Some interesting economic history data

[jaichind]

I always liked the historical GDP data from Maddison Project.  I spend time reading and studing they data they have.  They came out with their latest numbers in Jan 2013 which goes out to 2010.

http://www.ggdc.net/maddison/maddison-project/data/mpd_2013-01.xlsx

Today I homed in on something I found interesting.  It is about the different speeds different economies advance from GDP/capita in PPP 1990 $ terms from $2000 to $8000.  Of course there are exceptions mostly based on natural resources but I consider GDP/capita $2000 in 1990 $ terms is an economy where it has some level of industrization and  GDP/capita  $8000 in 1990 $ terms is an economy that is mostly done with the industrial takeoff and is moving into a more services oriented economy.  I was interested on when and how long it took different economies to go from one state to another.  Of course many economies are not there yet and the effect of war somtimes delayed this surge for certain economies.  I found the following looking at the data:

                         Year on when $8000                           How many years to go from $2000
Economy           GDP/capita is reached                                 to $8000 in GDP/capita
USA                          1941                                                              90
Canada                      1955                                                              75
Austrialia                   1955                                                             108
Sweden                     1957                                                              60
UK                            1958                                                             159
Holland                      1960                                                             134
Germany                   1961                                                               89
France                       1962                                                              94
Italy                          1967                                                              63
Japan                        1968                                                              40
Argentina                   1973                                                              92
Spain                         1974                                                              64
Greeece                     1976                                                              53
Portugal                     1984                                                              39
Taiwan ROC               1987                                                              21
South Korea               1989                                                              21
Chile                          1993                                                            104
Malaysia                     2002                                                              34
Poland                        2004                                                              67
Hungary                     2004                                                              81
Thailand                     2005                                                              31
Bulgaria                     2006                                                              54
Turkey                       2006                                                              54
Mexico                       2008                                                              67
PRC                           2010                                                              20  
India                          2032?                                                            30?

India is based on current trends.  Latin American economies seems to move to a mature economy slower since they were the example of the middle income economy trap.  Advanced economies like USA and UK were slow because they were at the technical frontier.  Southern and Eastern European economies were faster to advance and of course East Asian econmies the fastest especially they were the most behind.

[Torie]

Just for the record, a lot of other countries (putting aside the micro states like Luxembourg), have more than 8K in per capita income, or at least some. I was wondering why the Czech Republic was not on the list, and see that it has way over 8K now per clicking the data source. Interesting data however.

[jaichind]

You are right.  I did not list all economies that went from $2K to $8K for reasons of brevity so economies with lower enough population I just left off.  Also a bunch of economies are very close to hitting $8K like Russia and Brazil even thought I did my own projections on India and put it on the list.

[jaichind]

On interesting thing looking at the data is to highlight to me how much Margaret Thatcher reversed the relative decline of UK.    This data sets in addition to show GDP/capita in 1990 PPP$ also shows data by clusters.  It had a cluster of the 12 advanced West European economies  (Austria,    Belgium, Denmark,Finland,France,Germany, (Centre-North) Italy, Holland/Netherlands, Norway    Sweden, Switzerland, and England/GB/UK.  Comparing UK GDP/capita to these 12 advanced  West European economies had UK fall behind this 12  advanced West European economies GDP/capita in 1970 after being ahead of this grouping for centuries.   The post 1945 welfare state finally ran UK to a below average West European economy.  UK continued to fall further behind until it hit a new low relative to its West European peers in 1981.  But once Thatcher took over and her policies began to make an impact this began to reverse itself and UK began to catch up again with its West European peers until in 1997, the last year of Tory rule, it overtook the  12 advanced West European economies in terms of GDP/capita.  After that the gap continue to widen in favor of UK.

[Franknburger]

When interpreting the data, however, you need to take externalities into consideration. WW I & II pushed back Germany by some 40 years - the 1913 income level was only reached again in the mid-1950s. I suppose the same applies to France and Belgium, to a lesser extent also to the Netherlands, Italy, Austria, Poland and the Czech Republic. As such, without two World Wars, Central Europe would have needed 40-50 years to go from $2000 to $8000 GDP per capita, which is very much in line with Southern European time spans (though still longer than for the Asian "tigers").

