Posts Tagged ‘GDP’

Language follows economy: 150 years of US/English hegemony

June 25, 2017

The domination of English as a world language probably begins only about 200 years ago and 1820 is as good a starting time as any.

Language influence, I would suggest, follows economic influence. The predominance of English today is merely a consequence of growth and spread of the English speaking economies. And the role of the US has been decisive in the last 150 years. The Latin of 2,000 years ago which had gained dominance in Europe died during the dark ages, evolved into Italian at home and was replaced by a plethora of local dialects in the rest of Europe. Latin was possibly the first ever which could be considered a “world language”. As a language of international communication it was probably preceded by Greek and Egyptian before that. Perhaps Arabic came close to being an international language during the Middle Ages. As European countries colonised the Americas and parts of Asia, they took their local languages with them. But the key for English was that North America adopted English rather than Spanish (or French or German). The US does not formally have an official language but English is the de facto national language. (According to legend German came close to being adopted in Pennsylvania in 1794).

There is no official language at the U.S. federal level. However, 32 states of the United States … have adopted legislation granting official status to English. Out of 50 states, 30 have established English as the only official language, while Hawaii recognizes both English and Hawaiian as official and Alaska has made some 20 Native languages official, along with English.

…… American schools, public as well as private, require English classes at every grade level, even in bilingual or dual-language learning. Semesters of English composition are required in virtually all U.S. colleges and universities to satisfy associate’s and bachelor’s degree requirements. – Wikipedia

Harald Haarmann writes in his Mosaic of Languages:

Europe has far exceeded all other continents regarding the export of languages. There is no other continent from which so many languages have been spread around the world, taking root elsewhere in the world and giving rise to global language communities. Most world languages, i.e. languages with global communicative functions, are European in origin and belong to the Indo-European family of languages. The result of this language export from the 15th century onward is a vast increase in the numbers of speakers. Today, the majority of speakers of languages such as English, Spanish, Portuguese and French live in regions outside of Europe. The proportion of speakers in Europe compared to those in other continents varies considerably between the individual languages:

German and Russian are Europe-centred, with the vast majority of speakers of these languages living in Europe. Languages such as Portuguese, English and Spanish, on the other hand, have far more speakers overseas, and the speakers in the countries of origin constitute a minority of the total number of speakers.

The spread of language cannot be divorced from economic well-being. Angus Maddison’s important work on historical GDP’s is insightful and fascinating. In his Millenial Perspective of the World Economy he begins:

Maddison world economy Vol 1

Over the past millennium, world population rose 22–fold. Per capita income increased 13–fold, world GDP nearly 300–fold. This contrasts sharply with the preceding millennium, when world population grew by only a sixth, and there was no advance in per capita income. From the year 1000 to 1820 the advance in per capita income was a slow crawl — the world average rose about 50 per cent. Most of the growth went to accommodate a fourfold increase in population. Since 1820, world development has been much more dynamic. Per capita income rose more than eightfold, population more than fivefold. Per capita income growth is not the only indicator of welfare. Over the long run, there has been a dramatic increase in life expectation. In the year 1000, the average infant could expect to live about 24 years. A third would die in the first year of life, hunger and epidemic disease would ravage the survivors. There was an almost imperceptible rise up to 1820, mainly in Western Europe. Most of the improvement has occurred since then. Now the average infant can expect to survive 66 years. The growth process was uneven in space as well as time. The rise in life expectation and income has been most rapid in Western Europe, North America, Australasia and Japan. By 1820, this group had forged ahead to an income level twice that in the rest of the world. By 1998, the gap was 7:1. Between the United States (the present world leader) and Africa (the poorest region) the gap is now 20:1. This gap is still widening. Divergence is dominant but not inexorable. In the past half century, resurgent Asian countries have demonstrated that an important degree of catch–up is feasible. Nevertheless world economic growth has slowed substantially since 1973, and the Asian advance has been offset by stagnation or retrogression elsewhere.

What he writes about population and income applies as well to language

Advances in population and income over the past millennium have been sustained by three interactive processes:
a) Conquest or settlement of relatively empty areas which had fertile land, new biological resources, or a potential to accommodate transfers of population, crops and livestock;
b) international trade and capital movements;
c) technological and institutional innovation.

I would suggest that the spread of English during the colonial expansion (say 1650 – 1850), immediately followed by the economic dominance of the English-speaking US (1870 – present), led to English happening to be the dominant language at just the right time during the explosion of Maddison’s period of technological and institutional innovation. It is being adopted as the language of science and engineering and innovation which has given English the decisive penetration it now has.

