We live in a world where economic development takes place in different pace for different regions. It has always been like this, but for the first time in modern history, it is no longer western developed countries having the fastest growth.
Professor Michael Spence, 2001 winner of the Nobel Prize in Economic Sciences, set out to explain the future of economic growth in a multispeed world in his book The Next Convergence, which was published in 2011. The future is, he believes, a bright one, in which perhaps 75 per cent of the worlds population will enjoy standards of living similar to those of today’s high-income countries by 2050.
The book starts in 1950 at the beginning of what Professor Spence expects to be a century of economic convergence. At first such convergence was difficult to sustain. Only 13 developing countries managed to grow at an average rate of 7 per cent or more in 25 years. Fewer still managed to jump from poverty to affluence. But this sort of growth is now being achieved by giant countries, notably China, India and Brazil, with several other countries following close behind. That changes everything.
On May 10th, the IMF released a regional economic outlook for Sub-Saharan Africa. The statistics in the report supports the predications in Professor Spence book.
The report shows that economic growth in sub-Saharan Africa remained strong in 2012, with regional GDP increasing by 5%. Growth was particularly strong among oil exporters and low-income countries, while middle-income countries with closer ties to Europe saw a deceleration.
The smaller fragile countries still lagged behind relative to the regional average, and civil unrest was a drag on growth in a few countries. Inflation declined in most of the region, reflecting moderation in the movement of global commodity prices, improved local climate conditions, and tight monetary policy. The near-term outlook for Sub-Saharan Africa remains positive, with growth projected to accelerate to around 5.5% in 2013-14.
Click on the image to the right to download a copy of the report.
If you want to know more about the ideas of Professor Michael Spence and the Next Convergence, below is a talk where he presents his book.