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Notes on Global Convergence (Wonkish and Off-Point)

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23.10.2018

For readers obsessed with the Trumpification of America and the looming election, I’m with you — I try not to check FiveThirtyEight more than five times a day, but it’s hard. If you can’t bear to think about anything else, don’t read this; rest assured that this blog post isn’t coming at the expense of writing about the core issue of the moment, it’s a rest break, a bit of vacation in the head.

OK, that said, I read two things in the past few days that had me thinking about the biggest economic story there is: the dramatic rise of some formerly very poor nations, and the concomitant shift of the world’s economic center of gravity away from the West.

One was a new paper by Patel, Sandefur, and Subramanian pointing out that overall global convergence in per capita GDP, which used to be largely absent in the data, has become very pronounced since 1990, with really fast growth in middle-income economies. The other was a tweet by my CUNY Stone Center colleague Branko Milanovic, pointing out that convergence among Western economies seems to have stalled.

I’d argue that these observations are really part of the same story. Let me start with Branko’s observation.

The way I’d make sense of this observation is to argue that the West has already converged, in terms of technology and productivity. The remaining differences in GDP per capita mainly reflect different social choices over things like vacation........

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