The 60-year downward trend of economic growth in the industrialized countries of the world

Abstract

This report, using data from a range of authoritative sources, studies the long-term postwar economic growth of the industrialised North and shows that this has fallen continuously, with only brief and limited interruptions, since at least the early 1960s. The trend is extremely strong and includes all major Northern economies without exception. It is confirmed by both Purchasing-Power-Parity (PPP) and a range of standard real GDP measures, by a variety of weightings of the growth rates, and a variety of aggregations of different countries. The Newly-Industrialised Countries (NICS), after early high growth rates, joined the general trend of other industrialised countrieds after the Asian Financial Crisis of 1997. It is thus an extremely well-confirmed historical trend. Recent data show no evidence of any post-COVID reversal. These results sheds new light on the current difficulties of the world economy and have many implications. They conflict with any idea that Secular Stagnation as it is increasingly referred to even in mainstream literature, originates in some recent upset such as the 2008 crash, or in the incidence of, or problems created by, a putative new régime of accumulation such as neoliberalism or financialisation. In fact, the roots of the present crisis lie in a long historical process which set in very shortly into the ‘Golden Age’ of postwar expansion.

Keywords:

• Development
• economic history
• growth

Acknowledgments

I would like to acknowledge the kind support of Nobuharu Yokokawa, Robert Wade, Radhika Desai, and the comments of two anonymous referees. All errors are my own.

Notes

1 The terms “industrialised countries” and “global North” are defined in Section 7 “The definition of the North.”

2 See the data definitions section at the end of this article.

3 See Freeman (2016) for a more detailed discussion of these.

4 Australia, Belgium, Canada, Denmark, Finland, France, Germany, Italy, Japan, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom, and United States.

5 Several different measures of this PPP dollar are maintained and published. In Section 4 “Alternative measures of growth: PPP and the Maddison statistics,” we compare the results, showing that our qualitative conclusions are confirmed by all such variants.

6 We have used a four-period moving average throughout this article, being approximately half the average length of the postwar business cycle.

7 The “Hodrick-Prescott filter” is a data smoothing technique which is very useful for producing uncluttered graphical illustrations of trends, and it is widely used as an aid in presenting data with cyclic fluctuations. However it has to be used with care and its use as a tool of statistical analysis is deprecated (Hamilton 2007).