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What are the Policies and Long-Run Growth

In many concerns it is decidedly odd that world distribution of output per worker is as unequal as it is. Migration, World trade and flows of capital must all work to take resources and consumption goods from where they are cheap to where they are dear. As they travel with increasing volume and increasing speed as communication and transportation costs fall, these commodity and factor-of-production flows must erode differences in productivity and living standards between national economies. Furthermore most of the edge in productivity and standards of living levels held by the industrial core is no one's private property however instead the common intellectual and scientific heritage of humankind. Therefore every poor economy has an excellent opportunity to catch up with the rich by adopting and adapting from this open storehouse of modern machine technology.

We can view this certain glass either as half empty or as half full. Half full is that much of world that has already made the transition to sustained economic growth. Most people today live in economies that, while far poorer than leading-edge post-industrial nations of world's economic core, have successfully climbed onto escalator of economic growth and so the escalator to modernity. Economic transformation of most of the world is less than a century behind economic transformation of leading-edge economies-just an eye blink behind from the perspective of the six millennia since the spread of agriculture out of Middle East's Fertile Crescent.

Furthermore perhaps we can look forward to a future in that convergence of relative income levels will finally begin to occur. The bulk of humanity is now achieving material standards of living at which demographic transition takes control. As population growth rates in developing countries fall then their capital-output ratios will begin to rise rapidly. And--with tolerable government, better ways of achieving an education and reasonable security of property --their material standards of living and output per worker levels will converge to world's leading edge.

Half empty is that we live today in most unequal--in terms of divergence in the life prospects of children born into various economies--age that world has ever seen. Today one and a half billion people live in economies that haven't made the transition to intensive economic growth and haven't climbed onto the escalator to modernity. It is very hard to argue that median inhabitant of Africa is any better off in material terms than his or her counterpart of a generation before.

 

 

 

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M9575291

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