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Abstract
This paper provides an historical overview of both the evolution of the economic performance of the developing world and the evolution of economic thought on development policy. The twentieth century was broadly characterized by divergence between high-income countries and the developing world, with only a limited number (less than 10% of the economies in the world) managing to progress out of lower or middle-income status to high-income status. The last decade witnessed a sharp reversal from a pattern of divergence to convergence – particularly for a set of large middle-income countries. The latter phenomenon was also driven by increasing economic ties among developing countries and, on the intellectual scale, increased knowledge generation and sharing among the developing countries. Re-thinking development policy implies confronting these realities: twentieth century economic divergence, the experience of the handful of success stories, and the recent rise of the multi-polar growth world. This paper provides descriptive data and a literature survey to document these trends.
Notes
1. See Bourguignon and Morrisson (Citation2002) for a calculation of global inequality since the start of the industrial revolution and a decomposition between within-country and between-country inequality. The figures referred to here are from Theil Index and Mean Logarithmic Difference measures. The between country share is larger for the ‘standard deviation of logarithm’ method; however, the same trend is followed: a lower share of between-country differences that then grows dramatically in the twentieth century. See Table of Bourguignon and Morrisson for more details.
2. This is the case for Equatorial Guinea, Trinidad and Tobago and Oman.
3. See Lin (Citation2012c).
4. Data from IMF’s Coordinated Direct Investment Survey (CDIS), Table 5-o.
5. See IMF, CDIS, Table 6.1o. The direct investment position of South Africa is $13.7 billion, while it is $11.6 billion for France.
6. This is based on a simple average GDP growth rate over the 2000–2008 period using data from the World Development Indicators.
7. The seminal papers are Prebisch (Citation1950) and Singer (Citation1950). For a more recent survey of the issues, see Bruton (Citation1998). There are also recent studies of the empirical observation of declining relative primary commodity prices, as in Harvey et al. (Citation2010).
8. See Fry (Citation1980, Citation1997) for a discussion of financial repression and later financial liberalization. Lin (Citation2009) and Lin et al. (Citation2009) provide a theory of optimal financial structure as a function of a country’s stage of development.
9. Krueger et al. (Citation1992) developed a methodology to quantify the degree of taxation and applied it to a variety of developing countries in a five volume compendium.
10. Data are from World Development Indicators, simple average growth rates.
11. See Lin (Citation2009).
12. See, for example, Sachs (Citation1993).
13. This discussion of the two track reforms draws on Lin (Citation2009).
14. See Lin (Citation2012c).
15. See Lin (Citation2012c).
16. See World Bank President Robert Zoellick’s speech, ‘Democratizing Development Economics,’ delivered at Georgetown University on September 29, 2010.
