ADVANTAGES

A new study of the economic development of 18 mature economies confirms this view. Upon studying the economies of the U.S. and most major European nations from 1960 to 2013, it found that, with two possible exceptions, mature economies experienced linear growth in per-capita GDP (i.e., each year they had a lower percentage of economic gains per person). If correct, these findings suggest that economists need to factor this difference into their projections. But the idea of exponential growth rests at the core of modern growth theories that explain how capital, labor and technology combine to increase productivity. Governments rely on growth projections when they decide how much money they need in their social security funds or when summing up the costs and benefits of any proposed project. If growth isn't exponential, their calculations will systematically over-rate income and make their projections misleading.

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