World GDP by country 1 – 2008AD (Maddison)

The US became the country with the largest GDP in about 1872. By 1918 (after World War 1) the US economy exceeded that of the UK, France and Germany combined. By 1942 the US economy was larger than that of all of Western Europe. China and India are rising though their per capita GDP is diluted by their large populations.

GDP rising

Within 10 – 20 years the Chinese economy will be significantly larger than that of the United States.

GDP 2030 projection

The question is whether another language will replace English, in time, to reflect the economic realities of the age. I suspect it will not happen for another 200 years – if ever. The position of English as the language of innovation and science and now as the language of the internet presents an inertial barrier that even Mandarin Chinese may not be able to overcome. Hindi and Tamil are the only Indian languages that could even be remotely considered, but either becoming a dominating language is in the realm of fantasy. It is the same type of inertial barrier which will also keep English predominant in Europe, even after BREXIT. In fact, English may have an added strength in a Europe without the UK, as a non-French, non-German, “neutral” language. There are those who name Spanish or Arabic as potential world languages but I find the case for them replacing English less than convincing. The adoption of Spanish would require that the economies of South and Central America (without Brazil but including Mexico) become dominant in the global economy and that is a very remote possibility. German and Russian are too Euro-centric to be considered. The case for French rests entirely – and implausibly – on the economic dominance of France and French-speaking Africa.

Unless the world shifts from the economic growth model that has served us for over 8,000 years (at least) – and I cannot imagine what that paradigm shift could be – I cannot see any language replacing an English (which will of course mutate and change and evolve) as the dominant world language for at least a few hundred years.



GDP gives innovation …. or is it the other way around?

October 2, 2015

From The Economist.

To be fair it is quite easy to argue that the absolute value of GDP is conducive to innovation but that innovation leads to GDP growth.

Global Innovation Index 2015 image The Economist

Global Innovation Index 2015 image The Economist

…. The Global Innovation Index and a related report, which were published this morning by Cornell University, INSEAD, a business school, and the World Intellectual Property Organisation. The ranking of 140 countries and economies around the world, which are scored using 79 indicators, is not surprising: Switzerland, Britain, Sweden, the Netherlands and America lead the pack. But the authors also look at their data from other angles, for instance how countries do relative to their economic development and the quality of innovation (measured by indicators such as university rankings). In both cases the results are more remarkable. The chart above shows that in innovation many countries in Africa punch above their economic weight. And the chart below indicates that, even though China is now churning out a lot of patents, it is still way behind America and other rich countries when it comes to innovation quality.

Indian GDP growth figures at 7.5% flatter somewhat – but are not wrong

August 31, 2015

India since the start of this year has been using a new method of calculating GDP and GDP growth. Basically 3 changes have been made.

  1. the base year has been changed from 2004-05 to now be 2011-12
  2. a “cost of production” based method has been changed to be a “market value” based method, and
  3. a database of just 5,000 corporate entities has been expanded to include over 500,000 entities

It is the use of “market value” rather than cost based data which is the biggest change and actually brings India more into line with the methods used by most other countries. Cost based (bottom up) analyses are always historical in nature, somewhat out-of-date by the time the data are used, and under-estimate real value. “Market value” based data should be more current but have a subjective element and can overestimate “value” especially in times of high inflation. The subjective element can work in both directions but brings in an element of “expectation” into what should be a look backwards. For example a calculation of GDP growth for a quarter consists of “value now” minus “value 3 months ago”. A “value now” estimation in times of high growth will overestimate and in hard times will underestimate. On the other hand a cost-based, bottom-up estimation of value will always lag and underestimate real value.

There is no “correct” method. The real question is what the “value now” is to be compared with. To compare with the growth in China or some other country it is better that the methodologies used be the same. Of course, differences of value (growth) will be different using the different methodologies. The “new” method at least uses a large enough database to be more representative of the constituent parts of the Indian economy as it actually is now.

Hindustan TimesAll of this means the new method for computing GDP, which takes 2011-12 (when GDP grew 6.7%) as the base year, has bumped up India’s estimates of growth. In 2012-13, the new formula estimates growth at 5.1% (under the old one, it was 4.5%); in 2013-14, it is 6.9% (the old estimate was 4.7%); and, as we all know by the high-decibel crowing that came in its wake, in 2014-15, it was 7.3%.

There’s obviously no ‘old data’ for 2014-15 but estimates suggest that the old method may have pegged growth at 6.3-6.8%. All of this may mean something else too.

