Development Questions for 25 Years

Abstract

Looking at recent history, a first point that stands out is that there has been a massive divergence of growth rates in the last decades. Figure 36.1 shows income ratios of poor to rich countries in purchasing power parity (PPP) terms for selected regions in the second half of the last century, based on data from Maddison (2001). The East Asian ‘Tigers’ are the only group showing a sustained increase over most of the period, with modest catching-up on the part of other Asian regions (including China since the 1980s, and more recently India) in the last 25 years. Elsewhere, ratios declined, most notably for the Middle East and the formerly socialist countries after 1975. The diagram is disturbing especially because the downward paths of the ratios in several instances are due to stagnation or a decrease in the absolute value of GDP per capita of the follower countries. For example, Africa’s GDP per capita decreased from a high of 1,433 Geary-Khamis dollars¹ in 1977 to 1,217 in 1998. The Middle East fell to 4,053 Geary-Khamis dollars in 1998 from 4,716 in 1977. Lastly, the former USSR lost ground in record time, from 7,078 dollars per capita in 1989 to 3,893 in 1998.²