On the structure of the present-day convergence



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Note: Calculated on the data from World Bank (2013, NE.GDI.FTOT.ZS.)
per capita (e.g. Alfaro et al., 2004; Blonigen and Wang, 2005; Borensztein et al., 1998). Moreover, FDI has a significantly positive direct effect on TFP growth, which is extremely important, as more than half of the cross-country variation in both income per capita and its growth results from differences in TFP and its growth, respectively (for a detailed review see Woo, 2009).
This taken into account, the particularly high-economic growth rates in the middle-income countries are clearly not coincidental.
Possible global implications of the convergence-divergence pattern
Thus, the structure of convergence-divergence pattern in the recent years is rather complex. The gap between the high-income and the middle-income countries has been decreasing rapidly. This fact is particularly noteworthy when taking into account that the middle-income countries currently accommodate about 70 percent of the world population (about five billion people). If the current pace persists in the nearest decades, the prospects for these 70 percent look truly bright, as the gap between the high-income OECD countries and the middle-income countries will essentially


Figure 6.


Proportion of investments in GDP (percent), 2008







CWIS

disappear in just 15-20 years. However, such an over-optimistic view about the




31,2/3

middle-income countries fully converging to the high-income ones is very doubtful due




to the prospect of the “Reindustrialization of the West (or possibly, just the USA based













on cheap energy coming from shale oil,” on the one hand, and the “middle-income







trap” awaiting the middle-income countries, on the other. Indeed, a number of Latin







American countries were the first to experience stagnation at middle-income levels and




148

failure to move further into the ranks of high-income countries (note that exactly such




stagnation could easily be caused by too weak democratically legitimated institutions which seems a necessity to further growth according to some economic thought (see, e.g. Acemoglu, 2009). A number of works reveal the same threat to be currently looming large for many developing countries in other regions, notably in Asia (including China) (see, e.g. Grinin and Korotayev, 2010; Kohli and Mukherjee, 2011; Cai, 2012; Kharas and Kohli, 2011; Aiyar et al., 2013).

The gap between the high-income and the low-income countries has also been decreasing lately, but at a much slower pace. Meanwhile, the gap between the middle-income and the low-income countries has been growing steadily. This latter gap was about three times in the early 1980s and looked insignificant as compared to the colossal gap (by almost ten times) between the high-income and the middle-income countries. The current picture is remarkably different: the low-income countries lag behind the middle-income by more than five times, which is almost equal to the gap between the middle-income and the high-income countries.


As regards the low-income countries, we would like to emphasize that their total population does not exceed one billion people. (World Bank, 2013, SP.POP.TOTL), which is less than the total population of the high-income countries. In other words, “the bottom billion” is currently less than “the golden billion.” This means that when looking at the convergence and divergence processes through the prism of the population numbers in the converging/diverging countries, we are bound to state that currently the convergence processes clearly prevail over the divergence processes (much more people live in the converging countries than in the diverging ones). However, this disposition could very likely dramatically change in the coming decades, as the population growth rate in the “bottom billion” is much higher than in the rest of the world. Indeed, the African populations have recently been growing more rapidly than the non-African developing world had grown at its peak, and that the ratio of young dependents to the working-age population had exceeded historical developing-country norms by 1970, and remains above these through 2000 (Ndulu et al., 2007, p. 106). A decade of economic successes was barely enough to bring many countries just to the WHO recommended level of per capita food consumption; however, if the fertility decline fails to accelerate and population continues rocketing up, sustaining this level (let alone surpassing it and starting to catch-up, which is utterly necessary for improving the living standards of the majority of population) is likely to become “mission impossible.”
Conclusion
Our analysis reveals a rather significant re-configuration of the world system in the latest 30 years. It is namely the middle-income countries that demonstrated the highest economic growth rates after 1990 (and even more so after 2000). This is quite explicable, as in the modern world namely the middle-income countries generally have the best opportunities for achieving high-economic growth rates. Indeed, the workforce in such countries is still rather cheap (as compared to the high-income ones), but already benefits




from rather high levels of education and health system, which greatly increases the quality of the workforce (as compared to the low-income countries). The low-income countries, on the other hand, are lagging behind in terms of education (especially secondary and tertiary education) and still experience extremely high population growth rates, which increases the age-dependency ratio and decreases the economic growth rates. While the middle-income countries have been converging to the high-income ones, the low-income countries have actually been diverging from the middle-income ones. This is a rather threatening trend which requires specific international attention to removing the growth obstacles in the low-income countries (among other things, increasing the education level and the quality of the workforce, as well as bringing down the extreme population growth rates). This is especially true regarding the type of developmental cooperation with those low-income countries that should shift away from a philosophy of power relations (dictate of the stronger) toward a philosophy of cooperation and mutual esteem, and understanding of the real needs of poor countries. This particularly underlines the urge for another global political structure.


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About the authors
Dr Andrey Korotayev (born in Moscow) attended the Moscow State University, where he received a BA degree in 1984 and an MA in 1989. He earned a PhD in 1993 at the Manchester University, and in 1998 a Doctor of Sciences degree at the Russian Academy of Sciences. He is currently the Head of the Laboratory of Monitoring of the Risks of Sociopolitical Destabilization of the National Research University Higher School of Economics and a Senior Research Professor at the Center for Big History and System Forecasting of the Institute of Oriental Studies as well as in the Institute for African Studies of the Russian Academy of Sciences. In addition, he is a Senior Research Professor of the Laboratory of Political Demography and Macrosocial Dynamics of the Russian Academy of National Economy and Civil Administration, as well as a Full Professor of the Faculty of Global Studies of the Moscow State University. He is co-editor of the journals Social Evolution & History and Journal of Globalization Studies, as well as History & Mathematics and Evolution almanac. Together with Askar Akayev and George Malinetsky he is a coordinator of the Russian Academy of Sciences Program “System Analysis and Mathematical Modeling of World Dynamics.” Korotayev is a laureate of the Russian Science Support Foundation in “The Best Economists of the Russian Academy of Sciences” nomination (2006). In 2012 he was awarded with the Gold Kondratieff Medal by the International N.D. Kondratieff Foundation. Dr Andrey Korotayev is the corresponding author and can be contacted at: akorotayev@gmail.com
Dr Julia Zinkina has her PhD in History and works as a Research Fellow at the Laboratory for Monitoring Sociopolitical Destabilization Risks, Higher School of Economics, and Institute for African Studies (Russian Academy of Sciences), Moscow, Russia.


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