India was by far the biggest economy at the dawn of Common Era

The Economic History of the Last 2,000 Years in 1 Little Graph
By Derek Thompson

Jun 19 2012, 8:59 AM ET 5

That headline is a big promise. But here it is: The economic history
of the world going back to Year 1 showing the major powers’ share of
world GDP, from a research letter written by Michael Cembalest, an
analyst at JP Morgan.

I’m guessing that your first question, if you started scanning from
the left, is: Wait, India was by far the biggest economy at the dawn
of AD? Yup, India.

In Year 1, India and China were home to one-third and one-quarter of
the world’s population, respectively. It’s hardly surprising, then,
that they also commanded one-third and one-quarter of the world’s
economy, respectively.

Before the Industrial Revolution, there wasn’t really any such thing
as lasting income growth from productivity. In the thousands of years
before the Industrial Revolution, civilization was stuck in the
Malthusian Trap. If lots of people died, incomes tended to go up, as
fewer workers benefited from a stable supply of crops. If lots of
people were born, however, incomes would fall, which often led to more
deaths. That explains the “trap,” and it also explains why populations
so closely approximated GDP around the world.

The industrial revolution(s) changed all that. Today, the U.S.
accounts for 5% of the world population and 21% of its GDP. Asia
(minus Japan) accounts for 60% of the world’s population and 30% of
its GDP.

So, one way to read the graph, very broadly speaking, is that
everything to the left of 1800 is an approximation of population
distribution around the world and everything to the right of 1800 is a
demonstration of productivity divergences around the world — the
mastering of means of manufacturing, production and supply chains by
steam, electricity, and ultimately software that concentrated, first
in the West, and then spread to Japan, Russia, China, India, Brazil,
and beyond.

(via Paul Kedrosky)


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