 This is something where both we have teachers here all of you and presumably others watching But we also have ultimate consumers of this material So so it's going to be a little bit tricky You know if I if we were doing this just with the teachers we do it a certain way But then given that also lots of people today and later on when it's going to be posted online They're going to be accessing it directly. So this has to function You know at both levels both, you know as going on taking the teachers along but also having the so it's going to be a bit tricky So let's see how we challenge. We manage the challenge to some extent them The second challenge I think again, this is true for all teaching is that what is the balance you draw between? I would say, you know three or four things one is just content information, you know India's growth went up went down, etc. Etc. I Suspected even in your classrooms when you do that, it won't be easy to hold the audience so So that's one thing but some of it is unavoidable Then we have of course in this course What about I mean we also have things like you know some kind of methodological tools that I would like to for example There's going to be one kind of graph that I use a lot You know the what's what I call the cordon max cordon diagram for a small open economy to think about a number of policy issues So it has to have some content It also has to have some tools But then of course to make it interesting both here and in the classroom Also, how do you apply these things in practice because remember at some level? This is a course for an intelligent consumer Not necessarily someone who's going to do research and produce things because perhaps this might be a little bit too Maybe elementary for that kind of person so so that's kind of what I have in mind and so You know in terms of the way we've structured the course of course There's going to be information and so on but I would like to more to think about these things in terms of you know What does the data say to look at data quite a bit? And I think that's something that you know perhaps you do this already, but I really and you will find a lot of Diagrams, you know presented on two axes so kind of a rule of thumb is the following right that if you want to and don't say This to the ministers and things to the policy makers you'd normally present Data on one axis, you know just just say you know what happened to per capita GDP growth But I think for an intelligent consumer I think we can do two axes, you know to see what is happening, you know correlations between variables and what kind of puzzles and ideas It throws up so we'll be using a lot of data as well And it's something that I would urge you to you know, maybe in your classroom as well use a lot of so so not just content a Practitioners perspective some methodological tools and a lot of data So so that's what this you know course will also be about and of course the last challenge for something like this is that We're both doing something in real time today But also this is going to be filmed and going to be a MOOC that's Will have some shelf life beyond today a kind of semi-permanent shelf life now it creates some Tricky things for us. Just to give you one kind of very concrete example. I Want these sessions to be highly interactive. So, you know, I will ask you questions. You can ask me questions But you know when you ask questions, I may have to repeat your question because it's being filmed because we don't have mics everywhere So that's something we have to you know kind of as we go along Manage that process as well. So that's another kind of challenge One small a small housekeeping thing is that see normally, I mean, I think this is too big a Classroom for me to get to know all of you kind of Individually but at least for the first two or three sessions if you don't mind having a name tag and where you're from That might be useful, you know, I know all of you have swyam badges. Okay, maybe that okay That'll serve as it's not but anyway But at least initially if you're going to ask questions, just you know quickly tell us, you know Where you're from which college you're from so that you know, we can kind of establish some kind of you know camaraderie amongst all of you and you know, we can get to know each other a little bit better Now I think that's by way of all the housekeeping things that I wanted to Have so so, you know today the classroom is very full It's always nice to have a full classroom, but of course the challenge is going to be, you know, how many remain at the end of seven days I remember that, you know, when I was studying Doing my masters in PhD So it was a course taught by Professor Amartya Sen I mean Nobel Prize winner is really great economist one of the greatest economists and I still remember on the first day You know, you could not get in you know to overflow into the corridors But on the last day, I let just say there were fewer people than when they were Let me start it off with so so it's a challenge for the for the Everyone but I hope you know so part of the challenge is having you interested and engaged So and given we have these many challenges a lot is going to depend upon your participation to kind of make this thing work So, you know, so feel free, you know, I don't want want to be I mean one shouldn't interrupt the floor too much But we do need to have you know to kind of make it engaged We need to have questions and I know I'm delighted to have questions So in terms of timings today, it's going to be the first session will end at 2 The second session will begin at 3 to so it'll be 3 to 5 or 5 30 But from tomorrow onwards, we'll have a standard We'll have standard