Monday, July 12, 2010

Can Per Capita Growth Be Bad?

It can, if it's the result of more poor people dying.

I came across this observation from the book "From Subsistence to Exchange":

Again, if many poor people survive longer in an LDC [less developed country], this depresses per capita incomes and leads to what is habitually termed a worsening income distribution, both within the particular country and relative to richer countries. Conversely, if more of the poor die or a society reverts to subsistence production, this brings about more equal incomes within a country, accompanied by a rise in per capita incomes in the former case and a decline in the latter case.