Understanding the ‘catch-up’ growth phenomenon

The more developing countries can invest while ensuring stability, the faster they can continue to catch up with richer nations in economic terms, writes Kemal Dervis

FOR almost two centuries, starting around 1800, the history of the global economy was broadly one of divergence in average incomes. In relative terms, rich countries got even richer. There was growth in the poorer countries, too, but it was slower than rich-country growth, and the discrepancy in prosperity between rich and poor countries increased.

This “divergence” was very pronounced in colonial times. It slowed after the 1940s, but it was only around 1990 that an entirely new trend could be observed — convergence between average incomes in the group of rich countries and the rest of the world.