timings 10 30 to 12 so that it's going to be two hours But we'll have a kind of short break in between maybe 10 30 to You know, whatever two hours and 15 minutes and then the afternoon sessions will be 230 to 5 o'clock. So so so that's what it's so it's going to be very intense and you know Let's see whether we can, you know, see a see our way through these seven days So so with that by way of introduction One more thing I want to say, you know, this is something Is that you know, I even as we go through all of this, you know I am not here to convince you that I am right or you know That interest rates should be cut or the you know FRBM should be happen or you know my views or anything, you know This is more about how we together try and see How we can reach students and how we can get them engaged in economics, you know I think that's the challenge for us So I'm not here to, you know, prove anything or convince, you know I don't want to get into controversy is demonetization good or bad. Don't ask me I don't have a I don't for the for the purposes of this course. I have no views Which is completely different from, you know, the real-life job that I do But you know, I don't have used but that's because we know We have to think about in this constantly We're going to think about how we can reach, you know, that imaginary person, you know Sitting in wherever Andaman or Hossour and to get, you know Him or her interested in economics in general So are there any questions to begin with? You know, a few questions of logistics, clarification Not too many because we need to get into it But if you're really dying to ask a question in terms of housekeeping Please feel free. Otherwise, I think we should proceed But floor is open for a few minutes for important housekeeping questions Have I missed anything, team? Yeah, no. OK. Have I missed anything? Oh, I'm getting a second hot coffee. OK, good. No, no, I'm fine. Thank you. Thank you. And Professor Paul He's really been a dynamo here. Please give him a big round. OK. Yeah. Any question? Just can you Get us the web link where you'll be posting? Oh, yeah, yeah, yeah. That's something. Please note that down. We will be. So in any case, we'll be see as we finish, it's possible that, you know, within a day or two, we'll post this as we finish. Fine. But of course, it'll be finally, of course, it'll be posted on a web link. We'll send you the web link. I just don't want to do it immediately because it's possible. You know, they may have to. There may be some mistakes. There may be some changes which we'll do as we go along. So, yeah, please share you will be shared. Can we by C.O.B. We'll share the schedule. We'll in fact, if you go to my Twitter handle, we have the schedule, actually. So those of you who have Twitter, just go and check my Twitter handle. We have it there. The schedule is there. Yeah. Yeah. Those passwords for seven days. Yeah. Yeah, that'll be a good, very good point. Yeah, exactly. Hopefully, you're all comfortable in your rooms. You have Wi-Fi there because I do, you know, you've come a long way, but I do if you could, you know, spend a bit of time, you know, even after this, going through some of the material, I think that will make it, you know, come alive and, you know, more interesting share as well. So, minimum, like, we didn't anticipate that there will be no writing fan. There will be no pen. No. You would have brought it, but I thought that it is a work, I mean, it is a... Yeah. Yeah. But I think it's a good point, fair point, very good point. I think notebooks, but you'll also have these presentations on which to write it. But notebooks will be, you know, if you can make them available, maybe not this afternoon session, but certainly by tomorrow. So just for one session, you know, just absorb it all in your... This is a, remember, this is a non-paper kind of, you know, world. So you're a bit behind the times, if I may say so. Oh, yeah. Okay. Yeah. Okay. So I think let's... Very traditionally. Yeah, exactly. Your registration kits will actually be given to you during lunchtime. Oh, then, oh, you're very good. Because that is happening on YouTube, man. Okay, good, okay. So I got the question there. Okay, okay. And lunchtime, lunch will be in the hall at two o'clock. Lunchtime. No, not this one for today. Today, lunch will be in the same place where we have the IT, okay? From tomorrow, everything will be here, on this floor. Okay. Lovely. Thank you for the call. And now let's, you know, now this is a course that, you know, we've designed. It's like a course that I would design if I were teaching this. It's not comprehensive. It has a number of modules and, you know, and you can then adapt it as you go along, right? So the first topic module is going to be on global and Indian economic history. Because remember, even if you teach contemporary economics, you need to know, you know, where the world came from and what India has done post-independence in terms of economic history. So today, you know, 2,000 years of global history will be compressed in seven slides. And, you know, 75 years of Indian economic history will be compressed in about 15, 20 slides. And let's see whether, you know, we can do that and let's see what we learn. Also, I think every module or sub-module, I would like at the end for you to kind of take away one or two big, you know, ideas from it and then so that you, you know, at least retain something distinctive about this. Now, I don't have to tell you why, you know, we need to study global and Indian global history before we do Indian economic history. You know, we're a globalized world. What happens outside helps us. But even if it doesn't, because after all the history is gone, I