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Trade and Development Report 2006

Global Partnership and National Policies for Development

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Since 2002, world economic expansion has had a strong positive impact on growth and helped support progress towards the United Nations Millennium Development Goals. Most developing countries have benefited from this growth momentum as a result of strong demand for their exports of primary commodities and, to an increasing extent, of manufactures. However, global economic imbalances continue to pose a risk to the outlook of the world economy. Much depends on the ability of developing countries to adopt more proactive policies in support of capital formation, structural change and technological upgrading, and on the latitude available to them in light of international rules and disciplines. The Trade and Development Report 2006 offers relevant ideas and general principles for designing macroeconomic, sectoral and trade policies that can help developing countries to succeed in today’s global economic environment.

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National policies in support of productive dynamism

The widening gap in relative income levels between rich and poor countries has been a major trend in the world economy over the past 250 years. On one estimate, the difference in per capita income between the richest and the poorest country in the world was about 5:1 before the Industrial Revolution; today this difference has increased to 400:1 (Landes, 1998). While the exactitude of these numbers is debatable, there can be little doubt that the world economy has been on a long-term path of substantial and growing divergence in relative productivity levels and living standards, both between developed and developing countries and among developing countries themselves.

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