Global Macro Chart of the Day (#129): Is there a growth speed limit？

Research evidence excerpt

Global Macro Chart of the Day (#129): Is there a growth speed limit？

Global Research

22 July 2026ab

Global Macro Chart of the Day Economics

Global(#129): Is there a growth speed limit ?

Arend Kapteyn

Economist

Getting richer, growing slower arend.kapteyn@ubs.com

+44-20-7567 0531

There is a vast literature on the determinants of economic growth, and for much of

economic history there was limited evidence that poorer countries were able to catch up

with richer ones ('absolute convergence'). Indeed, between 1870 and 1990, the income

gap between advanced and poorer economies widened. This was despite poorer

countries’ theoretical ability to adopt existing technologies from richer economies and

despite diminishing returns to capital accumulation in advanced economies (it is hard to

push the technological frontier forward).

However, there was evidence of so-called 'conditional convergence': factors such as

institutional quality, human capital, demographics and geography help explain why

there is so much dispersion even for countries at similar income levels (e.g. very high

growth at low income levels but also many countries with negative per capita growth),

and why some catch up to slower growing (but richer) countries and others don’t.

Today’s chart plots real GDP per capita (PPP, constant 2011 dollars) against average per

capita growth over the subsequent decade. Each dot represents a country's income level

at a 10-year interval between 1950 and 2009 and its average growth over the

subsequent decades (1960–2019). Across all observations, the relationship is weak (R² ≈

0.02), reflecting the dispersion of outcomes at lower income levels. Even so, the fitted

relationship is downward sloping, implying slower growth at higher income levels