think it's going to be, you know, I found it very useful to understand global economic history, to understand what's happening today. So let's begin, you know, I hope all of you have done your appropriate, you know, pujas in your languages and religions. So let me give you the first slide. This is just an overview which we'll go through. But so this is world history in one slide. This is, you know, and remember, every time I present a chart, always look at the x-axis and the y-axis. It's kind of absolutely important for you to look at this. This is per capita GDP of the world from zero to 2015. So as I said, 2,000 years of global history in one chart. Basically what it says is that for about 1,000 years, we were in an era of Malthusian stagnation. That is, you know, per capita GDP was hovered around subsistence for about 1,000 years. And this is about $300, $400 per capita GDP. By the way, just again, as a kind of teaching device, I think all your students, you should make familiar with where this data came from. This data comes from Angus Madison's, you know, he has data on the history of the world. If you just Google, it's on the Groningen Center. But you know, it's really fun. You can ask your students, say, OK, how much did this country grow during this period? How much did India grow during that period? And then get into why and so on. So we had 1,000 years of Malthusian stagnation. And why do I call it Malthusian stagnation? Malthus was this English economist, also a cleric, kind of priest. And he had a very dark view of the whole economic development process. He said, basically, people will always be at subsistence per capita GDP standards of living could never rise consistently because he thought if standards of income rise, people will start fertility rates would go up, breeding would increase, population will go up. And therefore, as incomes go up, population will go up. And per capita GDP will return to its original level. Similarly, he thought if incomes come down because of war, famine, et cetera, et cetera, population will come down. Disease mortality would increase. And once again, population would go down. And the lower income and the lower population would settle at this something called subsistence. So that's what we had. And we did have that. And the famous English political philosopher Hobb said, life is nasty, brutish, dark, and short. And that's what it was for about 1,000 years. Then we had, now remember, I'm talking about this for the world as a whole. So I know you have questions about what happens in different places. But first, let's look at the world. And then we look at different regions of the world. Then you have a process where slowly things started to improve. Standards of living started to rise. Per capita GDP started to rise. And then we had the Industrial Revolution. And boom, standards of living exploded. And basically, this is what happened quote, unquote. And I should say, quote, unquote, the world. This is not quite the world. I'm aggregating. But this is what happened. So this is kind of history in one chart. Now, a small methodological point. This phase doesn't seem very different from this phase. Notice this is GDP per capita. But if you do the show the same start in log terms, remember, change in log is just growth rate. So you see immediately this period of Malthusian stagnation is actually quite different from this. Growth rates pick up. And then, of course, growth rates explode here. So this chart sort of shows that there have been three periods, this getting out of it slowly and just exploding out of it in a very, very consistent manner. So this is kind of world history in one slide. But then this is, as I said, at the aggregate level. What happens if you go to different regions? So now we start the clock at 1,700. Basically, it's kind of mediocrity everywhere, same standards of living everywhere. The red is kind of Western Europe and North America. Asia, Africa, this is the world average. What you find is they start exiting from stagnation. Maybe the rest of the world is pretty much the same. So this period begins what we call the Great Divergence. Divergence in standards of living between Western Europe and North America and the rest of the world. And then this is kind of, it explodes completely. And then around 1950, 60, 70, especially 1980, Asia starts catching up with this. You see that GDP per capita starts rising almost as fast as here. And this is a period where what we call convergence and begins. Now, I'm going to be using the words divergence and convergence are quite a lot in this course. So I want you to be familiar with that term. Convergence here, of course, means, divergence means that standards of living, widen between two groups of countries. But there's going to be a more technical definition of this, which I'll come to in a second about what exactly we mean by convergence. But this is essentially now history of all the different regions in one slide. Malthusian stagnation, uniform mediocrity, some, one set of countries does well. That set takes off and then very, very late in the historical process, Asia, especially Asia, starts thing, you can see sub-Saharan Africa, basically still hasn't started catching up with the advanced countries. So this is the history of thing in one slide. Now, we go now next to, okay, I started the clock here in 1700, but here is something really interesting. All this, this is the reversal of fortune and it's very, very true, very relevant for all of us here in India. What this chart shows is, so on the X axis, we show proxies for the standards of living in 1500, which is because we don't have good data on per capita GDP in 1500, there are proxies like urbanization and population density that have been shown to be reasonable proxies for standards of living. 