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November 28, 2003

The Poverty of Nations

To conclude my series of posts on international comparisons of IQ (no more, I promise!), I want to look at levels of economic development as measured by GDP (Gross Domestic Product) per head. While this cannot be a perfect indicator (such a thing does not exist), it is probably the best we have.

Data on GDP per head are available for all countries from the useful Nationmaster website. They are expressed in US dollars at Purchasing Power Parity. The source is given as the CIA World Factbook 2002, so I hope it is more reliable than their info on Saddam’s WMD (just kidding, folks). I assume that the data is from 2002 or not long before.

For the reasons given in my previous post, it would also be interesting to compare GDP of developed and 3rd-world countries now with GDP of developed countries around 1930 - the chronological baseline for the Flynn Effect. For this purpose I have taken the UK as a comparator, because I know a bit about UK statistical sources.

A variety of sources indicate that GDP per head in 1930 in the UK in real terms (i.e. allowing for price inflation since then) was about a quarter of its 2002 level of 17.7 K. (For details see the continuation.) Nationmaster gives 2002 GDP per head for the UK as $25.4 K. (The current market exchange rate of 1 = $1.7 would give the higher figure of $30.1 K, but I will use the Nationmaster figure for consistency of comparison with other countries.) This implies a 1930 level around $6.4 K (in 2002 PPP prices).

So here are data for GDP per head in selected countries, with the UK 1930 figure shown in bold. All figures are in US $ thousands.

USA.....................35.9
Denmark.............29.0
Canada................28.9
Japan...................28.0
Australia...............27.0
Germany..............26.2
France..................25.8
UK (2002)............25.4
Hong Kong...........24.6
South Korea.........19.3
Czech Rep...........15.2
Argentina.............10.3
Chile.......................9.9
Mexico....................8.9
Malaysia.................8.8
Russia.....................8.8
Brazil.....................7.6
Turkey....................7.0
Iran.........................6.8
Bulgaria..................6.6
UK (1930)..............6.4
Venezuela..............6.0
Gabon....................5.4
China......................4.7
Namibia..................4.5
Jamaica..................3.7
Egypt.......................3.7
Guatemala..............3.6
Sri Lanka................3.2
India........................2.5
Zimbabwe..............2.5
Iraq..........................2.5
Cuba.......................2.3
Equat. Guinea........2.1
Pakistan..................2.0
Ghana.....................1.9
Bosnia....................1.8
Bangladesh............1.7
Haiti.........................1.7
Laos........................1.6
Sudan......................1.3
Uganda...................1.2
Kenya.......................1.0
North Korea.............1.0
Nigeria......................0.8
Afghanistan..............0.8
Somalia....................0.5

Of course, there are both practical and conceptual difficulties in comparing GDP in different countries. How does one measure GDP in subsistence peasant economies? There are also some specific oddities in the table above. Can GDP per head in Bosnia really be that low? And why is it (apparently) five time higher in Gabon than in Nigeria?

Comparisons over long periods of time are even more problematic. Many goods and services available widely now did not even exist in 1930, and others have changed greatly in nature or quality.

So I wouldn’t put a great deal of weight on these comparisons. But, for what they are worth, they do show a huge range of material conditions in different countries. Income per head of the average person in the poorer countries must be below that of all but the very poorest individuals in the wealthier ones. And, so far as comparisons across time are valid, the figures are consistent with my earlier argument that environmental conditions in developed countries in the 1930s were already better than in many 3rd-world countries today. In so far as the Flynn Effect is due to economic development (and if it isn’t, what is it due to?), we would therefore expect IQ in those 3rd-world countries to be substantially ‘behind’ that of developed countries today.

“A variety of sources indicate that GDP per head in 1930 in the UK in real terms (i.e. allowing for price inflation since then) was about a quarter of its present level. “

- The ‘one quarter’ estimate has been given by a number of economic commentators, e.g. here.

- The economic history website eh.net gives a figure of 3,619 per head for UK GDP per head in 1930 in 1995 prices. This may be converted to 2002 prices by the 2002:1995 ratio of the Retail Price Index, which is 176:149, giving 3,619 x 1.18 = 4270. This is just under a quarter of GDP per head for 2002.

- B R Mitchell’s British Historical Statistics (1988) gives UK GDP in 1930 as 4142 million. Dividing by the 1930 population figure of 46 million gives about 95 per head in 1930 prices. Price inflation between 1930 and 1994 was approximately x 32, giving 3040 in 1994 prices, and updating this by the RPI increase between 1994 and 2002 gives 3040 x 1.22 = 3709. This is somewhat lower than the other estimates, but not badly adrift given the different data sources.

- The ‘one quarter’ estimate is also consistent with an average annual growth rate of between 2 and 3 per cent over the period, which is supported by other data.

Posted by David B at 07:15 AM