The text begins by establishing the key empirical regularities that motivate the study of economic growth.

Cross-Country Income Differences

• Large Disparities: There are vast and persistent differences in PPP-adjusted GDP per capita across countries. In 2000, the richest countries were more than 30 times richer than the poorest ones.
• Strong Correlations: These income differences are strongly correlated with welfare measures such as consumption levels and health outcomes (e.g., life expectancy).

The History of Growth and Divergence

• The Great Divergence: Analysis of historical data (from Angus Maddison) shows that large income gaps are a relatively recent phenomenon. In 1820, the income gap between the richest and poorest nations was much smaller. The period since the early 1800s has been one of significant divergence in economic fortunes.
• Post-War Stability and Spreading: In the post-1960 period, the world income distribution has been relatively stable, with at most a slight spreading out. The rapid growth of China and India since the 1980s has created a powerful force toward the relative equalization of income among the world’s inhabitants.
• Individual Country Experiences: The text highlights divergent paths, such as the stagnation of Brazil and Guatemala versus the rapid growth of Singapore and South Korea, illustrating that past performance is not a guarantee of future success.

Correlates of Economic Growth

The analysis identifies several key variables that are strongly correlated with income per capita and growth rates across countries. These are referred to as proximate causes of growth.

• Physical Capital: There is a strong positive correlation between investment rates (as a share of GDP) and income per capita.
• Human Capital: There is a strong positive correlation between measures of human capital (e.g., average schooling years) and income per capita.
• Technology: After accounting for physical and human capital, large residual differences in productivity remain, which are attributed to “technology.” This term is used as a shorthand for all factors other than physical and human capital, including genuine differences in techniques and the efficiency of production.