1960 to 1992 they showed that growth is good for human development and that
GDP is positively affected by the initial level of life expectancy but less so by
the rate of adult literacy. These results support the idea that a country could
follow a virtuous circle with high levels of human development leading to high
growth and high growth in turn further promoting human development (or
spiral into an opposite and vicious circle). During these decades they found
that eight developing countries had experienced virtuous growth: seven in East
and South-East Asia, plus Botswana. Of the 37 countries experiencing a
vicious circle 21 were from Sub-Saharan Africa and nine from Latin America.
Key points
- GDP growth can be defined as ‘the increase in the total real value of all
goods and services produced within a country in a single year’. - There are huge inequalities in average living standards in the world econ-
omy today. - There are three ways of thinking about growth discussed in this chapter:
growth as a process of change, growth as progress towards an ideal end-
state and growth as an assumption of progress. - Growth as a process of change is discussed here in terms of GDP growth
though there are distinct problems with the use of GDP. - A more encompassing measure of change is that of freedoms/capabilities.
There is only an indirect and uncertain link between incomes and free-
doms/capabilities. - Freedoms/capabilities are difficult to measure but have been proxied by life
expectancy and the Human Development Index (HDI). - Growth can be thought of as being progress towards an ideal end-state, that
of a high-income ‘developed’ country. - The idea of an ideal end-state is rarely so limited and many scholars have
tried to define such an ideal; those discussed in detail here are basic needs,
universal adequate nutrition and happiness. Each of them has only an
uncertain link with economic growth. - The notion of growth is one closely based on an assumption of progress.
- There are typically good and bad outcomes associated with economic
growth. - Though there is a close statistical relation between growth and measures of
human development such as life expectancy and education the pattern of
causation is not clear. - There are many of examples of growth without development and develop-
ment without growth.
42 Sources of Growth in the Modern World Economy since 1950