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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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Editorial

OECD Development Centre

This fourth report in our series on shifting wealth raises the question of whether convergence in the living standards of emerging-market economies and developing countries to the level of advanced economies will continue in the years to come. Although convergence implies much more than economic growth, the dynamism of emerging-market economies has been an important driver in gradually bridging the living standards gap. In 2010, the share of global GDP of non-OECD countries in PPP terms surpassed that of OECD countries. This change in relative economic size is being led by China and India, which together already account for almost one quarter of global GDP in PPP. However, the differential rate of economic growth between OECD and non-OECD countries has narrowed recently and there has been a significant slowdown in the rate of growth of emerging-market economies. 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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