The Causes of Economic Growth

During the past two centuries there has been, in many countries, an unprecedented improvement in economic conditions. If economic growth is measured by real per capita GDP, in this period the people of North America, western Europe, Australasia, and Japan have experienced an enormous rise in their standard of living. Table 1.1 gives a selection of figures from the work of Angus Maddison (1994). His original table contains estimates for selected years ranging from 1820 to 1989 for 43 countries, although for many of them there are no estimates for as early as 1820. Even earlier figures could probably be given for a few countries, but the earlier the year the less reliable the estimate must be. In any case, such figures would not change the general picture, which is one of very rapid change in many countries over a period of two centuries. If similar estimates existed for major cities and regions of northern Italy, Germany and the Netherlands in earlier centuries, they would undoubtedly show important examples of substantial rates of growth. But these first shoots of European growth were soon stunted or destroyed by war and foreign occupation. Only perhaps in the Netherlands has economic growth been almost continuous for five hundred years.