The economic collapse of the Eastern bloc is another factor to consider. Aside from obvious effects (dilution of West German GDP/capita), the transformation crisis also heavily affected many continental European economies. The Yugoslavian wars lead to massive immigration into Western Continental Europe, Scandinavia and Italy, while at the same time depriving them of a traditional major export market.
The UK, traditionally oriented more on trans-Atlantic trade, could widely steer free from these trends. As such, I don't think it is appropriate to attribute the UK's economic advance against Continental Europe to a single factor, namely Thatcherism. Once economic and political transformation in Central and Eastern Europe and former Yugoslavia is completed (probably between 2015 and 2020), we may take a look at long-term data and be able to judge the impact of Thatcherism. So far, the only thing I am seeing is the impact of the UK's geographic location.

[jaichind]

I totally agree.  I think a good benchmark would be Sweden which if anything benefited from WWI and WWII.  I pretty much feel economies in Western Europe like Germany and France would have taken around 60 years to go from $2K to $8K like Sweden as opposed to the 90 years it took then. 

[Franknburger]

I totally agree.  I think a good benchmark would be Sweden which if anything benefited from WWI and WWII.  I pretty much feel economies in Western Europe like Germany and France would have taken around 60 years to go from $2K to $8K like Sweden as opposed to the 90 years it took then. 

In fact, I think Germany should not be regarded here at all. West Germany, which is presumably what 1949-89 figures are relating to, comprised less than half of the pre-WW II territory of the German Empire, and only slightly more than half of its population. This is comparing apples with oranges. The same applies to Poland, for the large territorial changes after WW I and WW II.

France is also a bit problematic, unless the data has already been corrected for the 1872 loss, and 1919 regain of Alsace-Lorraine, which is one of its wealthiest regions still today (I also don't  know whether the heavily industrialised Saarland, under French administration from 1949 to 1959, is included in the data). Nevertheless, according to the data it took France until 1946 to re-achieve its 1914 GDP per capita, which would be a gross 32 years delay due to WW I & II. 6 years of Great Depression should be discounted, which yields 26 years net delay, or 68 years to get from $2k to $8k if there had not been the two world wars.
The same 26 years delay also apply to Belgium and the Netherlands

The fact that separate 1913 figures are shown for Czechoslovakia and Hungary suggests that pre-WW I Austrian data relates mostly to its current territory, not to the Austro-Hungarian empire (though it has probably not been corrected for post WW I territorial losses to Italy, especially Veneto, Trieste and South Tyrol). Anyway, using the same approach as for France yields 31 years of net WW I & II delay, and 59 years to get from $2k to $8k if there had not been the two world wars.

Overall, it is quite shocking to see it documented statistically how devastating wars have been for economic development.

[LastVoter]

No data for when Russia(in USSR) went from 2,000 to 8,000 for the first time?(pre-1990).

[jaichind]

Other observations I have looking at the data

1) Yugoslavia crisis and then civil wars of 1987-1995 were significant in terms of setback to the Yugoslavia economy as this data set still calculates the Yugoslavia GDP/capita up to 2010.  The 1986 Yugoslavia GDP/capita peak was not reached again until 2007.
2) Same for breakup of USSR.  The USSR GDP/capita peak of 1989 was not reached until 2007.
3) Due to natural resources Venezuela developed quite quickly, reaching $2K GDP/capita by 1925 and $8K GDP/capita by 1953.  But after that it stagnated, way before Chavez showed up.  GDP/capita of 2010 is still lower than 1957.
4) Post-Independence India economic policy of 1947-1991 was a disaster.  As the PRC recovered from WWII and the 1945-1949 civil war by the mid 1950s, we find that GDP/capita between PRC and India to be roughly equal around mid 1950s.  By 1978 when the PRC economic takeoff began they were still equal.  Bear in mind that the 1955-1977 economic polices of the PRC were a total disaster with the Great Leap Forward and the Cultural Revolution.  That India did not gain on PRC during this period implies that India's economic policies were equally disastrous.  I would claim it is worse because at the PRC had an excuse that they had insane economic policies led by Mao who is just a madman in terms of economic decision making.  India had good well meaning gentlemen of the INC at the helm.  Yet the result are the same.
5) In post WWII Asia, Philippines had the best starting point but pretty much lost ground to all rivals.  As of 1963, Philippines was ahead of ROC, 1967 ahead of South Korea, 1976 ahead of Thailand, 1984 ahead of Indonesia, 1991 ahead of PRC, 2006 Mymmar, 2007 ahead of India, 2007 ahead of Vietnam.  But was overtaken the year after.  This is a horrible relative record.  
6) The bellwether economies of the world over the last few centuries (looking at this data and other data that Maddison produced) are Ottoman Empire/Turkey and Mexico.  The average GDP/capita of the world seems to be very close to the  GDP/capita Ottoman Empire/Turkey and Mexico over time.  
7) There are two overtaking of GDP/capita which I think the rising economy would take great pleasure in given historical rivalries.  One is Ireland GDP/capita overtaking UK in 2000.  Of course this was reversed in 2008 given the economic crisis which hit Ireland hard.  The other which will most likely took place in 2011 which is outside this data set is the overtaking of Japan by South korea.
Being from Taiwan Province of ROC, I know a lot of the ROC-ROK (South Korea) economic rivalry that stretches back decades.  Politicians and economic policy makers on ROC always warn the population about how ROK will overtake us usless we do X.   Looking at the data it is interesting to note that since the mid 1950s after ROK has recovered from Korean War, ROK GDP/capita is always about 2 years behind ROC which lasted from the mid 1950s to today.  There has been very little deviation from this.

