GDP
and GNP
growth rates in developing
countries are on average higher than those
in developed
countries. Moreover, the difference became
even larger in recent years because GNP growth in developed
countries slowed from more than 3 percent a year in the
1980s to about 2 percent a year in the first half of the
1990s. Low-income countries, by contrast, appear to have
performed much better during this period, with GNP growing
by almost 6 percent a year in 1980-95. So, will the poor
countries soon catch up with the rich?
Unfortunately, the economic
growth patterns described above do not mean
that the world is on its way to "convergence"- that is,
to the gradual elimination of the economic gap between rich
and poor countries. Much faster population growth in most
developing countries is offsetting comparatively faster
GNP growth, causing GNP per capita growth rates in these
countries to be low or even negative (Figure
4.1; Map 4.1).
As a result the gulf between the average GNP per capita
in developing and developed countries continues to widen.According
to a World Bank study, per capita income in the richest
countries was 11 times greater than in the poorest countries
in 1870, 38 times greater in 1960, and 52 times greater
in 1985. In the early 1990s, of $23 trillion in global GDP,
only $5 trillion- less than 20 percent- was generated in
developing countries- even though these countries accounted
for about 80 percent of the world's population.
The rapid average growth in developing countries also masks
growing disparities among these countries. Between 1985
and 1995 East Asia experienced the fastest growth of GNP
per capita- more than 7 percent a year (Figure
4.2). But in two other regions of the developing world,
the average annual growth rate was negative: -1.1 percent
in Sub-Saharan Africa, and -0.3 percent in the Middle East
and North Africa. The biggest drop in GNP per capita growth
occurred in Eastern Europe and Central Asia because of the
economic crisis caused by the transition from planned to
market economies.
The news is not all bad for developing countries, however.
The two developing countries with the biggest populations
did comparatively well in 1985-95. In India GNP per capita
grew by about 3.2 percent a year, and in China by an unprecedented
8.3 percent a year. Rapid growth in China and India explains
why more than half of the world's population lives in economies
growing faster than 2 percent a year (Figure
4.3). But when China and India are excluded from the
sample of low-income countries, average annual growth in
this group turns negative (see Figure
4.1). In 1985-95 more than half of developing countries
had negative growth rates, and four-fifths of those with
positive growth rates were growing slower than high-income
countries (see Map 4.1).
Between 1965 and 1995 the gap between developed countries
and most developing countries widened considerably (Figure
4.4). Asia was the only major region to achieve significant
convergence toward developed countries' level of GNP per
capita. Per capita income in the newly industrialized economies
of Asia- Hong Kong (China), the Republic of Korea, Singapore,
and Taiwan (China)- increased from 18 percent of the developed
countries' average in 1965 to 66 percent in 1995. At the
same time Africa, for instance, became even poorer in relative
terms. The average per capita income in African countries
equaled 14 percent of the developed countries' level in
1965 and just 7 percent in 1995. You can mark the 1995 position
of your country on Figure 4.4 using Data Table 1 at the
end of this book (see the PPP estimates of GNP per capita
and use the average of $24,930 for GNP per capita in developed
countries).
Today only about 10 developing countries- those with GNP
per capita growth rates more than 1 percentage point higher
than the average for developed countries- can look forward
to catching up with developed countries within the next
hundred years. And those 10 countries will only catch up
if they can maintain their high growth rates. Doing so will
be a challenge. In fact, the poorer a country is, the harder
it is to maintain the high investment needed for growth
(see Chapter 6).
