Via the Economist, we see this intriguing histogram of Global GDP (below)

The Economist notes:

“Data compiled by Angus Maddison, an economist who died earlier this year, suggest that China and India were the biggest economies in the world for almost all of the past 2000 years.”

But then asks a really silly question:

“Why they fell so far behind may be more of a mystery than why they are currently flourishing.”

They were the biggest economies because they had a the biggest populations, and up until 200 years ago, population size was a dominant factor in economic output.

Once the industrial revolution came along, followed by the information revolution, mere size mattered less. First the Europeans, then the Americans leveraged technology to blow out GDP on a per capita basis. Steam engine, internal combustion engine, silicon makes up for size.

Now, India and China are using industrial leverage, and are moving up in the world on a GDP per capita basis.

Now >

Hat tip Chart Porn

~~~

UPDATE: I see that Paul points to a gigantic Excel table, if you want to play with numbers yourself.

Category: Digital Media, Economy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

35 Responses to “History of World GDP”

  1. WaveCatcher says:

    I LOVE pretty charts! nice one.

  2. bram says:

    Seems pretty obvious to me. Neither India nor China participated in the Industrial Revolution. John Steele Gordon has written about that in a couple of his books.

  3. leonardcrook says:

    I just showed this to a colleague, Indian, MIT PhD. His first reaction was “colonialism of course, all the wealth extraction.” I then shared your explanation, which I think is correct, and he generally concurred but still thinks colonialism was a key factor.
    A different point of view. Interesting.

  4. chetanr says:

    Answer’s even more obvious. Colonial control of the economy which began after 1757 and accelerated from 1857 onwards. One example – raw materials such as cotton was sent from India to England mills at no cost. Finished goods from the cotton were then sold back to India.

    There’s no mystery.

  5. callistenes says:

    BR lets not forget that in addition to population China was way ahead of the world in technology innovation but in about 1500 became xenophobic and closed off their country, burnt their navy, burnt most their books etc. In fact many of their inventions (which are just now being rediscovered) were centuries ahead of the west. They would have had a much higher GDP otherwise from 1500 on.

  6. gammavega says:

    It’s quite surprising that the Economist neglects to take into account the incredibly harsh effects of colonialsm on China and India. Colonial rule left these countries with huge underinvestment in its industries and people (low literacy rate, poor health, low life expectancy).

  7. China had more people at the end of the Ming Dynasty in the mid-1600′s than does Europe right now. It was far and away the predominant power in East Asia. The kowtow, lying prone, arms outstretched, at the emperor’s feet was required of every visitor, from foreign dignitaries of client states to missionaries from the Continent. For the Chinese, their ascension to modern-day prominence is just a return to the way things once were.

  8. obsvr-1 says:

    and don’t forget the splitting of the atom to create super power status

  9. Industrial revolution or the scientific method. Once the west started putting numbers and data to everything they could then quantify it and determine its usefulness.

  10. TimmyB says:

    “Colonialism of course, all the wealth extraction” is the right answer.

  11. Cynic_FA says:

    Wow! Scary chart if past is prologue. Can the demise of Great Britain from 1870 to 1970 fortell the demise of the United States from 1970 to 2070.

    the fatal errors of Great Britain was wasting domestic capital as policeman to the world and providing a socialist welfare state. Bush took military commitments (not defense) to critical levels and Obama/Pellosi are taking socialist spending to similar extremes.

    Is it too late to diversify overseas?

  12. DL says:

    When it comes to international conflicts, or resolution of the same, aggregate GDP matters a lot more than per capita GDP.

  13. Jojo says:

    BR said “They were the biggest economies because they had a the biggest populations, and up until 200 years ago, population size was a dominant factor in economic output.

    Once the industrial revolution came along, followed by the information revolution, mere size mattered less.”
    ————
    Apparently, countries like India, Pakistan, Bangladesh, etc. haven’t yet learned about the industrial or info revolutions. They continue to produce a large excess of babies, much more than they can afford to feed, care for or put to work when they grow up.

  14. jack says:

    i would say, especially in the case of china in the 1900′s, that rule of law was a factor as well.

