The Economist: Hello America
A History of World GDP
Comments
3 responses to “A History of World GDP”
-
Michael, could you explain purchasing power parity, and why the “industrialized” nations are at the “top”?
Dana -
Gross Domestic Product (GDP) is the total market value of final goods and services produced in a given time period. That market value has to be stated in some form of currency. We use the US dollar. That is probably simple enough.
But what if we want to compare nations to nations and we want make comparisons with previous eras? We have the problem of varying currencies and inflation within currencies. Purchasing Power Parity dollars is an attempt to state GDP from any country in any era in equivalent terms. It is usually is stated in terms of 1990 US dollars. Thus, the PPP dollars tell us more about relative differences between countries and eras.
Prior to industrialization, productivity was more tightly linked to labor and land. Therefore, GDP would track well with population size. But in more recent years, technology and industrialization are the big drivers in production. Thus, the link between industrialization and GDP.
Does that make sense? -
Yes, thanks.
Your family is in my prayers.
D.
Leave a Reply