Economic growth and economic development 22

Introduction to Modern Economic Growth

10

USA

LUX

log consumption per capita 2000
6
7
8

9

ISL
AUS
GBR
HKG
DNK
AUT
NOR
GER
CHE
IRL
NLD
BRB
CAN
JPN
FRA
FIN

ITA
NZL BEL
ESP
SWE
GRC
MUS
ISR
PRT
TTO CZE
MAC
SVN
KOR
ARG
URY
SYC
HUN KNA
MEX
POL
CHLSVK
ATG
EST
GAB
TUN
LTU
HRV
RUS
LVA
ZAF
BLZ
TUR

LCA
BRA
KAZ
BLR
LBN
MKD
BGR
GRD
VENDMA
SLV
PAN
ROM
IRN
EGY
GEO
COL
DOM
CRI THA
VCT
GTMPRY
SWZ
PER
CPV
MAR
ALB
MYS
DZA
UKR
ARM
GINLKA

GNQ
PHL
JOR
SYR
IDN
BOL
MDA AZE ECU
KGZ JAM
CHN
NICCMRZWE
PAK
HND
CIV
SEN
COM
BGD
IND
GMB
GHA COG
MOZBEN
KEN
NPL
TJK
STP LSO

UGA
MDG
RWA
TCD
MLI

MWI
BFA
NER
ZMB
TGO
BDI

GNB
ETH YEM

TZA

5

NGA

6

7

8
9
log gdp per capita 2000

10

11

Figure 1.5. The association between income per capita and consumption per capita in 2000.

1.2. Income and Welfare
Should we care about cross-country income differences? The answer is undoubtedly yes. High income levels reflect high standards of living. Economic growth
might, at least over some range, increase pollution or raise individual aspirations, so
that the same bundle of consumption may no longer make an individual as happy.
But at the end of the day, when one compares an advanced, rich country with a
less-developed one, there are striking differences in the quality of life, standards of
living and health.
Figures 1.5 and 1.6 give a glimpse of these differences and depict the relationship
between income per capita in 2000 and consumption per capita and life expectancy
at birth in the same year. Consumption data also come from the Penn World
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