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National Wealth and Rates of Economic Growth
National wealth is measured by per capita national income. Strictly speaking, national wealth and national per capita income are different concepts because national wealth consists of the value of capital stock, whereas income is income, so we use the term national wealth in the general sense in which people speak of rich countries and poor countries. We use two alternative measures of national income: per capita GNP in US dollars and real GDP per capita in US dollars. The second measure is calculated on the basis of the purchasing power parity of the country's currency. It is intended "to make more accurate international comparisons of GDP and its components than those based on official exchange rates, which can be subject to considerable fluctuation" (Human Development Report, 1997, p. 239). For some countries data on per capita GNP and real GDP per capita can differ considerably from each other. The basic difference between GNP and GDP is that GDP comprises the total output of goods and services for final use produced by an economy by both residents and non-residents within the geographical boundaries of a nation, whereas GNP comprises GDP plus income from abroad, which is the income residents receive from abroad, less similar payments made to non-residents who contribute to the domestic economy. The difference between GNP and GDP is relatively small for most countries - much smaller than difference between GNP and real GDP - but in some cases it can be quite substantial (see Gardner, 1998, pp. 22-23; Human Development Report 1999, p. 254; World Development Report 1999/2000, p. 274).
Most data on per capita GNP are taken from the World Bank's World Development Report 1999/2000 and all data on real GDP per capita from the United Nations Development Program's (UNDP) Human Development Report 2000. Sources of supplementary data are given at the foot of Appendix 2. Data for per capita GNP and real GDP per capita used in this paper are for the year 1998. These are the latest data available to us at the time of writing. These data for per capita incomes are shown in
Appendix 2 for the same countries as in
Appendix
1. However, in Appendix 2 the United Kingdom replaces Britain in
Appendix 1.
Economic growth rates are measured as percentage increases in per capita GNP and per capita GDP. Consistent national differences in economic growth rates over many decades are responsible for contemporary national differences in GNP and GDP. Our hypothesis that national differences in IQ are a cause of contemporary national differences in GNP and GDP entails the prediction that national IQs should be positively correlated with long term rates of economic growth. We present two tests of this prediction. First, we examine the correlation between national IQs and economic growth rates of per capita GDP over the period 1950-1990 using the per capita GDP data given by Maddison (1995) for 54 of the countries in our sample. Second, we examine the correlation between national IQs and economic growth rates of per capita GNP over the period 1976-1998 using per capita GNP data given in the World Bank's World Development Reports. From these data we have calculated the percentage changes of per capita GDP over the period 1950-90 and per capita GNP over the period 1976-98.
These figures are given in Appendix
2.
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