1500, and this is standards of living today, and you see a negative line. What that means is that those who were poor then have become rich today, those who were rich then have become poor today, and that's why you get a negative sloping line. So this is called the reversal of fortune. Around, and notice India here is on the right, that means in 1500, India was very rich, but then if you measure it on this axis, what it is today, India is here, most countries are above it. So this is the reversal of fortune. Now, as you know, I mean just again, this is very brief history, all of you should go off and follow it up. In 1500, around 1500, there were four civilizations that were in fact at the frontier, in fact, even ahead of Europe. Ming China, the Ming dynasty in China, Mughal dynasty in India, the Aztecs in Mexico and the Ottoman Turks. So these were highly prosperous societies. In fact, Ming China was amazing because at that time they made four absolutely revolutionary inventions, the compass, gunpowder, printing press, and silk. So they were well ahead of that. In fact, if you, you know, I've studied a bit of Chinese history, not that much. In fact, one of the amazing things about Ming China was that they were ahead of the Portuguese and the Spanish in terms of their naval technology. Around this time 1500, a little bit before 1450s, the Chinese technology for actually sea technology was just way ahead of anything that Europe had. So there's a famous admiral called Zheng He who went from China all the way to Africa, you know, the whole journey from the, you know, the China sea, Indian Ocean, and then all the way up to the eastern part of Africa. And 30, 40 years later, the Portuguese came down the coast of Africa, you know, Bartholomew Dias, but the ships that he used were almost, you know, mockingly primitive compared to what the Chinese used. And, but of course, after that something happened in China and China became, you know, less poor than it was in 1500. Similarly, the Mughal dynasty was up there. And in fact, in the discovery of India, Jawaharlal Nehru asked this great question. I mean, what happened after that? We were very open, standards of living were very high, and then something happened just like in Ming China, something happened in India, where we became less open to technology, what opened us, and then our standards of living declined. And then of course the Brits came and history changed. Similarly in Mexico, what happened there in around 1500, of course, was that the Spanish conquistadors, the Imperials, they came and conquered Mexico, and then the Aztec dynasty and the other dynasty in Peru. And then of course their fortunes changed as well. But this is, you know, a very interesting fact of history, the reversal of fortune, and very relevant to a country like India because we used to be up there. And so a lot of economic history is about, you know, why this happened, why the reversal of fortune happened. Yeah. Yeah? Yeah. Yeah. Yeah. So now here's a great question. Go to Madison, for example, and see what our standards of living were in 1500, and then in 1717-50, kind of just as the Brits came, for example. And you will find that, you know, this essentially we kind of stagnate, and then after the Brits come, we kind of start going down as well. So, but that's a very good question, and that's the kind of question that you can answer by looking at Madison. So I'm going to be using this, as I said, this definition of convergence and divergence, and essentially what convergence means, it means catching up. It means that if two countries initially start apart their standards of living, I'm told I shouldn't move in front, I've not been doing that, Rangita. Okay, just in case, okay. So what we mean is that if two countries start off one rich and one poor, convergence means that thereafter, the poorer country will grow much faster than the richer country, so that standards of living, absolute standards of living can start catching up. And a way to show this on a diagram is that this is, you know, initial level of per capita GDP. This is the subsequent growth rate. This is 1960, growth between 60 and 2000. So this is a level, this is a growth, and you see that within rich countries, all the rich countries today, there was fantastic, this downward sloping line means there was convergence, because the poorer you are, the faster you grow. So if you're here, you'll be much higher here. If you're rich, you'll grow much lower. So this is convergence, but if you look at the world as a whole, between 1985 and 60 to 85, you find that it's flat. Or in fact, actually the line is upward sloping. That means that the poorer countries, if you start off poorer, you do not grow faster subsequently, and therefore standards of living will continue to diverge forever. So this downward sloping line means convergence. The fact that this line is not downward sloping, but upward sloping means there is no convergence. So standards of living, so the rich countries are getting richer, the poor countries are getting poorer, and standards of living diverge. Yeah. Yeah, this is just an example. I wanted to show you 60 to 2000 just illustration. You can do this for any time period. What you'll broadly find is that for the world as a whole, between 1950 and about 1985, 1990, it's like this, then after it starts becoming gently downward sloping, and then very much downward sloping, if you start around 2095 or so. But this is just to illustrate the, yeah. But this is the reality. Yeah. What this simply means is that from 1960 to 1985, there are no convergence. Between all, the