When the world’s policy makers meet in Washington this month, the travails of advanced countries will be the focus. Five years into the global financial crises, the economic landscape remains largely cheerless. A depressed eurozone is struggling with high and rising unemployment. The US recovery is fitful. The blistering pace of emerging market growth has cooled. But all this risks obscuring the good news: that the golden age of global economic growth, which began in the mid-to-late 1990s, has mostly survived. These continue to be the best of economic times.
Lant Pritchett of Harvard famously described the phenomenon whereby the living standards of a few countries pulled away from the rest in the aftermath of the industrial revolution as “divergence, big time”. My 2011 book, Eclipse , documented the converse: never had the living standards of so many poorer nations begun to “converge” or catch up with those of advanced countries. What we are seeing today, despite the crises, is convergence with a vengeance. An unequal world is becoming less so.
Convergence occurs when a country’s rate of economic growth per head exceeds that of the typical advanced country, say the US. Between 1960 and 2000, the US grew at about 2.5 per cent. About 20 poor countries (excluding oil exporters and small countries) grew faster than the US by 1.5 per cent on average, among them remarkable growth stories such as Japan, Korea, Singapore, China and India.