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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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Executive summary

OECD Development Centre

Many middle-income countries are not on course to converge with OECD per capita incomes: Strong growth over much of the past decade has substantially boosted developing countries’ share of the global economy. But will this process of shifting wealth allow these countries to eventually converge with the average OECD per capita income level? After a long period of impressive progress, growth rates have begun slowing in some middle-income economies. At average growth rates over 2000-12 several middle-income countries will fail to converge with the average OECD income level by 2050.Their challenge is deepened by the slowdown in China, where rapid growth has up to now benefited its neighbours and suppliers, in particular natural-resource exporters.

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