Chapter_6 - Narrowing the Economic Gap in the 21st Century...

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Narrowing the Economic Gap in the 21 st Century Stephen L. Parente University of Illinois November 6, 2009
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I. Introduction circle6 Today, huge differences in international incomes.
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I. Introduction circle6 Today, huge differences in international incomes. circle6 In 2000, the average citizen living in the United States was more than 50 times richer than the average person living in Tanzania, or Burundi.
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I. Introduction circle6 Today, huge differences in international incomes. circle6 Three centuries ago, little difference in incomes.
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I. Introduction circle6 Question ? What will happen in the 21 st Century?
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I. Introduction Answer: The Good News-
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I. Introduction Answer: The Good News- circle6 Disparity has effectively stopped increasing as all but sub-Sahara Africa are experiencing sustained growth.
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I. Introduction Answer: The Good News- circle6 Disparity has effectively stopped increasing as all but sub-Sahara Africa are experiencing sustained growth. circle6 Catch-up in some late starters. Indeed, there are advantages to being a later starter.
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I. Introduction Answer: The BAD News-
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I. Introduction Answer: The BAD News- circle6 Catch-up is not automatic. circle6 Requires changes, reforms that will be resisted by subsets of population. circle6 Not sure if poor countries have the political willpower to make the necessary changes.
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II. Some Facts - Great Divergence circle6 Current huge disparity is the result of countries starting to experience economic growth at different dates.
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II. Some Facts - Great Divergence circle6 Current huge disparity is the result of countries starting to experience economic growth at different dates. circle6 Economic growth first begins in England in the 18th Century. Starts shortly thereafter in U.S. and Western Europe
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II. Some Facts - Great Divergence circle6 Current huge disparity is the result of countries starting to experience economic growth at different dates. circle6 Economic growth first begins in England in the 18th Century. Starts shortly thereafter in U.S. and Western Europe circle6 Many countries only recently have begun to realize sustained increases in per capita income.
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II. Some Facts- Differences in Starting Dates 1800 1850 1900 1950 2000 Japan Brazil India Leader Mexico 500 1,000 2,000 4,000 8,000 16,000 32,000
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II. Some Facts- Evolution of International Incomes: 1700-1990 1700 1750 1800 1850 1900 1950 2000 1/2 1/4 1/8 1/16 W es tern E urope Latin A m eric a A s ia A fric a 1
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II. Some Facts - Catch-Up circle6 Post War Experience of Western Europe circle6 Growth Miracles of Japan, S. Korea, Taiwan, Singapore, China, Botswana Doubled their living standard in a decade or less All Post 1950 Phenomenon Limited to countries that were poor when miracle began
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II. Some Facts- Advantage with Being Late Starter 0 20 40 60 80 1820 1860 1900 1940 1980 N.Z. U.K. NETH U.S. IRE CAN JPN NOR S.A. TUR TAIW CHIL PERU COL PORT BUL P.R.
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