Editing Economic growth (section)

==Long-term growth==
[[File:WeltBIPWorldgroupOECDengl.PNG|thumb|upright=1.4| Rate of change of GDP, world and [[Organisation for Economic Co-operation and Development|OECD]], since 1961]]
Living standards vary widely from country to country, and furthermore, the change in living standards over time varies widely from country to country. Below is a table which shows GDP per person and annualized per person GDP growth for a selection of countries over a period of about 100 years. The GDP per person data are adjusted for inflation, hence they are "[[Real versus nominal value (economics)|real]]".

{| class="wikitable"
|+ Economic growth by country<ref>{{cite book |last=Mankiw |first=Gregory |date=2011 |title=Principles of Macroeconomics |edition=6th |page=[https://archive.org/details/principlesofmacr00mank/page/236 236] |publisher=Cengage Learning |isbn=978-0538453066 |url=https://archive.org/details/principlesofmacr00mank/page/236 }}</ref>
! Country
! Period
! Real GDP per person at beginning of period
! Real GDP per person at end of period
! Real annualized growth rate
|-
! Japan
| 1890–2008 || $1,504 || $35,220 || 2.71%
|-
! Brazil
| 1900–2008 || $779 || $10,070 || 2.40%
|-
! Mexico
| 1900–2008 || $1,159 || $14,270 || 2.35%
|-
! Germany
| 1870–2008 || $2,184 || $35,940 || 2.05%
|-
! Canada
| 1870–2008 || $2,375 || $36,220 || 1.99%
|-
! China
| 1900–2008 || $716 || $6,020 || 1.99%
|-
! United States 
| 1870–2008 || $4,007 || $46,970 || 1.80%
|-
! Argentina
| 1900–2008 || $2,293 || $14,020 || 1.69%
|-
! United Kingdom
| 1870–2008 || $4,808 || $36,130 || 1.47%
|-
! India
| 1900–2008 || $675 || $2,960 || 1.38%
|-
! Indonesia
| 1900–2008 || $891 || $3,830 || 1.36%
|-
! Bangladesh
| 1900–2008 || $623 || $1,440 || 0.78%
|}

Seemingly small differences in yearly GDP growth lead to large changes in GDP when [[Compound interest|compounded]] over time. For instance, in the above table, GDP per person in the United Kingdom in the year 1870 was $4,808. At the same time in the United States, GDP per person was $4,007, lower than the UK by about 20%. However, in 2008 the positions were reversed: GDP per person was $36,130 in the [[United Kingdom]] and $46,970 in the United States, i.e. GDP per person in the US was 30% more than it was in the UK. As the above table shows, this means that GDP per person grew, on average, by 1.80% per year in the US and by 1.47% in the UK. Thus, a difference in GDP growth by only a few tenths of a percent per year results in large differences in outcomes when the growth is persistent over a generation. This and other observations have led some economists to view GDP growth as the most important part of the field of [[macroeconomics]]:

{{Blockquote
|text=...if we can learn about government policy options that have even small effects on long-term growth rates, we can contribute much more to improvements in standards of living than has been provided by the entire history of macroeconomic analysis of [[Procyclical and countercyclical variables|countercyclical policy]] and fine-tuning. Economic growth [is] the part of macroeconomics that really matters.<ref>{{cite book |last1=Barro |first1=Robert |first2=Xavier |last2=Sala-i-Martin |date=2004 |title=Economic Growth |edition=2nd |page=6 |asin=B003Q7WARA}}</ref>
}}

=== Importance of long-run growth ===
Over long periods of time, even small rates of [[exponential growth|growth]], such as a 2% annual increase, have large effects. For example, the United Kingdom experienced a 1.97% average annual increase in its inflation-adjusted GDP between 1830 and 2008.<ref>{{cite web |author1=Ryland Thomas |author2=Samuel H. Williamson |title=What Was the U.K. GDP Then? |website=MeasuringWorth |year=2022 |url=http://www.measuringworth.com/ukgdp/}}</ref> In 1830, the GDP was 41,373 million pounds. It grew to 1,330,088 million pounds by 2008. A growth rate that averaged 1.97% over 178 years resulted in a 32-fold increase in GDP by 2008.

The large impact of a relatively small growth rate over a long period of time is due to the power of [[exponential growth]]. The [[rule of 72]], a mathematical result, states that if something grows at the rate of x% per year, then its level will double every 72/x years. For example, a growth rate of 2.5% per annum leads to a doubling of the GDP within 28.8 years, whilst a growth rate of 8% per year leads to a doubling of GDP within nine years. Thus, a small difference in economic growth rates between countries can result in very different standards of living for their populations if this small difference continues for many years.