Playing catch up

Data provided by the World Bank and studied by the Commission on Growth and Development has indicated the differences in economic performance of nations are significant. This applies particularly to Africa and Latin America, where growth has been slow or has slowed down relative to the incomes of industrialised countries.

This implyies that they have fallen behind. Another way of describing differences in developing countries’ economic performance is to ask what growth rate a country would need to achieve to catch up with industrialised countries (whose per capita income is growing at the 2 per cent secular rate) by a certain date.

Current trends persisting, China could reduce its per capita growth rate to 5.7 per cent per year, down from its 8.3 per cent average during the past 10 years. This indicates that at current rates China will catch up with industrialised countries before 2050. Growth has recently accelerated in countries in Africa, Latin America, and West Asia, partly as a result of commodity price increases, and partly as a result of changes in economic policies. The issue now is whether this acceleration will persist.