Economic Growth

As we have seen, the economic history of the developing world since the start of industrialisation has been remarkably uneven. Britain experienced a long period of rapid growth in the first half of the nineteenth century, but then slowed down between 1850 and 1900. The USA grew rapidly during the whole of the nineteenth century and, more intermittently, through to 1945, but then slowed relative to new challengers. Germany and the Netherlands did much better during the second half of the nineteenth century than the first, and better still during the early years of the twentieth century, leading up to World War I. The 1930s were a particularly interesting and important period, with the USA and France languishing, Britain doing far better than previously, and Germany surging ahead at an astonishing pace. There have been decades when most of the most prosperous economies of the time were expanding very quickly, as they did in the 1950s and 1960s, although the USA did not grow as fast as others during these decades. After the post-war boom, in the 1970s, increases in output slowed in the developed countries. The world’s growth rate of 4.9% per annum cumulatively between 1950 to 1973 slowed to 3.0% per annum from 1973 to 1992.1 Crucially for the arguments in this book, however, the lower growth rates in the later period were far more marked among those economies where relatively high standards of living already prevailed, most markedly in Western Europe and Japan.