The Rise and Fall of modern empires Part IIIa What drives economic growth: population vs. income per capita improvement Regions’ analysis Created by the Forecasting Net Follow us on LinkedIn: Forecasting Net GroupLike us on Facebook: Forecasting Net page July 2013

“The energy of the mind is the essence of life” Aristotle, Greek philosopher 384 BC – 322 BC

What we discovered in Part IPart I and Part IIPart 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 empires From 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, 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 performance  As we had expected the East outperforms all other regions including the West in terms of GDP growth

And the top performer is: Asia Despite popular belief Asia’s growth is mainly based on GDP per capita and not population growth …and what drives regions’ GDP growth 1950 – 2010 Larger than the World’s average GDP per capita growth Smaller than the World’s average World Bubble size = GDP growth Smaller than World’s population growth Larger than World’s population growth Population growth Middle East has the second best GDP growth performance; however, this is based solely on population growth Overall, the West has below World’s average growth performance mainly due to low population growth Western Europe is a place of contradiction as it enjoys the second best GDP per capita growth rate, hence, improved living standards, but also the lowest population growth rate However, they depend solely on population growth Latin America and Africa grow at almost the same rate as World GDP East Europe & Central Asia region is the worst growth performer mainly due to low population growth

But how did we get there?

Larger than the World’s average GDP per capita growth Smaller than the World’s average Smaller than World’s population growth Larger than World’s population growth Population growth

 Asia  Is leading the way in GDP growth for the period  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  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... By the Forecasting Net Follow us on LinkedIn: Forecasting Net GroupLike us on Facebook: Forecasting Net page