history of the world in 25 slides
DESCRIPTION
With convincing graphs and excerpts from research, Jacob Lundberg investigates a range of causalities and developments in modern world history, including the link between economic freedom and economic growth, and the positive effects of economic growth.TRANSCRIPT
History of the Worldin 25 slides
Jacob Lundberg
Umeå University16 March 2010
Economic freedom
“Individuals have economic freedom when property they acquire without the use of force, fraud, or theft is protected from physical invasions by others and they are free to use, exchange, or give their property as long as their actions do not violate the identical rights of others.”
Economic Freedom of the World
• Size of government: expenditures, taxes, and enterprises
• Legal structure and security of property rights
• Access to sound money• Freedom to trade internationally• Regulation of credit, labor and
business
Free countries are rich countries
$0
$10 000
$20 000
$30 000
$40 000
$50 000
25 50 75 100
I ndex of Economic Freedom
GDP/ person
Economic Freedom of the World
”The dynamic relationships estimated strongly suggest that economic freedom fosters economic growth. To our knowledge, this causal link appears as an empirical regularity in most of the literature addressing the subject.” Vega-Gordillo, Manuel & Álvarex-Arce, José L. (2002), ”The Chicken and the Egg:
Economic Growth and Freedom”, Círculo de Empresarios <http://www.freetheworld.com/papers/Vega-Gordillo_and_Alvarex-Arce.pdf>
”Our empirical results confirm the strong relationship that many papers posit between economic freedom and economic development. … both property rights and economic freedom are .. effective in promoting economic growth in [rich] countries.”Khalil, Mahmoud, Ellaboudy, Shereef & Denzau, Arthur (2007), ”The Institutions and
Economic Development in the OECD”, International Research Journal of Finance and Economics 2007 (12) <http://www.eurojournals.com/irjfe%2012%20mahm.pdf>
”It was shown in this paper the economic freedom – economic growth literature is so affected by publication bias that it is not clear what the size of the genuine effect of economic freedom on economic growth is. This does not mean there is no economic freedom – economic growth association. The evidence is indicative of a positive impact on economic growth.”Doucouliagos, Chris (2005), ”Publication bias in the economic freedom and economic growth literature” in Roberts, Colin J. & Stanley, T. D., Meta-regression analysis: issues of publication bias in economics (Wiley-Blackwell)
”Economic freedom enhances growth in [poor countries] by two channels: directly, as it has already been shown in the literature, and indirectly, by increasing the [foreign investment] that a country attracts. Increasing economic freedom should therefore be a key priority of policy makers.”
Bengoa, Marta & Sanchez-Robles, Blanca (2003), "Foreign direct investment, economic freedom and growth: new evidence from Latin America", European Journal of Political Economy 19 <http://www.ciberoamericana.unican.es/documentos/Bengoa%20y%20S%C3%A1nchez-Robles%20%5B2003%5D.pdf>
”The results suggest that the overall level of economic freedom appears to cause growth, while changes in freedom are jointly determined with growth.”
Dawson, John W. (2003), "Causality in the freedom–growth relationship", European Journal of Political Economy 19 <http://www.appstate.edu/~dawsonjw/ejpefinal.pdf>
”Empirical research has shown that both more economic freedom and a higher stability of policy variables are supportive for economic growth. Thus, the path of policy liberalization may have a considerable influence on a nation's growth performance.”Pitlik, Hans (2002), "The Path of Liberalization and Economic Growth", Kyklos 55, p. 57-80 <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=309278>
Economic freedom
5
6
7
1980 1990 2000
Source: Economic Freedom of the World
Weighted average for 86 percent of world population, on a scale 0–10.
World GDP per capita
$0
$2 000
$4 000
$6 000
$8 000
$10 000
1950 1970 1990 2010
Source: Angus Maddison, IMF
World poverty
projections
Source: World Bank
0%
10%
20%
30%
40%
50%
1980 1990 2000 2010 2020
Nondemocracies are poor
Nondemocracies
Democracies Oil states
Sources: Freedom House, IMF
0
10 000
20 000
30 000
40 000
50 000
60 000
70 000G
DP p
er
capit
a,
US
D
Democracy
Source: Freedom House
3
4
5
1970 1980 1990 2000 2010
Average score on a scale 1–7 on political rights and civil liberties
Democracies don’t fight each other
nondemocracyvs.
nondemocracy205
democracyvs.
nondemocracy166
democracyvs.
democracy0
1816–2005. Source: Rudolph Rummel
wars since 1815 71
of which between democracies 0
Source: Bruce Russett
territorial disputes 1919–1995 348
of which between democracies 5
of which wars 0Source: Huth & Allee
disputes 1816–1992 2042
of which between democracies 62
of which wars 0Source: Frank Wayman
War deaths
0
10
20
30
40
50
60
70
1950s 1960s 1970s 1980s 1990s 2000s
Source: Human Security Report 2010
deaths per million people
Violence is declining
”The most important and most underappreciated trend in the human saga: Violence has been in decline over long stretches of history, and today we are probably living in the most peaceful moment of our species' time on earth…
If the wars of the twentieth century had killed the same proportion of the population that die in the wars of a typical tribal society, there would have been two billion deaths, not 100 million.”
Steven Pinker, Harvard psychologist
Strong correlation health/wealth
Source: Gapminder
World life expectancy is rising
0
10
20
30
40
50
60
70
1900 1920 1940 1960 1980 2000
Source: Indur Goklany, WHO
Access to safe water is improving
Source: World Bank
"Improved water sources include household connections, public standpipes, boreholes, protected dug wells, protected springs, and rainwater collections. … at least 20 liters per person per day from a source within one kilometer of the user’s dwelling.”
0%
20%
40%
60%
80%
100%
1970 1980 1990 2000 2010
Rich people are happy people
Source: Stevenson & Wolfers
Life satisfactio
n
GDP per capita, dollars (log)
Summary
Economic growth
DemocracyEconomic freedom
Thank you!
Youth of the Moderate Party
Västerbotten County
Moderate Party Students
Umeå University