West to the East

Japan, China, and India lead the way

This is a long term trend initiated many decades ago

Income gap is shrinking BUT inequality still holds strong

The Rise and Fall of modern empiresFrom the United States to China: a journey of global economic dominance from 1950 to 2010

So, economic power is shifting from the West to the East

However…

Is this shift of power attributed to

the growing and much larger

population of Asia and especially

China and India?

…or is it based on the improvement

of living standards, productivity,

and innovation on an individual basis?

* All figures are relative to corresponding Global GDP/Population/GDP per capita growth figures

** Source of actual GDP (in millions of 1990 US$, converted at Geary Khamis PPPs) and population data used in this analysis is: “The Conference Board Total Economy Database, January 2011, http://www.conference-board.org/data/economydatabase/”

Let’s do the following: We will analyze GDP growth* of different geographical regions, between 1950 and

2010, based on two growth drivers:

Population growth*

Income per capita growth*

By performing this analysis, we will identify the dominant elements for every region

and gain valuable insights about their growth dynamics

Let’s start!

Regions’ GDP growth performance1950-2010

As we had expected the East outperforms all other regions including the West in terms of GDP growth

And the top performer is:AsiaDespite popular belief Asia’s growth is mainly based on GDP per capita and not population growth

…and what drives regions’ GDP growth1950 – 2010

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World Bubble size = GDP growth

Smaller than World’s population growth Larger than World’s population growth

Population growth

Middle East has thesecond best GDP growth performance; however, this is based solely on population growth

Overall, the West has belowWorld’s average growth performancemainly due to lowpopulation growth

Western Europe is a placeof contradictionas it enjoys the second bestGDP per capita growth rate,hence, improved living standards,but also the lowestpopulation growth rate

However, they depend solely on population growthLatin America and Africa grow at almost the same rate as World GDP

East Europe & Central Asia regionis the worst growth performermainly due to lowpopulation growth

But how did we get there?

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Smaller than World’s population growth Larger than World’s population growth

Population growth

197019751980198519901995200020052010

Asia Is leading the way in GDP growth for the period 1950-2010

The region started to stand out after 1980

Contrary to the popular belief, its growth is mainly based on GDP per Capita improvement-not population growth

This unveils important growth dynamics implying significant developments in living standards, productivity, and

innovation on an individual basis

The West Below World’s average GDP growth rate for the period 1950-2010

Growth performance deteriorates after 2000

Poor population growth performance

Near average GDP per capita performance, with the exception of Western Europe that enjoys the second best

performance for 2010 due to improved living standards

The rest of the World Eastern Europe & Central Asia region has the worst growth performance due to losing momentum after the

dissolution of the Soviet Union in 1991

Latin America and Africa have growth rates near World’s average entirely based on population growth

Middle East has the second best GDP growth rate entirely based on population growth

Let’s summarize

The Rise and Fall of modern empires

Part IIIb What drives economic growth: population vs. income per capita improvement

Countries’ analysis

Coming soon ...Coming soon ...

By the Forecasting Net

www.forecastingnet.com

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