Economic Transformation, Population Growth and the Long-Run World Income Distribution

44 Pages Posted: 16 Jun 2006

See all articles by Marcos Chamon

Marcos Chamon

International Monetary Fund (IMF) - Research Department

Michael Kremer

Harvard University - Department of Economics; Brookings Institution; National Bureau of Economic Research (NBER); Center for Global Development; Harvard University - Harvard Kennedy School (HKS)

Multiple version iconThere are 2 versions of this paper

Date Written: February 2006

Abstract

We construct and calibrate a model of the world economy in which countries' opportunities to develop depend on their trade with advanced economies. Trade opportunities in turn depend on the relative population of the advanced and developing world. As developing countries become advanced, they further improve the trade prospects for the remaining developing countries. As long as the population growth differential between developing and advanced countries is not too large, the rate at which countries transition to prosperity accelerates over time. However, if population growth differentials are large relative to the transition rate, the world economy converges to widespread prosperity if and only if the proportion of the world population in advanced countries is above a critical level. The model suggests that countries which become more open are more likely to grow, but that increased openness by developing countries as a whole may lead to only modest increases in growth for developing countries in aggregate. The rapid rise of China may hurt some developing countries in the short-run, but will open tremendous opportunities for the remaining developing countries in the long-run.

Suggested Citation

Chamon, Marcos and Kremer, Michael R., Economic Transformation, Population Growth and the Long-Run World Income Distribution (February 2006). NBER Working Paper No. w12038. Available at SSRN: https://ssrn.com/abstract=883087

Marcos Chamon

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-5867 (Phone)

Michael R. Kremer (Contact Author)

Harvard University - Department of Economics ( email )

Littauer Center
Rm. 207
Cambridge, MA 02138
United States

Brookings Institution

1775 Massachusetts Ave. NW
Washington, DC 20036-2188
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Center for Global Development

2055 L St. NW
5th floor
Washington, DC 20036
United States

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
39
Abstract Views
718
PlumX Metrics