Highest Growth Countries: 6% avg annual return
Slowest Growth Countries: 12% avg annual return
According to the article, this is based upon decades of data from 53 countries.
On a $ 50,000 investment...
- At 6%/year over 35 years you'd have $384,000
- At 12%/year over 35 years you'd have $2,640,000
As usual, higher growth attracts competition and the new companies require capital. Labor costs are increased. Pricing power is diminished.
All of this may be good for civilization but generally adds up to reduced return on capital for investors.
It's a widely held false notion that high economic growth is correlated with high stock returns.
Two recent related postings:
The Growth Myth Revisited - July 2009
The Growth Myth - June 2009