Volatility and economic growth in the twentieth century

Abstract

This paper analyses the international distribution of GDP per capita growth rates and its dynamics during the twentieth century. We show that the century is characterized by a changing distribution of GDP per capita growth rates, which is reflected in different shapes and a persistent asymmetry at the regional level and for countries of different development levels. Interestingly, the well-known negative scaling relation between growth volatility and country size that characterizes the second half of the century is not observed before the 1950s, period dominated by severe global shocks. We discuss possible explanations to the disruption of the scaling relationship. We argue that in a turbulent context, the functioning and interdependence of economic components of countries of different size can be altered, also affecting the scaling relation between growth volatility and country size. Our results contribute with evidence of the underlying complexity of the growth process and its historical evolution.