[jaichind]

No data for when Russia(in USSR) went from 2,000 to 8,000 for the first time?(pre-1990).

See

http://www.ggdc.net/maddison/Historical_Statistics/horizontal-file_02-2010.xls

for data up to 2008.  This data set is much more detailed.

I think Russia never made it to $8K in GDP/capita although it might be close in 1989.

[robbin_hunting]

I always liked the historical GDP data from Maddison Project.  I spend time reading and studing they data they have.  They came out with their latest numbers in Jan 2013 which goes out to 2010.

Today I homed in on something I found interesting.  It is about the different speeds different economies advance from GDP/capita in PPP 1990 $ terms from $2000 to $8000.  Of course there are exceptions mostly based on natural resources but I consider GDP/capita $2000 in 1990 $ terms is an economy where it has some level of industrization and  GDP/capita  $8000 in 1990 $ terms is an economy that is mostly done with the industrial takeoff and is moving into a more services oriented economy.  I was interested on when and how long it took different economies to go from one state to another.  Of course many economies are not there yet and the effect of war somtimes delayed this surge for certain economies.  I found the following looking at the data:

                         Year on when $8000                           How many years to go from $2000
Economy           GDP/capita is reached                                 to $8000 in GDP/capita
USA                          1941                                                              90
Canada                      1955                                                              75
Austrialia                   1955                                                             108
Sweden                     1957                                                              60
UK                            1958                                                             159
Holland                      1960                                                             134
Germany                   1961                                                               89
France                       1962                                                              94
Italy                          1967                                                              63
Japan                        1968                                                              40
Argentina                   1973                                                              92
Spain                         1974                                                              64
Greeece                     1976                                                              53
Portugal                     1984                                                              39
Taiwan ROC               1987                                                              21
South Korea               1989                                                              21
Chile                          1993                                                            104
Malaysia                     2002                                                              34
Poland                        2004                                                              67
Hungary                     2004                                                              81
Thailand                     2005                                                              31
Bulgaria                     2006                                                              54
Turkey                       2006                                                              54
Mexico                       2008                                                              67
PRC                           2010                                                              20  
India                          2032?                                                            30?

India is based on current trends.  Latin American economies seems to move to a mature economy slower since they were the example of the middle income economy trap.  Advanced economies like USA and UK were slow because they were at the technical frontier.  Southern and Eastern European economies were faster to advance and of course East Asian econmies the fastest especially they were the most behind.

Very Interesting, yet, Is it a real indicator on how fast an economy is growing? It seems to me that economies before 1960 were growing much slower than after 1960. Also another thing to consider, World War I, 1914 to 1918 and World War II from 1939 to 1945 had drastic effects on the all economies thus dragging the growth of economies like US, France, Germany... to 80 + years

[jaichind]

One other interesting thing about this data is it is able to put the current economic crisis in perspective.  It looks like by 2014 Greece GDP/capita will bottom out.  When it does it is expected that it will hit its 1999 GDP/capita levels.  This is as per IMF data plus current economic projections.  So at the bottom of the crisis Greece GDP/capita will hit levels from 16 years ago for a 25% drop from peak.  How does that compare to other crisises we have the last few decades.

