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Home Publications Blogs Beat the Press It's Per Capita Growth that Matters for Well-Being

It's Per Capita Growth that Matters for Well-Being

Wednesday, 06 November 2013 05:33

The NYT had a piece telling readers that growth in Africa has not been able to reduce the number of people in poverty. By not taking population growth into account, it wrongly implied that the continent is seeing rapid growth. It told readers:

"The continent is indeed posting gains — in 2013, sub-Saharan Africa’s growth rate is projected at 4.9 percent, a figure that would be the envy of any Western government."

Actually, the 4.9 percent figure is not especially strong. Africa's population growth is over 3.0 percent annually. This puts it per capita growth at less than 2.0 percent annually. That is actually weak for developing countries and in fact not something that Western governments would particularly envy. For example, if Japan's economy grew at a rate of 1.7 percent a year, with a population that is declining at a 0.2 percent annual rate, it's per capita GDP growth would be the same as sub-Saharan Africa.

Growth by itself will not reduce poverty if it is concentrated among the wealthy, but in fact, sub-Saharan Africa has not been seeing especially robust growth. Its problem is not just a question of distribution.

Comments (4)Add Comment
written by Last Mover, November 06, 2013 6:38

Journalists compelled to imply economic causality can't be expected to chew gum and walk at the same time.

One day it's a report on Japan not having enough population growth to sustain the economy on a per capita basis. The next day it's a report on Africa having plenty of growth to sustain itself when per capita is ignored.

Someday there will be a journalists who chew gum and walk at the same time, the product of an economy with high economic growth and low population growth ... at the same time.
indeed africa lacks certainty....
written by pete, November 06, 2013 9:04
There is clearly room for growth, and indeed, the former British colonies with more of a tendancy for a rule of law do better in Africa as well as across the globe. As the rule of law spreads, there will be greater growth, and greater equality. China, the latest colonial power, is investing big time in Africa. Lets see how that works out. I expect they will massage the governments quite a bit.
.. the greatest good for the greatest number...
written by John Yard, November 06, 2013 10:02
The world's elites no longer create policies to support the greatest good for the greatest number, but the greatest good for themselves.

Self dealing is the name of the game.
written by Chris E., November 06, 2013 2:51
This is a very important distinction. The growth seen in China, India, Brazil are fantastic in per capita terms. But places like Kenya? Completely flat on a per capita basis for decades. Incredibly poor distribution and family planning practices makes for a particularly toxic combination.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.