Will the divergence in growth result in eventual convergence in incomes?

I showed a neat picture in my previous post on the divergence in growth rates between developing and rich countries. But can developing countries really carry the world economy?

Much of the optimism about their economic prospects is the result of extrapolation. The decade preceding the global financial crisis was a unique period, characterized by a lot of economic tailwind. Commodity prices were high, benefiting African and Latin American countries in particular, and external finance was plentiful and cheap. Moreover, many African countries hit bottom and rebounded from long periods of civil war and economic decline. And, of course, rapid growth in the advanced countries generally fueled an increase in world trade volumes to record highs.

Optimists are confident that this time is different. They believe that the reforms of the 1990's – improved macroeconomic policy, greater openness, and more democracy – have set the developing world on course for sustained growth. My reading of the evidence leaves me more cautious. It is certainly cause for celebration that inflationary policies have been banished and governance has improved throughout much of the developing world. By and large, these developments enhance an economy's resilience to shocks and prevent economic collapse.

But igniting and sustaining rapid growth requires something more: production-oriented policies that stimulate ongoing structural change and foster employment in new economic activities. Growth that relies on capital inflows or commodity booms tends to be short-lived. Sustained growth requires devising incentives to encourage private-sector investment in new industries – and doing so with minimal corruption and adequate competence.

If history is any guide, the range of countries that can pull this off will remain narrow.

Read the full column here.

Comments

[Jenyery]

I like your article here,keep updating,i will keeping reading every day!And i also want to introduce you to our Tiffany Schmuck online shop.

[me.yahoo.com/a/3zJbwjxjq4EU5ClvZ1uOt4bPcijZgSifKXS05fMhiUTX]

Ujiri attended a prep school in Seattle, where he stayed with a Nigerian family. mbt shoes

[Tina Sheen]

"Growth that relies on capital inflows or commodity booms tends to be short-lived."

Isn't this what we are seeing with the US economy? They just keep printing money, but that can't continue.

Tina
Delatest.com

[Yue Yong]

If history is any guide, the range of countries that can pull this off will remain narrow.
http://www.blueboo.cn

[turu80]

It seems paradox but the social injustices have increased with the increase of wealth. The greater the wealth the greater the difference between social classes ..

http://giochigratis.co

[Paris Johns]

Of course third world countries cannot carry or even compete in the world economy. Some of these people were living in mud-huts until 200 years ago. Western economy's have had thousands of years of practice, they have not.

Jack from:
http://www.kimkardashianrayjsextape.com

[Dhayl Strikes]

I am absolutely confident that the economic stability of the world rests in no small part on cooperation between the United States and China.

Employee Loyalty Programs

[Jaime Rob]

Yes the developing coutries can carry the world for about 20-30 years. But what happens after it?

Canon Pixma MX882

[Mike Peterson]

I think this is one of the most significant info for me. And i am glad reading your article. I am going to share this with my facebook friends. Thanks a lot.

http://www.dsdmobile.com

[Amy Wright JR]

Its hard to tell and I really don't think anyone can come up with the definitive answer but it does make me wonder.

Visit http://www.kimkardashiannudex.com/

[women]

Good stuff, interesting to read the comments. Thanks for such an informative article and the extensive explanation, it's been very useful. http://fr.photoswomens.com/

[Kidneyr]

If Pelosi skilled the chance to request for concerns, Natural Urticaria Relief

[Black Friday]

I am absolutely sure that the economic stability of the world is based largely on the cooperation between the United States and China. Same,

http://blackfridaylowestprices.com/
http://blackfridaycanonelph300.com
http://www.blackfridaycanonsx130.com/
http://www.blackfridaycanons95.net/
http://www.canons95blackfridays.com/

[Laleydelsecreto.wordpress.com]

I don't thing so. The economy of US depends to have the economy control of the whole words, and you need a false enemy
versos de amor/ so your politics could spent millions in arms. ingresos extra the problem is china could be the next world lider, and not an fictional enemy like the URRS in their last times...and this will force to change so many things...not for good

[slrlense01]

good article.. but I absolutely confident with the economic stability in the world

http://bestpregnancyblogs.com
http://bestpregnancyblogs.com/calculate-pregnancy/

[Vin Ke]

certain any new form of silica and copper is going to augment a desktop PC as much as, if not more so, than any tablet or laptop. oil seed screw press

[Vin Ke]

The biggest business in the world right now is centered on the American Voters. screw oil press

[Vin Ke]

Someone who's passionate about his or her subject and shows concern for students. Pellet Mill

[Aleclihong]

Pharmaceutical companies such as Janssen-Cilag and Novartis were also early out with patient-support programs that came with the patient's medication. http://bit.ly/tm83EY

[RenesPaley]

woow, interesting to see this kind of stuff. I ralley appreciate ur stuff, its very helpful for others.. -- UGG Boots

[Lifenzhu]

http://bit.ly/rzsThp
Kashin in the article devoted to the murder of Russian journalist Anna Politkovskaya on October 9, 2006, called Politkovskaya "Newsmaker, rather than a journalist, moreover, newsmaker of a strange kind, God's fool, standing in one row with Valeriya Novodvorskaya[9] and Viktor Anpilov." Kashin made a point that in modern Russia "there is no such horrid truth, for which a journalist can be killed", because, according to Kashin, critique makes no impression on authorities: they just do not notice it.[10]

[Vin Ke]

Study after study shows that the returns investors earn are well below the return of the very funds in which they invest. pellet mill

[Precioimplantes]

Another excellent column dani, nothing to add to an outstanding analysis. keep it up. implantes dentales precios

[Vin Ke]

200 employees received the gift certificate and two did not. One of the employees that did not receive the certificate missed the so called cut off by two days and was in HR and helped issue the gifts. Biomass Pellet Mill

[Vin Ke]

Listen, your blog is cool. I like the effort you put into it, especially with the vids and the pics. But, come on. There's gotta be a better way to say this,Cherry Apples

[Vin Ke]

I really pleased this specific post, and incredibly worthy of to learn just about all data,thank you . I currently book-marked this brilliant submit. Groundnut Kernel

[Vin Ke]

Its not the case that reader must be completely agreed with author's views about article. So this is what happened with me, anyways its a good effort, I appreciate it. Thanks. Colloid Mills

[D]

There are plenty of anti snoring solutions available. Some work efficiently for just about any handful of people, even though some don't. Numerous solutions really do not benefit anybody whatsoever.

[Vin Ke]

This article should be called how to be a better corporate programmed robot. Speak up but make sure what you say is generic enough that you don't ruffle any feathers.
Pumpkin Seeds

[Nebulizer machine]

How to properly use a nebulizer machine and description of all types of inhalers

[Toont1]

This is the best article kodak zx 5 review I've ever read. Thank you for all the awesome techniques you are giving here.kodak zx5 Bookmarked this web page, will come back again.

[Toon Thong]

It is very nice site. fast loan Thanks for sharing nice information with us.
Thanks for shaing This is great, nice post! very interesting and informative, cash loan