Chapter 2
Growth in the Modern World Economy
since 1950
In the period after 1950, most countries had largely recovered from the effects
of the Second World War and were turning their attention to renewed growth
rather than recovery. Accelerating economic growth became the key policy
goal for many developed and developing countries. The newly formed United
Nations (UN) made a substantial effort to develop improved and standardized
GDP data presentation methods, which made economic data increasingly
comparable across countries and made people increasingly aware of the gap
between developed and developing countries. Newly emerging post-colonial
countries focused on this gap and imbued it with various forms of nationalism
to argue that without economic growth (and industrialization) they would
remain vulnerable to exploitation and new forms of colonization. The emer-
gence of Development Economics as a distinct discipline within Economics
placed growth at the centre of its concerns and gave developing-country
governments an array of policy tools to promote growth, including the ‘big
push’ popularized by Paul Rosenstein-Rodan; ‘balanced growth’ from Ragnar
Nurkse; and the ‘take-off into self-sustained growth’ from Walt Rostow. The
politics of the Cold War gav e the US government an incentive to promote
poverty-reducing growth in its allies and client states, to ward off the tempta-
tions of communism. The apparent success of the USSR (the horrors of
Stalinism were less well known in 1945) since 1917 gave many developing
countries a role model of state intervention and rapid economic growth to
aspire to.
This chapter looks at statistical methods of measuring the causal influences
on growth, and at the economic drama and the many fascinating stories of
growth since 1950. The stories, like all good drama, are often completely
unpredictable. The USSR was in the 1950s seen as a serious rival to the US; by
1989 it was bankrupt and undergoing catastrophic economic collapse. Uganda
and Ghana were among the most disastrous economic stories of post-inde-
pendence Africa until the mid-1980s when both abruptly became celebrated
success stories. The Nobel Prize-winning economist James Meade in his study
of Mauritius in the 1960s forecasted doom. Mauritius was a tropical country,
located far from large markets, it was dependent on exports of sugar which
faced poor prospects in world markets and suffered from rapid population
growth that looked set to overwhelm any increase in production. In terms of
growth, exports and improvements in human welfare between the 1970s and
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