> Developing economies will of course grow faster.
No, they don't. Their GDP is more volatile, but over prolonged periods of time, they do not grow any faster. Most developing nations do not grow any faster at all. Very few do (only about 7% of poor nations managed to rise to middle income nations since 1870 or since the nation came into existence[1]. And in the same time, middle income nations are twice as likely to become poor than to become high income[1]).
The idea that there is "convergence" in which poor nations rise to become middle income and then middle income rise to become rich nations is a myth.
Yet it's one of those "cockroach myths" that never seem to die, because it appeals to people's intuitions, even though the data is clear on this point. Today, development economists no longer speak of "convergence" but of "low income trap" and "middle income trap".
But what the East Asian nations did by breaking out of these traps was incredibly impressive and equally rare. Think of a prison of poverty that no one has been able to escape, and they managed to escape it. It's an amazing feat.
For example, see this research article with transition probabilities:
No, they don't. Their GDP is more volatile, but over prolonged periods of time, they do not grow any faster. Most developing nations do not grow any faster at all. Very few do (only about 7% of poor nations managed to rise to middle income nations since 1870 or since the nation came into existence[1]. And in the same time, middle income nations are twice as likely to become poor than to become high income[1]).
The idea that there is "convergence" in which poor nations rise to become middle income and then middle income rise to become rich nations is a myth.
Yet it's one of those "cockroach myths" that never seem to die, because it appeals to people's intuitions, even though the data is clear on this point. Today, development economists no longer speak of "convergence" but of "low income trap" and "middle income trap".
But what the East Asian nations did by breaking out of these traps was incredibly impressive and equally rare. Think of a prison of poverty that no one has been able to escape, and they managed to escape it. It's an amazing feat.
For example, see this research article with transition probabilities:
[1] https://www.stlouisfed.org/publications/regional-economist/o...