State of the Developing World: PPP Income, Catching-Up/Falling Behind, and No Growth

Abstract

The author has recently, defining a catch-up index, growth as catching-up, and deriving an equation for years for absolute convergence, shown Sub-Saharan Africa has fallen behind sharply and, even considering India’s population-weight, South Asia has barely shown any growth since 1951 (growing at 0.16% rate giving 1642 years for convergence). This paper extends the analysis to all developing countries and distinguishes catch-up of a country’s income from absolute poverty and global inter-personal distribution of income on grounds country of residence matters. It shows the developing world (excluding China and one/two countries) consisting of 99/100 countries with 3.9/4.0b. population has not shown any growth since either 1951 or 1971; and its incomes have diverged continuously. It opines that to qualify as economic growth, one should look at data for longer than 20 years: Of the 30 best performers during 1991-2010, ten fell-behind and eight did not catch-up faster than 0.5% annually when their performance is examined over longer periods. If data for 12 excluded countries were available, conclusions would likely be worse.

Keywords: Income Gaps, China, India, Long-term Growth, Absolute Convergence Years

JEL Classification: O10, O43, O47