The graph above shows the Gross National Product (GNP) per capita, Purchasing Power Parity (PPP) of the First World (here Europe, United States, Canada, and Japan) and the Third World (Asia, Africa, and Latin America) between the years 1750 (The dawn of the Industrial Revolution) and 1900 (Beginning of the 20th century). Since I have thrown around quite a bit of technical terms, I will explain.
GNP per capita refers to the total value of the goods and services produced by a country or region including the income it derives from foreign investments and exports divided by the number of people living there. Now the value of a dollar in one country may not be necessarily equal to the value of a dollar in another country in the sense that a dollar may buy more goods and services in one country compared to another. So Purchasing Power Parity is a technique that economists have come up with to equalize the value of a currency across countries so that they can properly compare purchasing power across countries. So all told, you can think of GNP per capita as a measure of how wealthy the average citizen of a country or region is. I think this graph makes clear the great divergence in wealth, and the upward trajectory of the First World as they reaped the benefits of industrialization. The Industrial Revolution took off in Britain around 1760. The United States and Germany would join the industrial bandwagon in the early decades of the 19th century (Both would eventually overtake Britain largely because of their willingness to make use of deeper scientific principles that British engineers at the time resisted), Japan would join in the late decades of the 19th century around 1875. You probably also noticed the very similar starting points as regards the wealth of the two regions.
Here is the second graph:
This second graph shows the Gross Domestic Product (GDP) per capita from the time of the birth of the Lord, Jesus Christ roughly 2,000 years ago to the year 2001. GDP per capita refers to the total value of the goods and services produced by a country or region excluding the income it derives from foreign investments and exports divided by the number of people living there. So mathematically speaking:
GDP = GNP – Income derived from exports and foreign investment.
GDP is also a measure of the level of prosperity experienced by the average citizen of a country or region.
You cannot fail to notice how GDP per capita remains largely flat for every part of the world for about 1,800 years from the time that Jesus Christ literally walked on the face of the earth to the year 1800. You also cannot also fail to notice the significant jumps in GDP per capita experienced by Western Europe, USA and Japan at points that closely match the take-off of the Industrial Revolution in those regions. You might have also noticed that the graphs of U.S.A, Western Europe and Japan resemble the first two sections of an “S-Curve” (The third section of an S-Curve would typically be a gentle decline or flattening out). I explained S-Curves in a previous post. It just goes to show that economic development is not random or magical. There is a science to it, a science that as Africans, we do not seem to have grasped. This graph has some unflattering information. In 1913, that’s 110 years ago, America’s GDP per capita had already crossed $5,000. For comparison, Nigeria’s GDP per capita was $5,238 in 2018 . One more important fact to note. The main economic activity for the thousands of years before the Industrial Revolution, was agriculture. So when African politicians shout agriculture, you now have a picture of what average wealth will look like.
Of course, the jump in productivity brought on by the Industrial Revolution didn’t spring out of nowhere. By the way, you should know that nothing determines the level of wealth in a country as much as the growth in productivity (It is NOT natural resources. Please get that out of your head). And nothing drives the growth of productivity like the development of science and technology in service of economic growth that tends to happen when a country successfully industrializes. As I was saying, the jump in productivity the west, brought on by the Industrial Revolution, didn’t spring out of nowhere. The seeds were first sown in the 10th century, 800 years before the Industrial Revolution took off starting with the large scale urbanization that created Europe’s first cities . Other critical events include the establishment of a legal code for securing property rights that happened in the same time period of 900-1300 that the large-scale migrations to the cities was happening ; The invention of the Gutenberg printing press in the 15th century. We shouldn’t fall into the trap of thinking of this innovation as mundane because of the ease with which we print books today. The Gutenberg Press ranks up there with the world’s greatest inventions, from the invention of the wheel, to the steam engine, the discovery of electricity, right up to the invention of the internet; Further critical events include the development of Capitalism; The Scientific Revolution of which the Newtonian system of Mechanics was the pinnacle, and the movement known as the Enlightenment, which was a movement to bring scientific reasoning to the realm of human/social affairs modeled after the Scientific Revolution. All these and more were critical to the take-off of the Industrial Revolution.
I started this write-up saying just two graphs…I lied. If that line sounds familiar, you probably heard it in the movie “Commando” starring Arnold Schwarzenegger. Oh God…I think I just inadvertently told you how old I am.
BEFORE YOU GO: Please share this with as many people as possible. Also check out my book, Why Africa is not rich like America and Europe.
- Luiten Van Zanden, Jan. 2009 The long road to the Industrial Revolution: The European Economy in a Global Perspective, 1000–1800. Leiden: Brill
- The Maddison-Project, http://www.ggdc.net/maddison/maddison-project/home.htm