Last week, FM Arun Jaitley told US investors that India could attain double-digit growth soon. He wasn’t kidding. Because what’s 10% now could’ve been just 8% before!

For the April-June quarter Indian GDP growth is estimated to have been 7.4% compared to the 7.5% in the preceding quarter (calculated by the new method). With the old method the number would probably have been about 5.8 – 6.2 %. A growth of 7.5% is somewhat flattering of the real mood in Indian industry that I can discern.

I have a suspicion that at 7.5% the growth figures are a little too high and contain an overly optimistic “market value”. It could be that there is an in-built “optimism” of the politicians and bureaucrats, rather than of industry, which is skewing the “value now”. “Reality”, if such a thing exists, lies somewhere in-between the values calculated by the two methodologies.


The inexorable numbers – 10:10:10:100 is inevitable around 2100

December 4, 2013

10:10:10:100 by 2100

The “success” of a species is generally taken to be indicated by its population though it is of course possible to have quantity without much quality of life. In general however, an increasing population of any species does indicate the sufficiency of food, the ability of the species to withstand competition from other species and the ability to breed successfully in the prevailing conditions. And so it is for humans. Based on population, modern humans have never been as successful as they currently are. And in spite of all the doom-sayers and the alarmists, the fact remains that more humans are being fed and housed and are achieving some large part of their aspirations than ever before. They are living longer than ever before  and their life expectancy is still increasing – currently by about 2 -3 months every year.

However  just looking at the crude birth rate (number of births per 1000 of population) might lead one to a conclusion that there was a catastrophic decline in the human species.

Crude Birth Rate / 1000 of population

Crude Birth Rate / 1000 of population

Birth rates have declined from about 37/1000 in 1950 to less than 15/1000 now and are projected to be around 10/1000 by 2100. For any other species that would be a catastrophic decline. But of course that conclusion would be quite wrong when applied to humans. The mortality rate of humans has also declined drastically as medical and public health advances have been made. And human ingenuity has maintained food and material supplies such that life expectancy has increased in spite of a booming population.

Birth and mortality rates

Birth and mortality rates

The fact that population and life expectancy have increased simultaneously is a clear indicator that the quality of life has not deteriorated. There may be problems of equitable distribution but there is no shortage of food or other resources – and no prospect of any catastrophic shortages occurring. All other indicators tell the same story. Infant mortality, poverty and malnourishment are all at all-time lows and declining even if these can be lower still. The real GDP per capita is increasing. Leisure time (time not spent on the requirements for survival) is increasing and for more people than ever before. The age of space exploration and the potential for access to new sources of raw materials and even real estate has already begun.

There are many who rail against the consumer society and materialism but generally do so from a position of some comfort. There are others who moan the loss of spirituality and yearn for a return to a simpler life but they too are not quite ready to return to the trees. There is no shortage of doom-mongers and alarmists who merely keep pushing their doomsdays into the future where they cannot be disproved.

It is a question of attitude. There are those who would prefer to be governed by fear (the precautionary principle) and there are others who would move forward in spite of their fears.

But the reality is that the human species – with all its warts and threats and self-inflicted problems – is thriving.

Population and life expectancy WPP2012

Population and life expectancy WPP2012

It is not a forecast or an objective but merely the inexorable arithmetic of demographics which leads to the inevitability of 10:10:10:100 around the year 2100.

10 billion population, 10 births per 1000 of population, 10 deaths per 1000 of population and a life expectancy at birth of 100 years.

I prefer to see the glass half-full rather than the glass half-empty.

German economic motor is still running strong

October 15, 2010

The weaknesses in various Eurozone countries are depressing the value of the Euro but this is contributing to the continued strong exports from Germany. The GDP growth forecast for 2010 has been revised upwards to 3.5%. A second recession in the US and global reduction of stimulus programmes through 2011 could depress exports but the hope is that lower unemployment and wage increases would favour the strengthening domestic consumption to be able to compensate.


Exports helped  the German economy rebound quickly

Exports helped the German economy rebound quickly


Deutsche Welle: German economy on course for strongest growth in decades

Five leading think tanks have predicted that the German economy will grow by 3.5 percent in 2010, up from a more modest prediction of 1.5 percent earlier this year. Unemployment is expected to drop below three million. In their twice-yearly report, Germany’s five leading economic think tanks also included ….. a sharp increase in exports in the first half of the year (which has) fuelled the rebound from the deepest recession since World War II.

“The upturn is stable,” said Kai Carstensen from the Munich-based Ifo institute, one of the think tanks involved in the report. “In Germany, it looks good. The risks are above all overseas.” In Germany, Berlin plans to bring the country’s finances back into shape by cutting back on government spending. The move could lead to the deficit falling below three percent of gross domestic product, the ceiling set out for Euopean Union countries that use the euro currency.

