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Standard of Living

output per capita - more accurate measurement of standard of living than total  

  • adjusts for country's different sizes
  • in comparing other countries, cannot simply just use exchange rates to calculate relative GDPs
  • purchasing power parity (PPP) - adjusted real GDP numbers using set of common prices
    • different products valued differently in different countries >> better to use the same price for each product

general growth trends  

  • standard of living has increased a lot since 1950
    • force of compounding - effects of growth increase over time
  • growth rates of output per capita decreasing since 1970s
  • output per capita converging over time
    • countries behind in output have grown faster >> catching up
  • from end of Roman empire to 1500s, almost no growth of output per capita in Europe
    • majority of people employed in agriculture
  • slow growth from 1500 to 1700s, remained small even during Industrial Revolution
  • high growth only a recent phenomenon
    • leapfrogging - leader in output per capita changes (no single dominant leader)
    • 4 tigers - Singapore, Taiwan, Hong Kong, South Korea >> gaining on Japan
    • convergence not a trend among African countries
Subject: 
Economics
Subject X2: 
Economics

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