CARPE DIEM: U.S. Share of World GDP Remarkably Constant - 5 views
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The chart above shows the annual shares of real world GDP for four geographical regions (European Union 15, Asia/Oceania, Latin America and the combined share of Africa and the Middle East) compared to the U.S. share of world GDP between 1969 and 2009 (data here). What might be surprising is that the U.S. share of world GDP has been relatively constant for the last 40 years, and is actually slightly higher in 2009 (26.7%) that it was in 1975 (26.3%). It's also interesting that the EU15's share of world GDP has declined from about 36% of world output in 1969 to only 27% in 2009. Further, despite having a large share of the world's oil reserves, the Middle East's share of global output has increased from only 2.23% in 1969 to 3.16% in 2009 (graph shows Middle East combined with Africa).
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Bottom Line: World GDP (real) doubled between 1969 and 1990, and has increased by another 60% since then, so that world output in 2009 is more than three times greater than in 1969. We might mistakenly assume that the significant economic growth over the last 40 years in China, India and Brazil has somehow come "at the expense of economic growth in the U.S." (based on the "fixed pie fallacy") but the data suggest otherwise. Because of advances in technology, innovation, and significant improvements in U.S. productivity, America's share of total world output has remained remarkably constant at a little more than 25%, despite the significant increases in output around the world, especially in Asia.
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Somewhat surprisingly, the Economic Research Service of the U.S. Department of Agriculture has some great international historical macroeconomic datasets. According to its website:
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I find it amazing (and troubling) that Latin America and Africa have made no appreciable gains in 40 years. They are rich in human capital and other productive resources....as a side note, I noticed in one of the comments on the blog you found this graphic there was some conversation about the CPI and that it was reconfigured in the 1990's(?) and that with the new method inflation is underestimated, therefore RGDP must be overstated...I have to admit ignorance on this issue...Are you familiar with it? Any commments as to the validity of the underestimation of inflation? Thanks!! -
Gene, I'm not sure we should be so troubled by the flat trend lines for Latin America and Africa. Keep in mind, this is not GDP, this is share of world's GDP. Unlike total output, which is NOT a zero sum concept, share of total output IS a zero-sum concept. A gain made by one part of the world is only possible by a loss made in another part of the world. The decline of the EU 15's share of world GDP does not mean that the EU 15 experienced a decline in output. In fact, the EU 15 have grown steadily over the last 40 years. Their downward sloping curve indicates that they have grown more slowly than the rest of the world, that's all. So the flat lines for Africa and Latin America in fact indicate that those two regions have grown more rapidly than Europe. Although it doesn't look like it on this graph, the "poor south" is actually catching up with the "rich north" as average growth in Europe lags behind that in the south. It's a bit misleading to interpret the graph in this way, but the gains in Asia have in a way come at the expense of gains in Europe, but only in that they now have a larger share of a MUCH larger pie! All regions have grown, and Latin America and Africa have grown AS quickly as the US, and MORE quickly than Europe. Good news! -
Thanks for the reply and the analysis...I did not occur to me to think of it in those terms...I am better off for asking the question!!! :)
