The Next Hundred Years of Growth: Growth and Convergence

25 Pages Posted: 28 Oct 2016 Last revised: 29 Oct 2016

Date Written: October 26, 2016

Abstract

I use a Bayesian Markov-switching model to forecast world GDP per capita over the next 100 years. The switching model estimates the probability that a country is currently on a path to converge to the world frontier for each country in the world, as well as the probability that a country that is not currently converging will switch to a convergent path. Forecasts depend on both the rate of growth in income in countries at the world frontier and the rate at which other countries converge to that frontier. Convergence is a major course of growth, but this is largely due to countries which have already begun to converge. I forecast world income per capita to grow over the next hundred years at an annual rate of 2.5 percent. World income will be triple today’s U.S. income, although there will continue to be considerable inter-country inequality. Eighty percent of the world’s population will have income above today’s U.S. income, but only small fraction will have income above future U.S. income. A modest drop in the world Gini coefficient is predicted.

Keywords: growth, Markov-switching

JEL Classification: D04, C11

Suggested Citation

Startz, Richard, The Next Hundred Years of Growth: Growth and Convergence (October 26, 2016). Available at SSRN: https://ssrn.com/abstract=2859652 or http://dx.doi.org/10.2139/ssrn.2859652

Richard Startz (Contact Author)

UCSB ( email )

Department of Economics
University of California
Santa Barbara, CA 93106-9210
United States
805-893-2895 (Phone)

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