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The Future of Economic Convergence

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12.02.2018

WASHINGTON, DC – The world is now facing what observers are calling a “synchronized” growth upswing. What does this mean for the economic “convergence” of developed and developing countries, a topic that lost salience after the Great Recession began a decade ago?

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In the 1990s, developing economies, taken as a whole, began to grow faster than their advanced counterparts (in per capita terms), inspiring optimism that the two groups’ output and income would converge. From 1990 to 2007, the developing economies’ average annual per capita growth was 2.5 percentage points higher than in the advanced economies. In 2000-2007, the gap widened, to 3.5 percentage points.

Though not all countries made progress – many small economies did not do well – on an aggregate basis, the structure of the world economy was being transformed. Asian countries were catching up at a particularly rapid clip, driven by the large, dynamic economies of India and, even more so, China (which experienced nearly three decades of double-digit GDP growth).

After the global financial crisis began in 2007, however, the dynamic changed. At first, it seemed that convergence was accelerating. With advanced-economy growth having ground to a halt, developing countries’ lead in per capita growth increased to four percentage points.

By 2013-2016, however, growth slowed in many emerging economies – particularly in Latin America,........

© Project Syndicate