world as a whole, yeah, yeah, yeah. But if you, if you risk, yeah. Yeah, and if you confine it to the rich countries, yeah, yeah. Professor, again diagram shouldn't be the initial. Yeah, yeah, there's a mistake. It should be 1960. You have a very sharp eye. I noticed this as well. So this should be 1960. So you're absolutely right. So this is why we don't want to put it up immediately. And couple, please note this should be 1960 and 60 to 85. But the chart is similar. I've done it, you know, I've done like thousands of versions of this, but it's good that you spotted it, very good. You're all very alert and very sharp today. I want the same degree, you know. On the last day you tell me, oh, yeah, I'd be delighted with that. It's not published yet, isn't it? No, no, it's a working paper, yeah, yeah, exactly. Can I go to your previous, the Mughal period you were talking about? Yeah. In Mughal period, India's population if you just leave the South India part. And the Kandahar, almost down Kandahar, almost India was almost integrated. And India and China were contributing to 40% or more to the world trade. Because all it was not manufacturing, it was all natural product, which was, and where the Indian and Chinese, Chinese are a little bit different. But Indian, basically it is all natural product, which was being. So, let me just say that this is the kind of, you know, just as I have strong views which I don't want to pass on to you, if you have strong views about any of these things, let's discuss them outside because, you know, we're trying to see what we want to teach the students. We're not trying to teach them our strong views. In your classroom, of course, you should do that. But, you know, let's not hold up this because it's not about what strong views you and I have because we can have eternal debates on this. Yeah, so that's a good, yeah. And there are lots of explanations for that. And, you know, we should go into that, yeah. But thanks for pointing that out. So, this is the experience. Now, some things that I like, I think all teachers and all students should know, what is the definition of, you know, low income, lower middle income, upper middle income, high income? And I think these are all things that it would be great for students to know what is the World Bank definition. So, for example, this is now the current World Bank definition of low income, middle income. India is classified as a lower middle income country. China is classified as an upper middle income country. And in fact, if you want to get cheap loans from the World Bank, this is the threshold for that 1,185. The laughter is a cheap launcher. In fact, these are highly concessional loans. So, this is just, you know, for sake of argument, just sake of information that I think all students, they should get familiar with these definitions. Similarly, I think that it's useful for all students to know about poverty because it's a topic that I'm sure you cover about India. So, here is where I want to introduce a notion that I think all students, economic students, second, third year should know, and that's the notion of purchasing power parity. I think, you know, so for example, the Indian definition of the poverty line is the Tendulkar definition. You know, if you're aggregated, it's, you know, 39, it was 29, this is the average of rural and urban, 29 rupees a day average. And, you know, if you scale it up by inflation, it's 39.5 per day. The current World Bank definition of poverty line is $1.90, but in purchasing power parity exchange rates. So, what is the difference between, so if you saw a $1.90 and tried to convert this into rupees, you would multiply this by 64 or 63 or whatever. But that's not right. And that's why we have this concept of purchasing power parity, which I think all students should, you know, at least the intuition you should understand. What is the intuition that, so today the market exchange rate is at 64 rupees to the dollar. So, here's the question. So, the market says $1 worth 64 rupees. But, we know that $1 in the United States will buy less than 64 rupees will buy in India. That's the key idea here. One reason is, in poorer countries, services are much cheaper. So, just to give you one example, which I'm very familiar with, when I used to live in the United States and go to the barber, I used to pay something like $15 to $20 per haircut. In India, much better haircut with chumpy and all that stuff. You know, you would pay something like 100 rupees or 100, I know, even, I mean, that's kind of inner city. So, a dollar buys less in the US than what the market exchange rate buys today. So, what they do is, they have this, the pen world tables. There's a, what they do is, they collect prices of thousands of commodities all over the world to see what the real prices are. If you take a basket of goods and compare it to the basket of goods in the United States, you get purchasing popularity. And what you find roughly is that a dollar in the US buys something like, in 2015, 17, 17 and a half rupees. So, that's why, when they say this, you convert it into 17, 17 and a half rupees and then you get this 32.5. So, the Tendulkar line is 39.5. The World Bank line is 32. That means that by this definition, you'll have fewer poor people. By this definition, you'll have more poor people in a country because the poverty line is much greater. Yes? So, I mean, you need to repeat the question that these people ask. Yes, what was the last question? See, I see, you have to remind, thank you, Professor Paul. The last question was about, or someone, yes, one was on the explanation for the Mughal thing that I think is very useful. And then someone very astutely pointed out that a