Economic productivity and growth

Chart 1.

Low- and middle-income countries produce about 20 percent of the world’s goods and services, but have more than 80 percent of the world’s population. As Chart 1 illustrates, this trend results in people in low- and middle income countries having a smaller share of the world’s goods and services than people in high-income countries.

Photo 1.

A general objective of nations is to increase the size of their economies and hence their GNP per capita. Economic growth depends on people—both men and women—having better health, education, and work skills. It also depends on improving transportation, communication, and energy systems; having better tools and technology; having access to raw materials and capital; getting fair wages and prices for goods and services; encouraging savings and investment; increasing the value and variety of exports; and having better access to world markets to sell these exports.

Effects of population growth rate on GNP per capita

Chart 2.

Between 1980 and 1998, GNP grew moderately in many low-income countries, although in some cases—most notably China—growth was substantial. However, in many developing countries, economic growth is often counteracted by rapid population growth. As Chart 2 illustrates, between 1980–1998, GNP per capita has tended to grow at a slower rate in low- and middle-income countries than in high-income countries.

Many countries are trying to slow their population growth in order to raise standards of living. In general, countries that have managed to increase their GNP per capita have tended to contain population growth while following sensible economic policies that can encourage stability and increases in both human and physical capital.