As we have seen, modern productivity in agriculture and manufacturing is sufficient to supply everyone with a decent material standard of living while employing a little over 10% of the population directly. When one includes transportation, warehousing, food processing, wholesale and retail trade, total employment in goods production and distribution is probably between 30 and 40%.

In the discussion on world productivity convergence, we saw that the vast majority of people live on less than $30 per day in local purchasing power. Even in countries on the productivity frontier, such as the United States, 20% of the population survives on less than that.

As we also saw in the section on productivity convergence, productivity in developing countries can increase rapidly as agriculture and industries are brought up to date, while income growth in advanced economies is more dependent on advancing the productivity frontier through technological innovation.

Average personal income in a country is determined by total income divided by population size (aka GDP per capita), and how that income is actually distributed. In short, the size of the pie and how the slices are cut.

Here are the sizes of some economic pies.

Table 10: GDP per capita, selected countries. Source:  Data from the World Bank as presented in the Investopedia article: Silver, Caleb. 2021. “The Top 25 Economies in the World.” July 16, 2021. https://www.investopedia.com/insights/worlds-top-economies/#citation-92.

How are these “pies” sliced?