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To where disappeared the economic growth?

by on 13/02/2018

High economic growth didn’t end at seventies as some may claim, just turned around the corner. After the traditionally developed West European, Japan and North American countries accomplished twenty years of intense, post war reconstruction and economic growth, and continued with milder growth rates from the seventies, the economic growth started in the Asian Tigers, like Taiwan, South Korea, Hong Kong, etc. This period ended, with the Chinese shift from Centrally planned to market economy from the early eighties. The remarkable economic growth of China put it in the focus of world economic stage. Ten years later with the collapse of the Soviet Empire, the East European countries joined the market economy club countries, and their Purchasing Power Parity GDP per capita grew unprecedentedly from one fifth of the West European level to about half of it and the gap is still in process of closing.

The economic growth since the seventies in the global level was well above three percent in average.

Of course this process wasn’t a smooth one, but rather with huge local problems. Not to speak about decreasing marginal utility of the investments that slows down the economic growth in more developed countries compared to less developed ones. Also too fast, too chaotic economic growth, with huge investments, like in China, or in pre 2008 Spain, may cause inefficient, many times wasted investments into white elephant projects.

It seems the precondition for economic growth and prosperity is a relatively well functioning political system, liberating the creative capacities of people from suffocation under despotic, repressing regimes, with very different priority, than economic and social welfare of the population.

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