number on the graph was not right, which we'll fix, but we'll take the next question as we go along. So, just remind me that we need to do this, yeah? So, essentially, if you look at the World Bank definition of poverty, in 2011, they said 900 million were poor, of which 255 million were poor in India. On the Tendulkar definition, this number, I believe, will be 270 million rather than 255 million. But this is something that, again, I think when you start teaching the Indian economy, I think this is something that all students should know, explaining purchasing power, explaining what the poverty definitions are. I find this extremely useful because often you will see, say, poverty has gone down, the poverty line is this, you know, they used to be for a long time a famous World Bank poverty definition, a dollar a day. Yeah, dollar a day, but of course, they had to change that, it no longer works, so they have adapted it, but you have to understand what the poverty line means, what purchasing power parity means in order to try and compare what happens outside with what happens within India. Now, continuing our kind of, you know, 20,000 and zipping through global economic history, I find this actually a very useful chart to understand what has happened in the last 45, 50 years in development. So this is a chart, again, it says 1960 per capita income relative to the United States in 1960, so think of this as the starting point, and this is the end point, 2008. So you have nine squares, so this broken up into three, low income, middle income, high income, low income, middle income, high income, and this is the 45 degree line. So any country that is on this side means it's done better, that it's higher standard of living than in the past. If it's below the 45 degree line, that's actually it was better off in the past than it is today. So there are a number of very interesting things about this chart. There have only been 13 countries that have become high income countries, and those are these countries. Remember that means they started off middle income, now they're at high income. These were 13 countries. Four of them are in Europe. I think if you do the numbers, five of them are in Asia, five or six. You see Taiwan, Hong Kong, Japan, Singapore actually made the transition to high income. Very few. India is not there. I'll come to China and India in a second. Very interesting thing. Greece, I can almost guarantee you that Greece has now gone down into the square. After the crisis, 2008, income was peak. It's lost about 20% per capita GDP. It's come down here. I'm pretty confident now it's no long country. Interesting, very interesting thing. There are actually two sub-Saharan African countries that made the transition. Mauritius, a friend of India, lots of people of Indian origin living in Mauritius in the Indian Ocean. And this is Equatorial Guinea, which actually is very misleading because it's become rich based on oil. If you go and look at the standards of living there, people are actually very, very poor. This doesn't deserve to belong as a country. It's actually a part of the United States. And I can guarantee you that this country is already probably below because it now has a debt crisis that is really consuming it. Standards of living are following. Now, why is this? It's, I think it gives you a bird's eye view of which countries made it in some sense to high income and which didn't. Now, so there are two things I want to say about China and India before I move on. China began as a middle income country. It remains a middle income country, although it's done very well. It remains a middle income country. So there is this concept in economic growth and economic history called the middle income trap, which is our countries that were middle income doomed to remain middle income. That it's easy to grow for some time, but beyond the point it becomes very difficult to grow for a number of reasons. You get into crises, investment doesn't flow. And so the Chinese are obsessed with this middle income trap. Are they in the middle income trap or not? Now, India of course, I think will be, I think somewhere here it's done very well, but it's not transitioned, but it's done much, not as well as China. So India will be one of these things starting off low income, certainly, but transitioning into lower middle income status. So India is here, we need India to go from here all the way to here over the next 25, 30 years. And I think that China I think is on its way to moving up to high income status. So the question is whether India will move or not. So this in a sense is a kind of bird's eye view who made it, who didn't. Notice how so many countries actually are worse off. All these countries below the line are worse off than they began. So this is, for all these countries, it's a case of divergence and no convergence because they did not catch up with, because remember all this is defined relative to the United States. So by definition, you move up, you've moved up relative to the United States. These are, ah, good question. So here I actually went and checked this today. Ah, sorry, very good. So the question that was asked was, are these numbers in purchasing power parity terms or are they just in dollar terms? Now notice that essentially in this case, the definitions are from the World Bank. They are not, they are based on the World Bank, World Gross, National Income, Atlas-based definition. That's a funny mixture. It's not completely PPP. But because they've standardized it relative to the United States in both cases, it kind of, not quite, I think this, it should still be in PPP terms, but these are not explicitly in PPP terms. These are, you know, a different