1992, 10 per cent in 1993 and 25 per cent in 1994. In 1994 alone the output of
the machine-building industry fell by more than 40 per cent. The fall in GDP
was reflected in declining welfare. While luxury products made a sudden
appearance in shops there were large falls in consumption of basic food and
non-food items. The physical output of textiles and shoes fell by around half
between 1991 and 1993 and cotton textile output fell by 38 per cent in 1992/93
alone. There was a sharp rise in morbidity and poverty. Between 1990 and
1993 the incidence of tuberculosis increased by 34 per cent, syphilis 300 per
cent, whooping cough 72 per cent, and measles by 142 per cent. There was a
large increase in crime with murders increasing by 42 per cent in 1992. Poverty
(defined as insufficient food consumption to maintain a normal body weight at
an average level of activity) increased to 37 per cent by the early 1990s. From
having among the lowest death rates in the world in the early 1960s, the death
rate in Russia by 1993 was on a par with those of Bangladesh and the Sudan
(Nolan, 1995).
To put this in comparative perspective, during the Great Depression the US
economy (after expanding by 5.02 per cent in 1929) contracted by about one-
third between 1930 and 1933,or less than half that experienced in the USSR
after 1989. The current global financial crisis that has caused such disquiet in
the US led to a fall of 4 per cent in GDP in 2009 with positive growth in 2008
and 2010.
Episodes of growth and stagnation
Pritchett (2000) uses data on 111 countries beginning in 1960 and identifies six
distinct patterns of sudden change in growth or as economists label it, ‘struc-
tural break’. These included sudden accelerations (steep hills), accelerations
followed by growth declines (mountains) and sudden collapses in growth
(cliffs). Hausmann et al.(2004) find that growth accelerations are quite
frequent and they identify more than 80 between 1957 and 1992. Apart from
the number of accelerations the magnitude of acceleration is also striking. The
average acceleration was 4.7 per cent per annum and there are many episodes
of 7 per cent acceleration or more, such as Ghana in 1965 (8.4 per cent),
Pakistan in 1962 (7.1 per cent) and Argentina in 1990 (9.2 per cent). Of the 110
countries studied, 54.5 per cent had at least one acceleration and 20.9 per cent
two accelerations; Asia had 21, Africa 18, Latin America 17 and the Middle
East and North Africa 10. Jones and Olken (2008) find that about 90 per cent
of countries have converged with the US in this respect over some ten-year
period.
The acceleration of growth in China after 1978 is striking, though (see Table
2.2) not much different from the earlier rise of Japan. Average GDP growth in
China was around 10 per cent per annum between 1978 and 2005. In the late
1970s investment had reached 30 per cent of GDP, increasing further to 35 per
cent in the 1990s and 40 per cent in 2004. This growth was reflected in
improved welfare; housing space per person doubling between 1978 and
46 Sources of Growth in the Modern World Economy since 1950