And Der Spiegel points out that

the DAX, Germany’s stock exchange index, topped 6,400 on Wednesday, reaching a level not seen since just days before the collapse of the US investment bank Lehman Brothers.

The report also indicated that climbing tax revenues will result in a 2011 budget deficit of just 2.7 percent, below the 3.0 percent maximum allowed by European Union rules. German wages are forecast to rise by up to 2.8 percent in 2011. The economic experts who authored the report anticipate that domestic consumption will continue to be strong next year as a result.

The report, which is used by the German government to develop its own economic forecasts, was not without warnings. A renewed recession in the US remains possible, the report warns, as does a massive correction in the overheated Chinese real estate market.

A mix of prudence and optimism: Swedish GDP forecast up to 4.8%

October 12, 2010

The Swedish moderate/centre/ right coalition government presents its autumn budget proposal today. The previously expected growth of 4.5% has been revised upwards to 4.8%. But a strong level of prudence is still included with GDP assumed to be 3.7% next year instead of 4.0%. Though the coalition government is only just in a minority the budget is expected to pass in parliament. The main focus is on unemployment and job creation with the objective to reduce unemployment from the current 8.4% to 8.0% next year.

Sweden sticks out in Europe with its relatively high export-led growth.

Free translation from SvT:

Unemployment as a share of the workforce aged 15-74 years will be 8.4 % this year and fall to 8.0% next year. Unemployment will continue to fall gradually to 6.0% in 2014.
Consumer price index is expected to grow by 1.2 % this year and by 1.5 % next
year. “The government’s main goal is to bring Sweden back to full employment. We will therefore continue to work to strengthen employment and reduce exclusion, “said Finance Minister Anders Borg (M) according to a press release.
“But Sweden is still at a low activity level with high unemployment. And there are still risks that the development could be worse than expected. It is therefore important that we ensure that public finances are in surplus and that we prevent unemployment from remaining stuck at a high level. We must make use of the coming years of high growth to include those who have had difficulty to enter the labour market” said Finance Minister Anders Borg.

Strong GDP growth in India but danger signals persist

September 1, 2010

India and China continue to grow and should be able to weather the storm of the coming second dip of the double-dip recession which is looking ever more likely in Europe and the US – notwithstanding the recent growth in Germany and the UK.

In India the sharp growth in the manufacturing and service sectors could overcome the demand side weakness that is also apparent. The April – June quarter has had the highest growth for 10 quarters. Bringing inflation down from the current 9+% becomes crucial. The good monsoon so far should help. The hotels and tourism sector should get a further boost in the 3rd quarter when the Commonwealth Games is held in Delhi – though the Games themselves seem to be mired in corruption scandals and the late completion of all the venues.

From the Hindu Business Line.

Powered by a manufacturing rebound, the Indian economy has recorded an 8.8 per cent growth during the first quarter of the current fiscal (April – June 2010)

The 8.8 per cent year-on-year increase in the real gross domestic product (GDP) compared with 6 per cent in the same quarter of 2009-10 has been largely due to robust industrial (especially manufacturing) growth from a low base.

The industry, as a whole, grew 11.4 per cent against 4.6 per cent in the corresponding period of the previous fiscal, when factories were struggling to emerge from the slowdown triggered by the global financial crisis of late 2008.

Within industry, manufacturing registered a 12.4 per cent year-on-year jump, against 3.8 per cent during April-June of last fiscal. But, it is not only industry that has done better relative to last year. Even the farm sector and services have notched up higher growth rates for the first quarter. While agriculture has benefitted from a decent rabi harvest that followed a drought-impacted kharif crop, in services, the impetus has come mainly from commerce (trade, hotels, transport and communication) and construction.

But as The Times of India points out, danger signals on the demand side still persist and could threaten future growth.

However, a closer look at the data, say economists and bankers, reveals that the upward trend may not continue for long. StanChart in a report, said that despite strong growth in Q1, slow growth in domestic demand and global slowdown raise doubts about growth in the next few quarters. A research report by Nomura also pointed out that the biggest surprise in India’s growth figures is the substantial divergence between the real GDP (gross domestic product) growth estimated at 8.8% (year-on-year basis) and the real GDP growth at market prices, estimated at 3.7%.

The report explained that the difference between the two is indirect taxes and subsidies offered by the government. Government’s latest figure suggests that taxes are falling while subsidy payments have risen substantially.

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