Ranking U.S. Economic Growth
When it comes to economic growth, is the United States more like China or like Europe?
Economies around the world speed up and they slow down. This not only impacts the overall well-being of people, it plays a prominent role in determining the outcome of elections.
We wonder: By what percentage has the U.S. economy grown annually over the two decades since 1991?
The U.S. economy has been growing at a considerably slower clip than 10.4% over the past two decades. However, that high rate of GDP growth — unprecedented in human history over such a long period — has been achieved by the People’s Republic of China.
China has been engaged in a major economic catch-up effort, after it had essentially fallen out of the modern world for most of the century prior to 1978. That is the year when Deng Xiaoping launched China onto a course of economic reform and modernization.
Since 1900, the United States achieved economic growth in excess of 10% a year from 1941 to 1945, when the economy grew rapidly to meet the needs of World War II.
India’s economy has grown by 6.6% for the past two decades. That is a remarkable achievement, especially given the particularly strong presence of bureaucracy in India at all levels of government. In addition, corruption and inadequate infrastructure also hold back economic growth.
As is the case with China, one significant factor that helped fuel India’s economic growth was the rapid increase in India’s population since 1991, when it was growing at about 2% a year. It has slowed to about 1.4% in recent years.
The last time the U.S. economy grew at a rate of at least 6.6% was back in 1984, when it expanded by 7.4% after a particularly sharp recession. That rapid growth helped pave the way to Ronald Reagan’s reelection as president.
Developing countries as a group have grown their economies at an average annual rate of 5% since 1991. That performance was significantly boosted by population growth. Between 1990 and 2010, developing countries registered 1.5% annual increases in population. Countries in sub-Saharan Africa averaged closer to 2.5% annual population growth.
After a long time of a sub-par economic performance, a significant number of Sub-Saharan Africa’s economies are now growing at a clip of 5% or more. As was the case in China before, policymakers there are finally determined and/or successful enough to have their economies humming along.
The United States last registered a GDP growth rate close to 5% was in 1999, when the Internet boom helped fuel a 4.8% increase in GDP. In the case of Germany, Europe’s largest economy, such a growth rate is an even more distant memory — the early 1990s, when its economy was booming after the reunification of West and East Germany.
The U.S. economy has been growing at a clip of 2.4% a year since 1991. That is slightly less than half the rate achieved by the developing world over those two decades.
Since 2001, however, U.S. GDP has grown an average of 1.6% a year, a rather slow rate of economic growth. The one positive factor for the United States is a relative one: Europe’s growth rate has been even slower — at an average rate of 1.5% since 2001.
However, a significant part of the difference is that over this period the U.S. population has grown almost twice as fast as Europe’s. This is an indication that, contrary to widely held perception, U.S. economic growth has not been fundamentally stronger that Europe’s, regardless of what political party was in power.
Editor’s note: To listen to The Globalist’s Stephan Richter discuss this quiz with Marketplace Morning Report host Jeremey Hobson, click here to open a pop-up media player.