On the structure of the present-day convergence

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Notes: From here on we use 2005 constant international dollars, PPP. The figures on the Y-axis scale denote by how many times the average GDP per capita in the high-income OECD countries exceeded the one in the low-income countries for a given year. Thus, the value of 25 for 1981 means that in 1981 the GDP per capita was 25 times higher in the high-income OECD countries than in the low-income countries. Calculations made on the basis of the data presented by: World Bank (2013, NY.GDP.PCAP.PP.KD.)
According to the World Bank classification, high-income OECD countries include Australia, Austria, Belgium, Canada, Chile, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Iceland, Ireland, Israel, Italy, Japan, Korea, Rep.; Luxembourg, the Netherlands, New Zealand, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, Switzerland, UK, USA.
According to the World Bank classification, the low-income countries include Afghanistan, Bangladesh, Benin, Burkina Faso, Burundi, Cambodia, Central African Republic, Chad, Comoros, the Democratic Republic of Congo, Dem. Rep.; Eritrea, Ethiopia, the Gambia, Guinea, Guinea-Bissau, Haiti, Kenya, North Korea, Kyrgyzstan, Liberia, Madagascar, Malawi, Mali, Mozambique, Myanmar, Nepal, Niger, Rwanda, Sierra Leone, Somalia,
South Sudan, Tajikistan, Tanzania, Togo, Uganda, Zimbabwe
is kept in the nearest decades, the gap between the high-income OECD countries and the middle-income countries will essentially disappear in just 15-20 years. However, such a bright prospect of the middle-income countries fully converging to the high-income ones is very doubtful with a view to the prospect of the “Reindustrialization of the West,” on the one hand, and the “middle income trap” awaiting the middle-income countries, on the other. As defined by Aiyar et al., the “middle-income trap” is “the phenomenon of hitherto rapidly growing economies stagnating at middle-income levels and failing to graduate into the ranks of high-income countries” (Aiyar et al., 2013, p. 3). For a detailed description of the factors and mechanisms of the middle income trap (see, e.g. Kharas and Kohli, 2011).
Finally, let us view the dynamics of the gap in GDP per capita between the middle-income countries and the low-income countries in the past three decades (see Figure 3).

Structure of the present-day convergence


Figure 1.
The dynamics of the gap in GDP per capita (by how many times) between the high-income OECD countries and the low-income countries, 1981-2012

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