A new system tell us the answer — economically, at least
America is rich. Per person, the US economy produces significantly more than most European economies do.
One could simply compare GDP per capita figures to show this, but there’s another, more interesting, method. Using recent rates of economic growth, it’s possible to calculate how long it would take for a poorer economy to become as rich as the richer economy is now.
Thanks to a new website, you can get the answer instantly. It’s the creation of Oliver W. Kim — an economics PhD student at Berkeley. Called The Mountain to Climb, it allows to the user to compare any two countries.
For instance, compared to American GDP per capita in 2019, the British economy won’t reach the same level until 2037. So, on this measure, the UK is 18 years behind the US.
There’s an extensive economic literature as to why such a wide gap exists between America and the UK and other European countries. One of the most basic reasons is that Americans work harder — or at least longer. Innovation and entrepreneurship is perhaps the biggest factor, which is reflected in the fact that Big Tech in the West is dominated by American firms.
Natural resource endowments can make a difference too. For instance, Europe is currently reeling under the impact of the surging energy cost, but the US is partially protected by its shale gas resources.
Of course, the differences between the US and Europe pale into insignificance compared to those between the West as a whole and the world’s poorest nations. Kim calculates that it would take “over 300 years”…
Kim uses this method to illustrate the huge gap between the richest and poorest in the world. For instance, he points out that it would take “over 300 years” for the West African country of Guinea-Bissau to “reach the 2019 GDP per capita of its former colonizer Portugal.” In the case of Senegal and France, the equivalent figure is 2,572 years.
However, the mountain to climb isn’t as high everywhere in the developing world. Using recent ten-year growth rates, it will take Bangladesh 32 years to get to where Britain is now. The corresponding figure for Indonesia and the Netherlands is also 32 years.
It’s been a while since the term “third world” fell out of favour, to be replaced by “developing world”. But for how long will it make sense to refer to countries like Bangladesh as “developing” if, in a generation or so, they become as rich as we are now?
Of course, there are various caveats which Kim is careful to point out. Most importantly, these are projections based on current or historical growth rates; they are not predictions. Rates of growth change over time. Furthermore, GDP per capita is a crude average that says nothing about how equally income is distributed.
Nor is GDP the only measure of national well-being. For instance, Britain may be poorer than America, but Brits may place a greater value on universal healthcare, walkable cities, longer holidays and the abundance of their cultural heritage.
Furthermore, countries playing catch-up can often leapfrog entire stages of development that richer countries had to go through. A key example is communications technology. Today, nations can go straight to the digital, mobile stage without the analogue, fixed-line stage.
So while GDP comparisons do expose global inequalities, many of them extreme, the potential for rapid improvement also exists.