USA great depression 1929 - 20 years (bottom at 1933) 23% drop
PRC great leap forward 1959 - 10 years (bottom at 1962) 20% drop
Philippines political crisis of 1983 - 13 years (bottom at 1985) 19% drop
South Korea crisis of 1997 - 3 years (bottom at 1998) 6% drop
Thailand crisis of 1997 - 6 years (bottom at 1998) 9% drop
Indonesia crisis of 1997 - 7 years (bottom at 1999) 15% drop
Mexico crisis of the 1980s - 11 years (bottom at 1988) 14% drop
Mexico crisis of 1994 - 6 years (bottom at 1995) 8% drop
Peru crisis of 1980s - 33 years (bottom at 1992) 32% drop
Chile crisis of early 1970s - 19 years (bottom at 1975) 24% drop
Argentina crisis of 1949 - 7 years (bottom at 1952) 10% drop
Argentina crisis of early 1980s - 17 years (bottom at 1985) 18% drop
Argentina crisis of late 1990s - 12 years (bottom at 2002) 21% drop
Brazil crisis of 1980 - 8 years (bottom at 1983) 13% drop
Brazil crisis of late 1980s - 9 years (bottom at 1992) 9% drop
Bolivia crisis of early 1980s - 20 years (bottom at 1987) 23% drop
Sweden crisis of the early 1990s - 8 years (bottom at 1993) 6% drop
Finland crisis of the early 1990s - 8 years (bottom at 1993) 12% drop
Various crisis of Eastern Europe/USSR due to fall of Communism of 1980s 1990s
  Poland - 21 years (bottom at 1991) 18% drop
  Romania - 24 years (bottom at 1992) 33% drop
  Bulgaria - 29 years (bottom at 1997) 24% drop
  Czechoslovakia - 19 years (bottom at 1992) 17% drop
  Hungary - 23 years (bottom at 1993) 28% drop
  Yugoslavia - 27 years (bottom at 1993) 48% drop
  Albania - 27 years (bottom at 1992) 29% drop
  USSR - 39 years (bottom at 1998) 45% drop
  Cuba - 48 years (bottom at 1993) 35% drop
  Outer Mongolia - 16 years (bottom at 1993) 29% drop

It seems that the Greek crisis is similar to the medium case of the Post-Communist economic crisis of USSR bloc economies but by no means the worst.  It is similar to the USA Great Depression.

[robbin_hunting]

It looks like by 2014 Greece GDP/capita will bottom out.  

Lets wait and see. Yes the IMF and the ECB are expecting Greece's Economy to stabilize in 2014 and start a mild growth afterwards, yet, It doesn't look like there any signs of recovery so far.

[jaichind]

It looks like by 2014 Greece GDP/capita will bottom out.  

Lets wait and see. Yes the IMF and the ECB are expecting Greece's Economy to stabilize in 2014 and start a mild growth afterwards, yet, It doesn't look like there any signs of recovery so far.

Well, if you look at the medium and mean estimates of GDP from various investment banks, they also have Greece GDP falling slightly in 2014 and then positive GDP growth in 2015.  2013 will still be a significant drop of -4.5%, and that is on top of GDP declines of -0.2% in 2008, -3.18% in 2009, -4.85% in 2010, -7.15% in 2011, and -6.38% in 2012.

[jaichind]

One other interesting thing about this data is it is able to put the current economic crisis in perspective.  It looks like by 2014 Greece GDP/capita will bottom out.  When it does it is expected that it will hit its 1999 GDP/capita levels.  This is as per IMF data plus current economic projections.  So at the bottom of the crisis Greece GDP/capita will hit levels from 16 years ago for a 25% drop from peak.  How does that compare to other crisises we have the last few decades.

USA great depression 1929 - 20 years (bottom at 1933) 23% drop
PRC great leap forward 1959 - 10 years (bottom at 1962) 20% drop
Philippines political crisis of 1983 - 13 years (bottom at 1985) 19% drop
South Korea crisis of 1997 - 3 years (bottom at 1998) 6% drop
Thailand crisis of 1997 - 6 years (bottom at 1998) 9% drop
Indonesia crisis of 1997 - 7 years (bottom at 1999) 15% drop
Mexico crisis of the 1980s - 11 years (bottom at 1988) 14% drop
Mexico crisis of 1994 - 6 years (bottom at 1995) 8% drop
Peru crisis of 1980s - 33 years (bottom at 1992) 32% drop
Chile crisis of early 1970s - 19 years (bottom at 1975) 24% drop
Argentina crisis of 1949 - 7 years (bottom at 1952) 10% drop
Argentina crisis of early 1980s - 17 years (bottom at 1985) 18% drop
Argentina crisis of late 1990s - 12 years (bottom at 2002) 21% drop
Brazil crisis of 1980 - 8 years (bottom at 1983) 13% drop
Brazil crisis of late 1980s - 9 years (bottom at 1992) 9% drop
Bolivia crisis of early 1980s - 20 years (bottom at 1987) 23% drop
Sweden crisis of the early 1990s - 8 years (bottom at 1993) 6% drop
Finland crisis of the early 1990s - 8 years (bottom at 1993) 12% drop
Various crisis of Eastern Europe/USSR due to fall of Communism of 1980s 1990s
  Poland - 21 years (bottom at 1991) 18% drop
  Romania - 24 years (bottom at 1992) 33% drop
  Bulgaria - 29 years (bottom at 1997) 24% drop
  Czechoslovakia - 19 years (bottom at 1992) 17% drop
  Hungary - 23 years (bottom at 1993) 28% drop
  Yugoslavia - 27 years (bottom at 1993) 48% drop
  Albania - 27 years (bottom at 1992) 29% drop
  USSR - 39 years (bottom at 1998) 45% drop
  Cuba - 48 years (bottom at 1993) 35% drop
  Outer Mongolia - 16 years (bottom at 1993) 29% drop

