Penn World Tables - World Economic Growth

This article discusses the development of the new Penn World Tables that has been released within the last month.  With much research, these tables provide a more accurate depiction of the worlds' economies than did previous information.  Specifically, these tables enable us to see economic growth and relative income among countries.  They were the first of their kind to attempt to illustrate relative sizes of economies.  The results have shown a world of "increasing wealth . . . where predictions of Malthusian traps and permanent poverty look increasingly archaic" (The Whole World Is Getting Richer, and That's Good News).  The main components of this process involved comparing how much something costs, what people are buying, and how these vary over time.  This looks into how we value goods and services over a period of time, and uses information from the past as well as current information.

These tables shifted the size of economies as was previously estimated, most for the better.  Surprisingly, China is growing even faster than was thought according to this study.  However, this is just a reflection of all of the world's economies, as it indicates that almost every economy is larger than we have thought.  While some smaller countries have only doubled the size of their economy since 1960, many countries have increased in size by five fold.  About 5/6 of the world's population live in areas which have increased by five fold, while all but 1% live in an area that has increased by at least two fold.

I attribute a large portion of this growth to trade among countries, especially in the past couple decades.  Due to the availability of resources and products on the international scale, we have been able to make ourselves better off and have raised standards of living, as is shown by this study.  Countries have chosen to trade in order to take advantage of another countries' resources such as technologies or other endowments.  I think that these tables will be very useful tools in future studies and research, but more simply I think that they illustrate how advantageous world trade can be.  It's one thing to look at graphs to predict benefits, but another to see real world decisions that have helped economies grow.