The Future of Convergence
AbstractNovelists have a better track record than economists at foretelling the future. Consider then Gary Shteyngartâ€™s timely comic novel â€œSuper Sad True Love Storyâ€ (Random House, 2010), which provides a rather graphic vision of what lies in store for the world economy. The novel takes place in the near future and is set against the backdrop of a United States that lies in economic and political ruin. The countryâ€™s bankrupt economy is ruled with a firm hand by the IMF from its new Parthenon-shaped headquarters in Singapore. China and sovereign wealth funds have parceled Americaâ€™s most desirable real estate among themselves. Poor people are designated as LNWI (â€œlow net worth individualsâ€) and are being pushed into ghettoes. Even skilled Americans are desperate to acquire residency status in foreign lands. This is sheer fantasy of course, but one that seems to resonate well with the collective mood. A future in which the U.S and other advanced economies are forced to play second fiddle to the dynamic emerging economies in Asia and elsewhere is rapidly becoming clichÃ©. This vision is based in part on the very rapid pace of economic growth that emerging and developing economies experienced in the run-up to the global financial crisis of 2008-2009. Latin America benefited from a pace of economic development that it had not experienced since the 1970s, and Africa began to close the gap with the advanced countries for the first time since countries in the continent received their independence. Even though most of these countries were hit badly by the crisis, their recovery has also been swift. Optimism on developing countries is matched by pessimism on the rich country front. The United States and Europe have emerged from the crisis with debilitating challenges. They need to address a crushing debt burden and its unpleasant implications for fiscal and monetary policy. They also need to replace growth models which were based in many instances on finance, real estate, and unsustainable levels of borrowing. Japan has long ceased to exhibit any growth dynamism. And the eurozoneâ€™s future remains highly uncertain -- with the economic and political ramifications of its unraveling looking nothing less than scary. In such an environment, rapid growth in the developing world is the only thing that could propel the world economy forward and generate increasing demand for rich-country goods and services â€“ the only silver lining in an otherwise dreary future. The question I address in this paper is whether this gap in performance between the developed and developing worlds can continue, and in particular, whether developing nations can sustain the rapid growth they have experienced of late. I will not have anything to say on the prospects for the advanced economies themselves, assuming, along with conventional wisdom, that their growth will remain sluggish at best. My focus is squarely on the developing and emerging countries and on the likelihood of continued convergence.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Harvard Kennedy School of Government in its series Scholarly Articles with number 5131504.
Date of creation: 2011
Date of revision:
Publication status: Published in HKS Faculty Research Working Paper Series
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-05-29 (All new papers)
- NEP-DEV-2012-05-29 (Development)
- NEP-PKE-2012-05-29 (Post Keynesian Economics)
- NEP-SEA-2012-05-29 (South East Asia)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dani Rodrik, 2007.
"Introductiion to One Economics, Many Recipes: Globalization, Institutions, and Economic Growth
[One Economics, Many Recipes: Globalization, Institutions, and Economic Growth]," Introductory Chapters, Princeton University Press.
- Barry Bosworth & Susan M. Collins & Arvind Virmani, 2006.
"Sources of Growth in the Indian Economy,"
India Policy Forum,
Global Economy and Development Program, The Brookings Institution, vol. 3(1), pages 1-69.
- Andrei A. Levchenko & Jing Zhang, 2011.
"The Evolution of Comparative Advantage: Measurement and Welfare Implications,"
NBER Working Papers
16806, National Bureau of Economic Research, Inc.
- Jing Zhang & Andrei A. Levchenko, 2011. "The Evolution of Comparative Advantage: Measurement and Welfare Implications," 2011 Meeting Papers 302, Society for Economic Dynamics.
- Simplice A, Asongu, 2012.
"African Financial Development Dynamics: Big Time Convergence,"
36053, University Library of Munich, Germany.
- Asongu Simplice, 2012. "African Financial Development Dynamics: Big Time Convergence," Working Papers 12/003, African Governance and Development Institute..
- Asongu Simplice, 2012.
"African Stock Market Performance Dynamics: A Multidimensional Convergence Assessment,"
12/004, African Governance and Development Institute..
- Simplice A, Asongu, 2012. "African Stock Market Performance Dynamics: A Multidimensional Convergence Assessment," MPRA Paper 36055, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ben Steinberg).
If references are entirely missing, you can add them using this form.