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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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Shifting wealth and the productivity challenges for middle-income countries

OECD Development Centre

The chapter begins with an update on recent trends in shifting wealth, examining global growth, trade and investment. The second section discusses the convergence prospects for middle-income countries and highlights the important role of productivity growth in boosting these prospects. This section also looks at trends in total factor productivity (TFP) and labour productivity for manufacturing and services in selected middle-income economies, summarising more detailed analyses found in later chapters. The following section examines the traditional drivers of growth that may be starting to fade in middle-income countries. The final section of the chapter provides a roadmap for the rest of the report and summarises key considerations for boosting productivity and supporting development.

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