Growing Pains? A Comment on “Converging to Convergence”

13 Pages Posted: 19 Jul 2021 Last revised: 18 Nov 2021

See all articles by Rohini Pande

Rohini Pande

Yale University - Economic Growth Center

Nils Enevoldsen

Independent

Date Written: July 2021

Abstract

Early tests of cross-country convergence found evidence only for conditional convergence. In contrast, with more recent data, Kremer, Willis, and You (2021) find evidence that since the mid-1980s there has been a trend towards unconditional convergence culminating in absolute convergence since 2000. Additionally, they find suggestive evidence that one of the major drivers of this trend is an underlying convergence towards development-favored policies. We discuss the implications of this result through the lens of individual welfare and poverty, concluding that the news is not as welcome as it may seem for the world’s poor. We point out that absolute convergence has happened contemporaneously with rising within-country inequality, resulting in more of the world’s poor living in middle-income countries. Next, we argue that domestic redistribution is essential to spread the benefits from industrialization, since the labor share of manufacturing isn’t reaching the heights it did in industrialized countries. Finally, we argue that the democratic institutions that can facilitate this redistribution themselves face headwinds. Democratic backsliding, the Covid-19 pandemic, and a bleak climate outlook all present obstacles to transforming economic growth into economic justice for the poor.

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Suggested Citation

Pande, Rohini and Enevoldsen, Nils, Growing Pains? A Comment on “Converging to Convergence” (July 2021). Available at SSRN: https://ssrn.com/abstract=3889153 or http://dx.doi.org/10.2139/ssrn.3889153

Rohini Pande (Contact Author)

Yale University - Economic Growth Center ( email )

Box 208269
New Haven, CT 06520-8269
United States

Nils Enevoldsen

Independent ( email )

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