Map of the week: The Wealth of Nations
As Britain experiences declining wealth for the first time in 16 years and the IMF looks to bail out Ukraine and Hungary, I thought it might be interesting to offer some global perspective.
My map of the week comes from the newly published "Atlas of the Real World" and, fittingly perhaps, (as some ponder on the drawbacks of the global free market system) looks at what Adam Smith described as "the wealth of nations".
What we see are two rather odd-looking maps which twist and stretch the world so we see countries in terms of increasing or declining wealth.
The size of each territory in the first map shows the growth of GDP from 1975 to 2002, adjusted for local purchasing power. Two-thirds of the territories in the world experienced increases in their wealth over this period. China saw the biggest increase, followed by the United States, Japan, India and Germany. China and India do well mainly because of their very large populations: they experienced relatively small increases in GDP per person over the 27 years, but those translate into large growth in GDP when multiplied by the population size.
The second map shows the decline in GDP over the same period, also adjusted for local purchasing power. More than half of the territories that became poorer over this period were in Eastern Europe. Ukraine, Russia, Poland and Saudi Arabia experienced the largest declines with Ukraine registering a decline more than twice that undergone by any other territory.
Another way of looking at this phenomenon is in terms of increases and decreases in wealth per person in different countries over the same period.
Largest Increases in GDP per person 1975-2002 (US$)
1. Luxembourg 39,968
2. Equatorial Guinea 28,600
3. Ireland 24,991
4. Norway 19,235
5. Hong Kong (China) 18,496
6. Singapore 17,601
7. United States 14,805
8. South Korea 13,523
9. Japan 13,468
10. Cyprus 12,898
15. United Kingdom 11,230
Largest Decreases in GDP per person 1975-2002 (US$)
1. Ukraine 25,903
2. United Arab Emirates 25,847
3. Slovenia 17,826
4. Czech Republic 15,172
5. Saudi Arabia 12,409
6. Poland 10,153
7. Turkmenistan 10,073
8. Lithuania 9,922
9. Croatia 9,845
10. Tajikistan 8,608
I have to admit, the story revealed by the maps comes as something of a surprise. The economic decline of Eastern Europe after the collapse of the Soviet Union - albeit that the situation may have improved since 2002 - was not a story that got much play in the British media.
No wonder Ukraine finds itself so exposed today.
I would also appreciate any observations on the lists of countries which saw the largest increases and decreases in wealth per person.
The discovery of oil in Equatorial Guinea explains its place at number two in the increasing wealth table but the statistics hide a tragic story of corruption and brutality. Most of the country's population barely survive on an income of less than $1 a day with sewage running through the streets of the capital.
"The Atlas of the Real World" by Daniel Dorling, Mark Newman and Anna Barford is published by Thames and Hudson.
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with so many eastern block countries that have been forced to learn the free market ecconomy its not surprising that they may well struggle and need help during what ammounts to there first decline.
the western countries have embraced these fledgling counties at first but with there own problems they will become more icolated.
but thats the free market for you its very american in its feel and its sink or swim and there will be drownings before this downturn stops.
sadly the people will suffer world wide.
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Using 1975-2002 period maybe convenient, but quite misleading for quite a few countries. The obvious is Eastern-Europe, as the economic growth continued well into the 199Os in most of these countries. But it is also problematic for the Western countries as it was the last year of the 1973-75 recession thus the depth of it would distort the figures.
In Eastern Europe the massive drops started in 1990-1992, but then it is problematic to use pre 199O statistics, not because they cheated, but because the methodological principles were very different.
It is much more useful to look at changes in life expectancy, mortality rates, certain income-related diseases, calory intake, etc. to appreciate the real depth of the effect of the transition on these countries. Consider that in Rumania the daily nuitrition intake at the end of the 1990s was worse than during Causescu's most tighten period (and then at least foreign debt was repayed, while in the 1990s debt was accumulated and the population still not fed).