    good book i read this summer covers this topic in very enlightening fashion:
    http://www.amazon.com/Poverty-Prosperity-Intangible-Liabilities-Scarcity/dp/1594032505

    they look at a number of intangible factors that foster (or inhibit) growth in countries.

  15. super_trooper says:

    In 1 AD France didn’t exist, it was part of the roman empire. If italy is represented by the roman empire (I can’t see any other argument for the fraction being so high for Italy), then France must be included. In addition the bar from 1940 again, France barely existed (German) and India was part of the UK for many of the parts. I would recommend looking through Paul Kennedy’s “The Rise and Fall of the Great Powers”.

  16. rktbrkr says:

    Interesting, if colonialism held back third world economic development then Japan and Siam should have been the most prosperous Asian economies during the colonial period – half true I’d say.

    Korea and Taiwan were long time Japanese colonies and we can see what they did following the wars.

    Both Ireland’s population and economy shrunk during it’s cruel occupation by the British but it now enjoys one of the highest GDPs in the world -and higher than it’s former oppressor’s – a source of joy to the Irish.

  17. tyaresun says:

    I will appreciate it very much if all of you folks including our fine host Barry Ritholtz read a little bit of history before interpreting these charts. For example, read up on this little thing called the East India Company. While India has been invaded many many times over the previous centuries, all those invaders settled down in India. The British were the first invaders that siphoned the wealth back to their home country. In fact, you can read theses arguing that the industrial revolution would not have been possible without Britain’s crown jewel. The industrial revoultion was increasing British labor productivity very quickly and this would have caused a lot of problems if the Indians could not have been forced to consume all that excess supply.

    I ams ure you are hearing the revese echos of that process today.

  18. and services is going to play a big role in these economies. china and india’s contribution by services is 40% and 55%, while US and Japan are 79% and 74%

    Contribution to GDP (est. 2007) in world’s largest economies
    1. USA: 78.5% services | 20.6% industrial | 0.9% agriculture
    2. China: 39.5% | 49.5% | 11%
    3. Japan: 73.3% | 25.2% | 1.5%
    4. India: 55% | 28.4% | 16.6%
    5. Germany: 69.5% | 26.9% | 0.9%
    (source: economywatch )

  19. TDL says:

    tyaresun,
    How did the crown jewels (and I am not talking about grants from the crown) set forth advances in smelting, economic theory, physics, the steam engine, etc.? I think there is a massive simplification occurring in this discussion. While colonialism did limit development in many parts of the world, the industrial revolution (as BR stated above) allowed for the Western world to leverage that knowledge and become more efficient with labor & capital. This revolution also allowed for the rapid acceleration in specialization & innovation to occur. Denying that either colonialism or the industrial revolution are not factors in the relative economic performance over the past 300 years is to deny history.

    Regards,
    TDL

  20. alfred e says:

    @Investmentpal: Thanks for the numbers. What would the US services % be without financial? Really surprised that ag is that small. We are the World’s breadbasket and that’s it?

    Colonialism? Royal crown.

    Me thinks there’s a distinction between national GDP and corporatocracy/trust/royalty/elite GDP. That knows no boundaries. In some circles it used to be referred to as colonialism, and others rape and pillage.

    Now it’s Globalization, or NAFTA, or ???.. Same old same old.

  21. sakhalinsk says:

    It wasn’t “just” the industrial revolution, but an industrial revolution empowered by two things: scientific rationalism as a product of the enlightenment, and ever cheaper energy. You needed both.
    It’s interesting to look at the above graph and note that Drake’s well was 1859.

    The enlightenment allowed the “West” to move beyond the constraint of belief and “knowledge through divination” to a scientific method and a testable model of the world. The resulting descoveries were further enhanced by the commercialisation of ever cheaper energy, first coal and then oil. This enabled this intellectual capital to be channeled into growth, increasing GDP not through human labour but through chemical energy. (Another interesting “fact” is that a barrel of oil contains the same energy as 5-10 years physical human work – it’s not a simple calculation…).

    This in turn enabled colonialism. Don’t forget the force multiplying effect of energy. The “West” wouldn’t have stood a chance against the vastly more populous east without this advantage. Regardless of the morals of colonialism, we wouldn’t be discussing it if the “West” wasn’t the first to combine ideas with energy.

