Michael Spence (PhD)In 2008, the Commission on Growth and Development, which I had the privilege of chairing, produced a report updating our knowledge about sustainable growth patterns. Then, as now, one thing is clear: the policies that underpin multi-decade periods of high growth, structural transformation, rising employment and incomes, and dramatic reductions in poverty are mutually reinforcing. The impact of each is amplified by the others. They are ingredients in recipes that work – and, as with recipes, missing items can substantially undermine the outcome.
When World War II ended 70 years ago, much of the world – including industrialized Europe, Japan, and other countries that had been occupied – was left geopolitically riven and burdened by heavy sovereign debt, with many major economies in ruins. One might have expected a long period of limited international cooperation, slow growth, high unemployment, and extreme privation, owing to countries’ limited capacity to finance their huge investment needs. But that is not what happened.
MILAN – When World War II ended 70 years ago, much of the world – including industrialized Europe, Japan, and other countries that had been occupied – was left geopolitically riven and burdened by heavy sovereign debt, with many major economies in ruins. One might have expected a long period of limited international cooperation, slow growth, high unemployment, and extreme privation, owing to countries’ limited capacity to finance their huge investment needs.
Why Low-Cost Airline Carriers Don’t Work in Africa
Low-cost airline carriers (LCCs) have had a major effect on most of the world’s continents. Following the pattern of Southwest Airlines in the United States, budget carriers in Europe, Asia and even the Middle East – where it was popularly believed that travelers would equate low prices with low quality and take on low cost airlines – have opened up new horizons to millions of people.
Until relatively recently, countries’ so-called middle-income transitions were largely ignored – in part because what was supposed to be a transition often became a trap. A few economies in Asia – particularly Japan, South Korea, and Taiwan – sailed through to high-income status with relatively high growth rates. But the vast majority of economies slowed down or stopped growing altogether in per capita terms after entering the middle-income range.
Today, investors, policymakers, and businesses have several reasons to devote much more attention to these transitions. For starters, with a GDP that is as large as the combined total of the other BRICS countries (Brazil, Russia, India, and South Africa) plus Indonesia and Mexico, China has raised the stakes considerably. Sustained Chinese growth, or its absence, will have a significant effect on all other developing countries – and on the advanced economies as well.
Advanced economies’ experience since the 2008 financial crisis has spurred a rapidly evolving discussion of growth, employment, and income inequality. That should come as no surprise: For those who expected a relatively rapid post-crisis recovery, the more things stay the same, the more they change.
