15 per cent in 1998; China’s somewhat less so to 6.3 per cent in 1998 (Crafts,
2004:52).
Much in line with our discussion in the Introduction, Lans Pritchett argues
that ‘Divergence in relative productivity levels and living standards is the
dominant feature of modern economic history’ (1997:3). He estimates that
between 1870 and 1990 the ratio of per capita incomes between the richest and
poorest countries increased by a factor of approximately five. There are excep-
tions to this trend, one of which is that among today’s 24 developed (OECD)
countries there has been strong convergence in per capita incomes. The poor-
est six (and richest five countries) in 1870 had the fastest (slowest) national
growth rates until 1960. Such historical time series data has a built-in problem.
Examining the growth story of the now high-income countries almost guaran-
tees finding convergence. If they hadn’t all had similar growth rates for an
extended period they wouldn’t be today clubbed together as high-income
countries. The sample ignores countries that failed to converge, were rich and
grew more slowly like Argentina, or were poor and continued to grow slowly.
The post-war boom and bust
The period 1950 to 1973 with its relatively rapid rates of growth encompassing
both developed and developing countries has been labelled the ‘golden age of
capitalism’. This marked a sharp shift from the years of stagnation during the
worldwide depression of the 1930s. The years after 1973 marked a significant
slowdown in GDP growth rates across the developed world, most dramatically
in Japan, and also a shift into stagnation in Africa. Two exceptions were China
and India where growth rates accelerated (see Table 2.2).
The end of the 1980s saw the spectacular collapse of the USSR. Russian
national income declined by 34 per cent in 1989–91, by a further 30 per cent in
Growth in the Modern World Economy since 1950 45Table 2.2 Growth rates of real GDP per capita (average annual
percentage changes)1950–73 1973–98UK 2.44 1.79
US 2.45 1.99
Germany 5.02 1.60
Brazil 3.73 1.37
China 2.86 5.39
India 1.40 2.91
Japan 8.05 2.34
Former USSR 3.36 –1.75
Africa 2.07 0.01Source: Data compiled from Maddison (2006:186, 196, 216, 225).