    And looking forward it is no surprise that China is paying whatever it takes to access secure energy. Whether peak oil is today, tomorrow, or in 50 years China is looking beyond that game. They plan to recover their position in the world.

  22. JDinCT says:

    Why has world GDP been falling since 1820?

  23. plantseeds says:

    JDinCT
    is that a joke?
    i’m guessing you’re joking but just in case…

    this is 8 countries and although they account for a large %, it’s not the world, and it shows their respective percentages of the world’s GDP (whatever it may be in a given year….my professional analysis….. world GDP has been rising a shit load since forever) in a way to try and adjust exchange rates so that goods or services in different countries have the same prices when expressed in any one currency (PPP) all in 1990 dollars.

    “When it comes to international conflicts, or resolution of the same, aggregate GDP matters a lot more than per capita GDP.”

    no doubt – scary part is ..if you have both a high aggregate GDP and a low per capita GDP it’s like a double bonus in those affairs.

  24. guidoamm says:

    I cannot buy the colonialism argument.

    It is undisputable that the West has colonized and exploited other countries. But this was made possible by the nature of the people that were colonized.

    If you go far enough back in history Europe was nothing but a collection of warring clans and tribes just like the rest of the world. Europeans began to dominate only when they began to coalesce in progressively larger culturally and socially similar groups thereby giving rise to greater degrees of collective conscience. A greater sense of collective conscience allowed Europeans to organize more effectively for the “greater” good which, of course, entailed exploiting other less developed societies.

    The advantage Europeans enjoy still today is that we can count on there being significantly less predisposition towards collective conscience and fiduciary duty in developing societies than in our own so that we can easily buy local leaders to do our bidding and exploit their own people in return for material gain for them and their tribe. Material gain that we allow them to keep or that we outright pay to them.

    So colonialism is only a function of the degree to which other societies are willing to forgo the interest of the individual or tribe for the good of a larger circle of people within a society.

    In a sort of tangentially related fact, look at what 60 years of aid and development has achieved. The answer is not much. Not one “developing” country has been brought to transition despite the Trillions that have been donated or lent. In fact, the only result of all this aid and development is that the West can continue to plunder unhindered because despite the Trillions that have been dished out, none of the leaders we have bought have been willing to serve the interest of their own people outside their own families and tribes.

    Arguably, only South Korea and Singapore can qualify as countries that have emerged from under-developed to developed and, interestingly, both countries have not been recipients of humanitarian aid. But both these countries do display an exceptionally high sense of collective conscience.

  25. paladin says:

    Re China, Adam Smith was insightful:

    China seems to have been long stationary, and had probably long ago acquired that full complement of riches which is consistent with the nature of its laws and institutions. But this complement may be much inferior to what, with other laws and institutions, the nature of its soil, climate, and situation might admit of. A country which neglects or despises foreign commerce, and which admits the vessels of foreign nations into one or two of its ports only, cannot transact the same quantity of business which it might do with different laws and institutions. In a country too, where, though the rich or the owners of large capitals enjoy a good deal of security, the poor or the owners of small capitals enjoy scarce any, but are liable, under the pretence of justice, to be pillaged and plundered at any time by the inferior mandarines, the quantity of stock employed in all the different branches of business transacted within it, can never be equal to what the nature and extent of that business might admit.

    It’s about institutions and attitudes. Do they really get it now, or are they just a big commie con, about to blow up?

    In India, if it was simply “colonialism and wealth extraction”, then

    1) How come Britain’s relative gains are so much smaller than India’s relative losses?

    2) How to explain that so few Brits could rule so many millions of Indians? Is is conceivable that Pax Britannica preserved the privileges and power of Indian princes and landlords, while simultaneously increasing protection (and productivity) of the peasant masses?

