Greatest Economic Boom in World History

Kurt Brouwer July 16th, 2007

Now, that’s a compelling headline isn’t it? James Pethokoukis at Capital Commerce Blog reports[emphasis added]:

“This is far and away the strongest global economy I’ve seen in my business lifetime,” is how U.S. Treasury Secretary Henry Paulson recently described the current global boom. Hyperbole? Actually, that dramatic declaration probably understates things. Let’s refer back to this piece of analysis from Paulson’s old firm, Goldman Sachs: “If we and the consensus are correct, then the period 2003-2008 will have been one of the most powerful periods of economic growth globally since accurate data [have] been collectible for much of the world.”

Indeed, the global economy is growing at about a 5 percent annual pace, according to the International Monetary Fund, after growing 4.9 percent in 2005 and 5.4 percent last year. By contrast, the global economy grew at a 3 percent pace from 1980 to 2000 and at 4.7 percent from 1960 to 1980…’

In my opinion, economic growth of this magnitude is a function of several trends, among them:

  • Free trade. Protectionist barriers to trade are falling all over the world and this makes it easier for goods and services to flow.
  • Lower taxes. There is a competition among countries to reduce taxes and that has resulted in greater economic activity.
  • Information technology. Access to computers, cell phones and the Internet has been booming and that has resulted in much better access to information.
  • Medical advances. People across the globe are living longer and healthier lives. That does not mean there are not areas where medical care is entirely lacking, but it does mean that positive changes are occurring.
  • More peace. Despite the fact that we hear of carnage every day on the news, the incidence of large scale wars is down. Compare today’s conflicts to those of the last century–World War I and World War II. Fortunately, we have not seen any conflict of that magnitude for decades.
  • More democracies. People in countries as diverse as India, Brazil, Poland and South Korea have gained more control of their political structure and this reduces internal conflicts and helps pave the way for stronger economies.

Now, we have to ask ourselves, how do we keep this going? Also, we have to address challenges such as environmental issues that are coming up due to growth.

Did you enjoy this article?

Comments are closed.

Trackback URI |