The U.S. GDP per capita growth rate from 1789 through the early 1900s was
around 1.2 percent annually. The GDP per capita growth rate since the great
depression has been about twice that (2.4 percent annually). What caused
this change?
The Answer
When it comes to something as complex as economic growth, there are no
simple answers. Nevertheless, here are my educated guesses.
The first reason that economic growth was slower from 1789 to 1900 is
that the early part of this period had very little per capita economic
growth -- preceeding the industrialization of the economy.
Yet, even if one looks at the period since the Civil War, one still sees
acceleration. The figures I calculated for an article in the Oxford
Encyclopedia of Economic History are:
1860-1900 1.5% per annum
1900-1950 1.7% per annum
1950-1999 2.3% per annum
Much of the earlier growth can be tied to increases in the amount of
capital (e.g. factory equipment, farm equipment, railroads) per person,
but the later growth is harder to explain and is generally attributed to
the immeasurable "technological progress." One reason for accelerating
growth, then, would be that technological progress is accelerating (not
everyone accepts this proposition, but it seems sensible to me). As the
total number of people coming up with new economic and technological
ideas has increased (due to higher worldwide population, higher levels
of worldwide education, etc.) it would seem inevitable that
technological progress would accelerate -- and even more so into the
future with rising education levels in countries like China and India.
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