macro stylised facts of growth

•Stylized fact 1: Some countries are rich and some are poor; the differences are enormous and it has pretty much stayed like that in relative terms over the last 40 years. However, there is some tendency towards a more equal world income distribution, though not much at the very bottom.

•Stylized fact 2:Growth rates vary substantially between countries, and by the process of growing or declining fast, a country can move from being relatively poor to being relatively rich, or from being relatively rich to being relatively poor.
•Stylized fact 3: Growth can break in a country, turning from a high rate to a low one or vice versa.
•In the 1960s the East-Asian ”growth miracles” experienced growth breaks, moving from low to high growth rates. Hence, it ispossible for poor countries to escape from poverty!
Hypothesis of absolute convergence:In the long run, GDP per worker (or per  capita) converges to one and the same growth path in all countries, so that all countries converge on the same level of income per worker.

Stylized fact 4: Convergence: If one controls appropriately for structural differences between the countries of the world, a lower initial value of GDP per worker tends to be associated with a higher subsequent growth rate in GDP per worker.


Stylized fact 5: Over periods of more than 130 years, many countries in Western Europe and North America have had relatively constant annual rates of growth in GDP per capita in the range 1.5-2 per cent.


Stylized fact 6: During the long periods of relatively constant growth rates in GDP per worker in the typical Western economy, labour’s share of GDP has stayed relatively constant, hence the average real wage of a worker has grown by approximately the same rate as GDP per worker.


The relative constancy of the factor income shares andthe observation that real interest rates do not have any trend upwards or downwards in the long run (see figures), so that rates of return on capital must be relatively stable implies


Stylized fact 7: During the long periods of relatively constant growth rates in GDP per worker in the typical Western economy, capital’s share and the rate of return on capital have shown no trend, therefore the capital-output ratio K/Y has been relatively constant, and the capital intensity K/L has grown by approximately the same rate as GDP per worker.

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