The countries on the list suffered because of different reasons. Clearly with the former Soviet republics the key issue was that independence and free market ideology based pretty half baked policies destroyed economic (supplier/customer) relationships, thus they pulled down each other. To a degree it is also true for Slovenia and Croatia with the addition that Slovenia was a privileged republic of the Yugoslavian Federation (having 3 times as high living standard as the Yugoslav average and 6 times that of Kosovo - the dirty jobs in Slovenia were actually done by Kosovar Albanian "guest workers").
Poland is a prime example of unfortunate events. Economic growth essentially stopped when the Solidarity troubles started, the Comecon countries supplied food to Poland (which had a particularly inefficient agriculture as for political reasons collectivisation did not really take place) and many people engaged in long-distance trading (clothing from Turkey sold along the way in various East European countries). It was followed by the disaster of shock therapy from which Poland still has not yet recovered (high unemployment) in which whole industries disappeared. Poland also suffers, because there is very little connection between the large companies owned by multinationals and local firms.
The Czech Republic's presence on the list is largely a result of the time chosen. The then Czechoslovakia actually managed the 1973-75 recession and the 1978 oil price increase better economically than any country in Western Europe, thus the 1975 figure is inflated. The fact also plays a role here that the contribution of some of the heavy machinery industry was overvalued in the 1980s, thus their disappearance (tractor production, lorry and truck production, the heavy machinery industry around Plzen) appears to be larger in the statistics.
One of the common features among the former Soviet republics on the list is the lack of mineral or energy resources.
I was quite surprised that Estonia was not on the list, I wonder what statistical magic resulted in that.
So, while these maps show something, essentially the disaster of Eastern Europe in the 1990s, it is highly imprecise, because the period choice is dodgy.
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Sorry, typo in the first paragraph in my post above. Of course, growth continued into the 198Os and not 199Os. Apologies.
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These sort of statistics and maps are misleading though. Even as GDP is increasing per capita, it doesn't translate to an actual increase per individual in the society. The wealth doesn't necessarily trickle down, in fact as a nation gets richer, the majority of its people get poorer; wealth concentrates at the top.
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It is no surprise to see Luxembourg & Ireland near the top of the list as both have gained from EU subsidies over this period.
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You missed Iceland.
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It would be better to describe the Atlas as a "historical one". All stats ref the previous Soviet bloc (1975-90) are dubious to say the least. Therapies applied in the first half of the 1990's varied enormously, with an imposed sudden shock here in Poland having long term benefits. Frankly given that the atlas terminates with 2002, its value is purely that of a snap-shot look at a historical record. Massive change has accelerated since then across the region. Is the picture therefore relevant in late 2008?
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"I have to admit, the story revealed by the maps comes as something of a surprise. The economic decline of Eastern Europe after the collapse of the Soviet Union - albeit that the situation may have improved since 2002 - was not a story that got much play in the British media."
I'm not sure why you're so surprised. Perestroika and the Chicago Boyz effectively liberated them from the tyrannical yoke of socialist oppression and any suggestion that these forces subverted and destroyed decades of hard work would have been very bad publicity for light-touch regulation back home would it not? It's been happening here too, transport, energy, communications etc all slowly perestroika-ed, just here, it's been like heating frogs up slowly...The effects are the same, slow demographic suicide (see East European/European TFRs - it's the latest Liberal-Democratic thing don't you know).
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Oil dealed in dollars for so many years, then each country which changed this across to dealing directly in Euros was marked an axis of evil. Several of these has led to the economic crisis we're all currently suffering. America started the great depression, which then filtered through to the rest of the World - however America is even to this day STILL the most in debt country in the World who have just been using tactics like the embedded oil/dollar deals, cheating banking systems, and having their national bank in no way directly responsible to the US.
As we base our economic systems on units which are rapidly declining (gold and oil), while also using these ever dwindling resources to keep the entire system running seems like suicide for mankind. You can't disagree oil is a dwindling resource, nor that both our food AND our economic system is heavily based on oil. Google "peak oil" if you want more info on that.
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a great map of the wealth and a great learning lessons...
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