    Even today, 60 years after Indian independence and the demise of the British Empire, British nominal GDP is almost twice India’s.

  26. Spog says:

    People believe what they want to believe, but you need to look behind the plumed hats of colonial governors to consider reality. Before the British arrived in India in the mid 18th century, the history of the continent was of turmoil, death and despotism, as well as great culture. The British conquered by force and persuasion, but ruled with the acceptance of the majority of the population. The Indian Civil Service was minute, smaller than the bureaucracy that runs a large city in the developed world nowadays. The British left a functioning civil service, democracy, the rule of law, an education system and arguably the finest railway network in the world. The religious and sectarian massacres on independence are harbingers of what might have happened without colonialism. Also, there is one very important issue that those who fashonably choose to blame all on the Brits forget, and that is the terrible economic and social evil of the caste system, which remains alive and well in India today. It is a disgrace.

  27. Evoo Kermartin says:

    Darn, I KNEW our Civilization score was going down.

  28. Lord says:

    It isn’t quite so silly. Economists often consider number of people and size of market as very good offering more inventiveness and greater opportunities. Against this we have the industrial revolution occurring among relatively few in small markets with higher incomes. Economists so often support lower incomes as a way of benefiting consumers, they don’t recognize that people are also producers and higher incomes are often the seed for advancement.

  29. WaveCatcher says:

    It would be interesting to see this data presented on a PER CAPITA basis.

  30. [...] History of world GDP. India and China aren’t “up and coming” terminator countries. Really, it’s back to the future. (The Big Picture) [...]

  31. NaveenM says:

    Silly question? Only if you assume the West could only industrialize. Of course, Japan proves that false, the pertinent question is: Why didn’t India and China industrialize?

    There are different answers for the different countries, but the failure to adapt to a changing world is the lesson to be learned for us.

    Alternative energy or revitalized education system, anyone?

  32. It is undisputable that the West has colonized and exploited other countries. But this was made possible by the nature of the people that were colonized.

    Oh God. What is next, the girl was asking to to be raped because she wore a short skirt?

  33. MikeC says:

    “The fatal errors of Great Britain was wasting domestic capital as policeman to the world and providing a socialist welfare state.”

    Funnily enough, those of us who live in GB don’t see the welfare state as a, “fatal error”. More a resounding success. We see incredibly rich states not looking after their poorest people as a fatal error though. Morally and socially speaking.

  34. guidoamm says:

    To Douglas Watts – in a sense yes.

    The reason that a girl can wear a short skirt in developed countries is because society has established a set of moral and ethical guidelines that keep people’s basic instincts at bay. These safeguards are nowhere nearly as well developed in second and certainly third world countries.

    People of developing countries have little compunction in abusing their own societies to the benefit of their own families and clans simply because the rest of society is unable to coalesce to force a greater degree of fiduciary duty.

    I have lived overseas now for 30 years. I witness everyday some of the wealthier and/or brighter local minds coming back to their respective countries with academic titles earned in Western institutions. And yet I am forced to admit that very little changes in their attitude. Even worse. I have witnessed locals making a wonderful career abroad for many years only to come home and fail miserably.

    Social customs and social attitudes trump any type of academic or empirical training that is provided so that developing nations are such because they are socially and culturally not adapted to the Western model which, whether we like it or not, happens to be the dominant model.

  35. guidoamm says:

    As an addendum, I firmly believe that the only leader of a developing nation of the modern era that risked everything to move his country and his people forward was Kamal Attaturk. Attaturk was regrettably way ahead of his time but despite the political/social rollercoaster since his death (which to a certain extent also rolled back someo of the advancements Attaturk had wrought), Turkey today has quite a bit to show for. Of course, nothing that compares favorably with South Korea or Singapore for example, but it certainly compares favorably in the Middle East/Africa and Near East regions.