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Japan Beats the United States in GDP Growth per Capita for Last Decade

Mainstream economists speak of two Japanese lost decades(s) between 1990 and 2009.  Often the United States and the UK are seen as leader in growth. Some statistics might confirm this:

U:S. UK France Japan Italy GermanyWhen we look on a more subtle criteria, namely GDP growth per capita, available at the world bank, we see a different picture.

China and then nothing, nothing, then India, Russia, Indonesia, Saudi-Arabia, Thailand and somewhere at the bottom our well know “developed” nations.

GDP per Capita China India Russia Indonesia Saudi Arabia Thailand Singapore Korea, Rep. Brazil South Africa Australia Sweden Germany World Switzerland Netherlands Japan Canada United States New Zealand Norway France United Kingdom Ireland Spain Italy Greece

GDP per Capita (source world bank) - Click to enlarge

The developed countries with the strongest growth have ties to China: Australia exports commodities to China and profited on the price increase. Germany, Finland and Sweden export capital goods and engineering products. The Netherlands are one of the leaders on global trade. The U.S. provided the basis for the Chinese ascent , Americans spent and spent until 2008. The U.S. trade deficit financed the huge investments in China that are still keeping Chinese firms competitive despite rising salaries.

GDP Per Capita Developed Nations

GDP per Capita (data source world bank), click on graph to expand

As also recognized by Paul Krugman, Japan has seen a stronger growth per capita than the U.S. or the UK. Seemingly the GDP growth in two latter countries was mainly driven by population growth and immigration.

Japanese GDP per capita and working age vs. US

(click to expand) Japanese GDP per capita and working age vs. US (source Paul Krugman)

Larry Summer’s recent idea to boost U.S. consumer spending will be counter-productive. Currently the U.S: economy is improving precisely because investments are finally increasing. Investments are driven by savings.

The Japanese savings rate was constantly falling during the two “lost decades”. Growth as created by government spending and investments.

Savings Rate EU UK US Japan

For us the biggest Japanese issues were falling incomes after huge bubble in the late 1980s. Weaker incomes, however, were unavoidable because for many export goods, Japan had to compete with cheap China and South Korea. Weak population growth seems to be a common issue in all of these three countries.

Read also:

What drives the economy? Consumer spending or saving/investment?

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George Dorgan
George Dorgan (penname) predicted the end of the EUR/CHF peg at the CFA Society and at many occasions on and on this blog. Several Swiss and international financial advisors support the site. These firms aim to deliver independent advice from the often misleading mainstream of banks and asset managers. George is FinTech entrepreneur, financial author and alternative economist. He speak seven languages fluently.
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