methodology that the World Bank uses. So that's why, you know, I mean, you could do this in purchasing power parity terms. I think the picture would broadly look the same, but it's a great question. It's not explicitly in purchasing power parity terms. Yeah? Yeah, so it's up and we've got the road for it. We should have, apparently, with this figure is on Partula's book as inclusive, right? So at least some form of human welfare, which does not completely look at incomes, but we have a competitive view of it. Yeah, so great question again. I mean, is this growth fetishism? After all, economic development is about much more than growth. It's about human development indicators. It's about how much environmental capital you use up. Now, let me give you a warning. Why, but I think you should, it's a great idea to do this. What I suspect, because I've been, I looked at these to some extent, so one obvious thing to do would be to do a human development index here and a human development index here. The problem is the human development index begins much later, so you may not be able to do that. So then you have to do, and certainly if you want to take into account the environmental, i.e., for example, if you grow and deplete your natural resources, then that should be a minus, right? But estimates of income or development that take that account, you certainly won't get that for the past. That's what makes it very difficult. But in principle, yes, I think so. One of your students, you could do a project, okay, maybe not 60 and 2000. Can we do this, 1980 to 2000? Maybe by 80, more such indicators become thing, and that would be a great thing for students to do as well. Now, so far, and I'm going to end the international part in about two more slides, but there are all this while we've been talking about countries, not people. Remember that all these dots represent a country. So when you say a country grows at 5% per capita GDP, we abstract from the fact of inequality within a country. After all, not everyone is growing at 5%. Indian economic growth rate, let's say today, per capita GDP, let's say is about 5.5%. I mean, clearly, people at the bottom maybe are not growing at 5.5, and people at the top are growing at greater than 5.5, so this doesn't capture that. This captures the average person in the country, not the distribution of what happens to those people. So there is now more and more work to go from country level to individual level. And one of the most striking recent studies is by Branko Milanovic, and he's produced this thing called the Elephant Curve, which has become highly, highly referred to. It's one of the iconic figures representing what's happening. It actually relates, I'll tell you in a while, to the whole globalization debate, and to what's happening in the US, what's happening in Europe, et cetera, et cetera. Now, what is this measure? So on this, you have all the people in the world lined up from zero to 100 at the starting point. This is the percentile of global income distribution, and on the y-axis is how much did each percentile, so if you began here, so the nine billion people in the world think of this as stacked up like this from kind of Warren Buffett and Bill Gates here to maybe the poorest man in sub-Saharan Africa here, and then we ask, how have they done? Now, this is data that Branko and others, the World Bank has produced, is based on surveys. Like our NSS has surveys, many countries have this surveys, so you can drill down from the average person to different strata of society, and why this thing is very striking says, it says in the period this should be, again, Kapil Vishni should be 1988 to 2008 or 2010, 20 years. This is the beginning. So what it shows is that if you're very poor, you're over a 20-year period, let's say your incomes grew by 40, 50%. If you began somewhere in the middle, and the Chinese middle class is somewhere in the middle of the global income distribution, they grew very, very rapidly, and I would say that India is somewhere here. These points are represented by India because the Indian middle class probably began poorer than the Chinese middle class, but what you find is that the 80th percentile represents the US lower middle class, and they did very poorly in terms of how much the incomes grew over a 20-year period, and Sher, you go back, where is my pointer? This top thing here, this thing point, is Bill Gates and Warren Buffett, the richest people in the world, their incomes grew very rapidly. So what this shows is that over the last 20, 25 years, in terms of dynamism growth, not the level, in terms of dynamism, the Indian and the Chinese middle class, especially the Chinese middle class, have done brilliantly. The middle class or the lower middle class in advanced economies, they have slipped, their standards of living have declined, and the very rich, the super rich in advanced, by definition, remember the super rich are here, and you know, well, I think the super rich of India, a few of them will also be here. So this is not just Bill Gates and Warren Buffett, you know, I can't name Indian billionaires here in this classroom, but you know who I'm referring to, they're also here, they've done very well. So this actually, it encompasses three or four really, I mean, striking things about recent global economic history. One, the Chinese and Indian middle class have done very well. Two, there's been stagnation in advanced countries, which is what many people think has given rise to things like the Trump phenomenon, you know, and this has been happening for 20, 30 years, as you know, so you know, the whole US middle class, the UK middle class not doing well, and all that it means for, you know, politics