Ronan Lyons | Personal Website
Ronan Lyons | Personal Website

Global economic growth changes drivers, not gears

  • Shane ,

    Hi Ronan,

    In your opinion do you think Mongolias small population (2.4m i think) and its extremely inhospitable climate could limit its future growth and prosperity?

    Thanks

    Shane

    • Ronan Lyons ,

      Hi Shane,
      I was in Mongolia a few years ago as it happens and I think they’ve enough natural resources (particularly minerals) and perhaps the lowest labour-land ratio on the planet. Canada does very well despite having a very low labour-land ratio (which all else equal tends to drive up wages) and an inhospitable climate. Mongolia is landlocked, though, which reduces international trade, and leaves the country dependent to some extent on Russia and China (hence their recent closer links with the US and push for inward investment).

      I think there’s more than enough potential in there for a generation-long boom in Mongolia. Whether that happens is of course an entirely different matter.
      Thanks for the comment,

      Ronan.

      • Gregory Connor ,

        It would be interesting to see the same type of global-growth decomposition done using per-capita income growth instead of total income growth. With that type of metric, Germany, with a moderate total income growth rate and negative population growth rate forecast would contribute positively, but a developing country with high total income growth but even higher forecast population growth would contribute negatively. It should be feasible to do this, since population growth rate forecasts tend to be good over fairly long horizons; it would require a change in your metric. The analysis you have provided is interesting, but using per-capita income growth (and appropriately adjusting the algebra) might give a different message about which countries are contributing relatively strongly to the growth in global per-capita income.

        • Ronan Lyons ,

          Hi Gregory,
          Thanks for that comment. You’re right, I imagine the per capita figures would look a good bit different, especially conclusions about sub-Saharan Africa and indeed Germany, as you point out. Part of the emphasis above was about “size of the pie” type arguments, i.e. total world GDP and where that’s growing. A per capita exercise would probably have different implications but is no less useful an exercise.
          R

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