The Bankwatch

Tracking the consumer evolution of financial services

“Convergent incomes and divergent growth – that is the economic story of our times” – Martin Wolf

In the midst of a fairly long piece, Martin summarises the distinction between emerging and advanced economies.  Incomes are converging between the two at a rapid pace and this produces highly divergent growth rates.

The most staggering statistic is that during the 5 years to 2010, the Chinese economy grew 70% and advanced economies grew by 5%.  Elsewhere he notes that China is where Japan was in the 1950’s relative to advanced economies.

In the grip of a great convergence | – Martin Wolf

In short, today’s divergent rates of growth between successful emerging economies and the high-income economies reflects the speed of the convergence of incomes between them. This divergence in growth is staggering. In an important speech in November, Ben Bernanke, chairman of the US Federal Reserve, noted that in the second quarter of 2010, the aggregate real output of emerging economies was 41 per cent higher than at the start of 2005. It was 70 per cent higher in China and about 55 per cent higher in India. But, in the advanced economies, real output was just 5 per cent higher. For emerging countries, the “great recession” was a blip. For high-income countries, it was calamitous.

Written by Colin Henderson

January 5, 2011 at 12:24

Posted in Uncategorized

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