Global GDP per capita – income up but unequal

If you are studying the Growth unit at CIE or NCEA the image below – from the ‘Visual Capital’ site which is well worth a visit – is a good discussion starter for your class. It has an interactive chart where you can elect individual countries and look at the GDP per capita form 1820 to 2018. The graph below shows the major groups of countries with New Zealand added.

  • 1800 – 80% of global population lived in extreme poverty
  • 1975 – incomes were 10 times higher on average. Post WW2 growth was rapid as Europe etc rebuilt after the war.
  • 2015 – incomes rose faster in developing countries with many lifted out of poverty. Between 1975 and 2015 saw the fastest decline in poverty.

In the 19th Century there was much more equal distribution of income across regions of the world – $1,100 per capita. Many lived below the poverty line but the world had less wealth. Today the GDP global average is approximately $15,212 but although there is more wealth the distribution is less equal.

At the highest end of the spectrum are Western and European countries. Strong economic growth, greater industrial output, and sufficient legal institutions have helped underpin higher GDP per capita numbers. Meanwhile, countries with the lowest average incomes have not seen the same levels of growth. This highlights that poverty, and economic prosperity, is heavily influenced by where one lives.

Sign up to elearneconomics for multiple choice test questions (many with coloured diagrams and models) and the reasoned answers on Real GDP. Immediate feedback and tracked
results allow students to identify areas of strength and weakness vital for student-centred learning and understanding.

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