Growth and inequality

Why are some countries rich and others poor? Because economic growth is a long-term process, history is part of the answer. To help understand long-term economic growth, economic historians have been working on reconstructing historical national accounts. Collecting such data in a comparable way (expressing them in at one level of prices) was started by Angus Maddison. Today it is a collaborative project that continues under his name. The differences in today's world are very big. A small group of rich countries is up to ten times richer than a lot of poor countries.

In 1900 these differences were much smaller:

And in 1800 they were smaller still.

Locations on map: Africa and Asia very poor now mostly Africa:

Old-school growth theory (Rostow) suggested "take-of", some moment where modern economic growth began, e.g. growth china's industrialistion is a good example.

Today we know that this is incorrect for the first industrialising countries. They were richer before industrialisation than many of today's developing countries.

Maddison's data should be used with some care. Besides more detailed issues about e.g. price indics applicability of a concept like GDP and, there is the fact that for a lot of countries, we lack good historical data. Such data was originally imputed and some of those values have survived. Best case scenario is that they are using proxies, but often they are just assumptions about income levels in such countries. Great care should for instance be take with all values of exactly "X00"

Unfortunately, some of those are non-imputed values after all. These things are not precisely recorded in the dataset itself because of unknown reasons.