Shifting Share

If you want to see global economic history in a single colorful graph, check out this one, produced by The Atlantic magazine. It shows the share of global GDP for various countries since the year 1 AD.

What you see in the early years might surprise you. India accounted for almost 40% of global GDP during the height of the Roman Empire, and China accounted for another 30%. Europe and the U.S. didn’t make up more than 50Bob V Article% of total world economic activity until the mid-1800s, and the rise of the U.S. economy is—visibly—one of the great economic stories of all time.

The shifting economic heft is not hard to explain. Before the Industrial Revolution, the size of a country’s economy was measured by the size of its population; there wasn’t a lot of leverage due to technology or innovation. When technology began expanding the impact of some nations’ citizens but not others, there were significant shifts. Notice that the U.K. was basically invisible on the global economic landscape until the late 1600s, and became significant as the steam engine and manufacturing technology was born in its cities.

That leverage continues. Today, the U.S. makes up 5% of global population but generates 21% of its GDP. Japan, Germany, the U.K. and European countries generally are punching above their population weight, although less so than in the middle of the 1900s. Meanwhile, the Asian countries (minus Japan) account for 60% of the world’s population and just 30% of its GDP.

Will that last? Probably not. You can see the same technological leverage starting to work in favor of China, which is on track to enjoy the world’s largest GDP, as it did in the 1700s, while the U.S.’s share of the world’s economy is slowly eroding.

Source:

http://www.theatlantic.com/business/archive/2012/06/the-economic-history-of-the-last-2-000-years-in-1-little-graph/258676/

About Objectively Speaking

Tom Batterman, founder of Vigil Trust & Financial Advocacy and Financial Fiduciaries, LLC is in the business of representing the best financial interests of his clients. Having provided objective, fee-only financial management services for over two decades, he specializes in managing the investment and related financial affairs of individuals and mutual insurance companies who do not have the time, interest or expertise to manage such matters on their own. As an objective, unbiased professional who takes on a fiduciary responsibility to his clients, he guides clients to the financial decisions they would make themselves if they had years of training and experience and the time and expertise to fully research and understand all of their options. Founded in 2010 as an outgrowth of Vigil Trust & Financial Advocacy, Financial Fiduciaries, LLC is a financial management solution for individuals and mutual insurance companies who recognize they do not have the time, interest or expertise to properly attend to their financial matters on their own. While there are many financial “advisors”, most of them have investment products to sell and the “advice” they provide is geared toward getting their clients to engage in a purchase. As one of the rare subset of advisors known as “fiduciary advisors”, Financial Fiduciaries does not sell any investment product so its guidance is not compromised by conflicts of interest which plague ordinary advisors. Prior to his employment in the financial industry in financial advocacy and trust positions, he worked at a private law practice in the Wausau area in the areas of estate planning, tax, retirement planning, corporate organizations and real estate. He is a graduate of the University of Wisconsin-Madison and the UW-Madison Law School and has during his career held Series 7, 24 and 65 securities licenses. A longtime resident of the Wausau, Wisconsin Area, Tom is active in the community. He enjoys golf, curling, skiing, fishing, traveling and spending time with his family.
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