It seems that the Greek crisis is similar to the medium case of the Post-Communist economic crisis of USSR bloc economies but by no means the worst.  It is similar to the USA Great Depression.

See



It seems Harvard professors  Reinhart and Rogoff came up with an index to measure the severity of an economic crisis.  It is very similar to what I came up with based on data from the Maddison Project.  Of course the difference it seems to be is that  Reinhart and Rogoff are Harvard professors and I am a slaked-jawed yokel with excel.

[Foucaulf]

It seems Harvard professors  Reinhart and Rogoff came up with an index to measure the severity of an economic crisis.  It is very similar to what I came up with based on data from the Maddison Project.  Of course the difference it seems to be is that  Reinhart and Rogoff are Harvard professors and I am a slaked-jawed yokel with excel.

More importantly - since this has to be Reinhart & Rogoff (2009) - they did it four years before you thought of it.

With less snark, Greece 2008 differs from U.S. 1929 because we are in an age of considerably greater factor mobility (of labour, say). Just looking at that graph, there is no crisis that comes close to the severity of Greece's post-WWII. I would say it is then too unique for any predictions of recovery.

[jaichind]

It seems Harvard professors  Reinhart and Rogoff came up with an index to measure the severity of an economic crisis.  It is very similar to what I came up with based on data from the Maddison Project.  Of course the difference it seems to be is that  Reinhart and Rogoff are Harvard professors and I am a slaked-jawed yokel with excel.

More importantly - since this has to be Reinhart & Rogoff (2009) - they did it four years before you thought of it.

With less snark, Greece 2008 differs from U.S. 1929 because we are in an age of considerably greater factor mobility (of labour, say). Just looking at that graph, there is no crisis that comes close to the severity of Greece's post-WWII. I would say it is then too unique for any predictions of recovery.

Your most likely correct.  Although my understanding is that Reinhart & Rogoff started collecting data on economic crisis for years and the “This Time Is Different” (2009) made use of that data which in turn had errors and lead to another round of battles on the the issue of how high can debt be to combat economic recession.  The data above was presented quite recently (in Jan 2014 I believe).  Of course it is very likely that  Reinhart & Rogoff came up with this index years ago but the data which presented it using this index to show that the Greek Crisis was about the same scope as the USA Great Depression was just presented recently.  My tough-in-cheek comment was that this index does not take a great deal of intelligence to construct (like I managed to and came the the same conclusion) but somehow this index made its way in the Economist magazine.

As for how unique is the Greek crisis, I would say some of the more severe Latin American crisis
like Bolivia and Peru might be comparable.   Even thought I despise Krugman, I do take his point that the common theme of all these crisis is that the the debt these economies are burdened with are in different currency.  With Bolivia and Peru it is an issue of "original sin" where a deflating commodities bubble exposed them to large debt which are most in US dollars and devaluation to regain competitive advantage only served to increase the debt burden.  As for Greece since no devaluation was possible it had to be done with internal price deflation which in turn had the same effect.   

[Torie]

Isn't there a tendency when per capita growth is retarded due to wars or other economic disruptions, that growth after "the troubles" pass tends to be faster than those countries less hold back by such troubles? In other words, my impression is that over long periods, the per capita income increase rates for nations in a growth pattern tend to move closer together. That makes sense if populations are otherwise reasonably similar in skill set levels, and one has world wide free trade relatively speaking, advances in technology or whatever arising in one place, tend to get diffused elsewhere, and populations move to zones where the compensation for a given skill set is relatively higher, and depart from places where it is relatively lower.