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Perspectives on Global Development 2014

Boosting Productivity to Meet the Middle-Income Challenge

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Developing economies continue to grow faster than more advanced countries. Non-OECD countries’ share in world GDP surpassed that of OECD countries in 2010. Since its first edition in 2010, the annual Perspectives on Global Development has investigated the trends in “shifting wealth”, the increasing economic weight of developing countries in the world economy. “Shifting wealth” has received a boost through the rise of China, which has also led to positive spillover effects on developing economies that supply China’s demand for resource-based products and intermediates. However, even at their higher rates of growth since 2000, the per capita incomes in developing countries – including many middle-income countries – will not reach the levels of developed countries by 2050. Boosting productivity growth in middle-income countries could stem this trend and is the focus of this report. At the same time, this growth needs to be inclusive so a real convergence in living standards can take place.

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Competitiveness in and through services

OECD Development Centre

Fostering the development of competitive service sectors has great potential to enhance overall competitiveness and to contribute to the convergence process in middle-income countries. They can help create jobs and – with their relatively low resource intensity – drive inclusive, sustainable development. Rapid progress in ICT has allowed economies of scale in the production of most services and spillover effects to be realised. The first section endeavours in particular to show that services can contribute to the movement towards convergence in that they help increase consumption, complement manufacturing, and are increasingly tradeable. Sustained competitiveness in services can be achieved only through higher productivity and efficiency. The second section of this chapter shows that while emerging countries’ productivity levels in some services are still considerably lower than those of the advanced economies, they are catching up. The third section identifies policy options to develop competitive service sectors.

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