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The Industrial Revolution led to increasing inequality among nations. Some economies took off, whereas others, like many of those in Africa or Asia, remained close to a subsistence standard of living. General calculations show that the 17 countries of the world with the most-developed economies had, on average, 2.4 times the GDP per capita of the world’s poorest economies in 1870. By 1960, the most developed economies had 4.2 times the GDP per capita of the poorest economies.

However, by the middle of the twentieth century, some countries had shown that catching up was possible. Japan’s economic growth took off in the 1960s and 1970s, with a growth rate of real GDP per capita averaging 11% per year during those decades. Certain countries in Latin America experienced a boom in economic growth in the 1960s as well. In Brazil, for example, GDP per capita expanded by an average annual rate of 11.1% from 1968 to 1973. In the 1970s, some East Asian economies, including South Korea, Thailand, and Taiwan, saw rapid growth. In these countries, growth rates of 11% to 12% per year in GDP per capita were not uncommon. More recently, China, with its population of 1.3 billion people, grew at a per capita rate 9% per year from 1984 into the 2000s. India, with a population of 1.1 billion, has shown promising signs of economic growth, with growth in GDP per capita of about 4% per year during the 1990s and climbing toward 7% to 8% per year in the 2000s.

Visit this website to read about the Asian Development Bank.

These waves of catch-up economic growth have not reached all shores. In certain African countries like Niger, Tanzania, and Sudan, for example, GDP per capita at the start of the 2000s was still less than $300, not much higher than it was in the nineteenth century and for centuries before that. In the context of the overall situation of low-income people around the world, the good economic news from China (population: 1.3 billion) and India (population: 1.1 billion) is, nonetheless, astounding and heartening.

Economic growth in the last two centuries has made a striking change in the human condition. Richard Easterlin , an economist at the University of Southern California, wrote in 2000:

By many measures, a revolution in the human condition is sweeping the world. Most people today are better fed, clothed, and housed than their predecessors two centuries ago. They are healthier, live longer, and are better educated. Women’s lives are less centered on reproduction and political democracy has gained a foothold. Although Western Europe and its offshoots have been the leaders of this advance, most of the less developed nations have joined in during the 20th century, with the newly emerging nations of sub-Saharan Africa the latest to participate. Although the picture is not one of universal progress, it is the greatest advance in the human condition of the world’s population ever achieved in such a brief span of time.

Rule of law and economic growth

Economic growth depends on many factors. Key among those factors is adherence to the rule of law    and protection of property rights    and contractual rights    by a country’s government so that markets can work effectively and efficiently. Laws must be clear, public, fair, enforced, and equally applicable to all members of society. Property rights, as you might recall from Environmental Protection and Negative Externalities are the rights of individuals and firms to own property and use it as they see fit. If you have $100, you have the right to use that money, whether you spend it, lend it, or keep it in a jar. It is your property. The definition of property includes physical property as well as the right to your training and experience, especially since your training is what determines your livelihood. The use of this property includes the right to enter into contracts with other parties with your property. Individuals or firms must own the property to enter into a contract.

Questions & Answers

why do you think agricultural product is best example of inelastic Demand in comparison to manufactured products?
Sangay Reply
remind me about price theory
Mulindwa Reply
what is Elastic Demand
Sangay
what is supply
Adeola Reply
supply refers to the quantity of goods and services that suppliers are willing and able to supply at certain priceces over a period of time.
Philimon
Supply is the total amount of goods and services that the producer is willing to supply in the market.
James
What is Industrialization
Desmond Reply
Industrialization is the concentration of industry in a geographical area
Onome
Industrialization is the process of applying mechanical, chemical, and electrical sciences to reorganize production with inanimate sources of energy
Nwawuba
in the long run what profit does a perfect competitive firm makes
nyoja Reply
what is industrialisation
Blessing Reply
what are their importance
esther Reply
pls who is a consumer
Cobby Reply
whoever use the product can be the consumer either the buyer of it or people at home who will be using the product
Donatius
compensation of goods and services by a customer with price that willing to satisfy themselves.
Kho
who describe economic
yao Reply
thediminishingarginalutility
Stanley Reply
mean
yao
pls I'm a home economic student and went I was in my formal school I was doing biology so wen I got she 2 and I went a different school and that school they don't do biology what they do is economics and I don't understand it cos I didn't learn from form one so I will need ur help in this please
Hawa Reply
what help u need
Fatema
I don't understand it I tried to learn from form one but still don't understand
Hawa
jxt follow the notes well try solving question under it
Nana
important of economics
Benita Reply
what is supply chain
Jos Reply
What is Fiscal policy
Adeola
what is financial management? And why is it necessary in business ?
Fatema Reply
it is the managing of all transactions that take place in any business and if not managed properly it could create debts and destroy the business
Asive
What is demand?
Annonymous Reply

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Source:  OpenStax, Principles of economics. OpenStax CNX. Sep 19, 2014 Download for free at http://legacy.cnx.org/content/col11613/1.11
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