kind of is represented by this line. And here, if you come here to my Warren Buffett Bill Gates, I will not name the Indian people here. What you find is that they've also done very well, and this has been the target of, not the target, but the explanation for this famous French economist called Thomas Piketty, talking about how the very rich have done all over the world. And what he says is that we have a very funny kind of inequality in the world. It's not just that, you know, the upper middle class grows faster than the lower middle class of the poor, but a few, not just very rich, but very, very, very rich. The top 1%, the top 0.1%, the top 001%, they grow very rapidly. And that's what creating a lot of anxiety in these countries, because, you know, there's huge income distribution, global income inequality is widening, widening at the very top. And so people are saying, what kind of democracy do we live in that it can't deliver fairer outcomes for everyone in the world? And so this kind of, you know, also in some ways encapsulates very well what has happened in the last 25, 30 years. And I think that we've done one hour, I think. It's probably time to take a break. But before we do that, I am willing to answer a few questions. Yeah, please. What elephant got instead of another simple guy? So I think why it's elephant is simply because if you go and look at this shape, it's the shape of an elephant, that's all. That is very simple. If you, there's a funnier version of this chart. The trunk is on the other side. Oh, the trunk is on this side. Yeah. Oh, okay. See, see, economists are lousy visualizers. And I think you can say, I've always thought that the elephant was on this side, but I think very good point, excellent point. It's the, yeah, please. I have a question, this is a small moment. Yeah. If you go to the next one. Yeah, maybe you clear. Yeah. Oh, the previous, oh, sorry. No, I'm sorry, I'm going forward. Yeah. Oh, sorry, sorry, I'll let me go backward. Yeah. Introduce to all Seema Sharma on this side, and I'm a faculty in the area of economics in the department of management studies. Actually, I was just wondering about this, the way you're facing China here, because 2008 year has been picked for this. And that was the time when China, a country which is aggressively into export, got hit by this uptrend crisis also. Millions of jobs were lost in China at that time. So is this right to draw generalizations from the data which is shown there that's bothering me or not? Okay, so let me, good, so that question was heard. The question was, the fact that it's 2008, is that representative what happened in China afterwards? So my first response to this always is, give your students exactly this thing to do. Ask them to reproduce this for 2015 or 16, one. But then let me finish. Second, I told you already that Greece, this is misleading, because 2008, they suffered a crisis. But for China, you will notice that this actually has gone up because in economic growth, China, it slowed from 11% growth to 7% growth. So it didn't collapse like Greece. Greece actually had negative growth so that standards of living declined. So in that sense, but the point is a fair one, I think you should update this and you should do that in your class as well. Any more questions? Yeah. Make per capita income relative to United States. Now, I am a little uncomfortable. How does it show transitions? Because which is the period from where you're showing the transition? That's yeah, that's 1960, it says. So yeah, so even if you take the 1960s to this level of 2008, how would you encapsulate the period where the transition is actually happening? So I think remember that this, by definition, captures two points in time. What you said you have to repeat today. Oh yeah, I think this I don't have to repeat, but just maybe because you were on mic. But the question is that how do we capture transitions, growth transitions, for example. And I think by definition, this is two axes only. So you capture the starting point and this, but there is a lot of other work which does talks about transitions. You could read the other papers by Danny Rodrick and Lance Pritchett and so Ricardo Hausman. They talk about which other periods when countries grew very rapidly. Which countries grew rapidly, sustainably, which grew rapidly only for a certain point in time. So those are all, so when you are doing this course, if this question interests you, then either you should write to me or you should just say Google, growth transitions and Hausman, Richard Ricardo will come up and then you can answer those questions. But thank you very much for asking that question, yeah. Yeah, and remember, see the only rule I'd say is that, ask questions like this, but no kind of commentary or your views. That's my only request. Yeah, and I think you had already one, maybe this afternoon session, we have to, we can only, I can monopolize the conversation, not anyone else. Yeah. So one question here, India versus China, if you look, 1980 figure, not from here, not from this table, otherwise whatever the fact is there, but capital income of India was much higher than what the China was there, but 1990 or after all, it has moved. So how this graph is actually India versus China will be depicting? So that's a question I'm going to reserve because I'm going to show you that in the next half of the course. If you want to continue, I'm happy to continue. If you want to take a break, because I think maybe I'm happy, break, I have orders from now minutes to break. If we have to, you know, keep this course going, you have to be punctual, no Indian stretchable time, you know, our Indian standard time. And so now, thank you.