Global Development Horizon 2011

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Global Development Horizons 2011

Multpolrty: Te Ne Globl Economy


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G l o b a l D e v e l o p m e n t H o r i z o n s 2 0 1 1 v

Contents

Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi

Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv

Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .xvii

Abbreviations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xix

OvERviEw. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Emerging Growth Poles Will Alter the Balance o Global Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Emerging-Market Multinationals Becoming a Potent Force in Reshaping the Process oIndustrial Globalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Multipolar International Economy to Lead to a Larger Role or the Euro and, inthe Long Term, or the Renminbi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Multipolarity to Bring Benets and New Challenges to the Developing World . . . . . . . . . . . . . . . . . 9

ChaPTER 1: Cngng Grot Poles nd Fnncl Postons . . . . . . . . . . . . . . . . . . . . . . . . . 13

Growth Poles and the Global Macroeconomy in the Postcrisis Era . . . . . . . . . . . . . . . . . . . . . . . . . 14

The Character o Growth in the Potential Emerging Economy Poles . . . . . . . . . . . . . . . . . . . . . . . . 24

Dynamics o New Growth Poles: Implications or Domestic Output, Trade Flow Patterns,and Global Payments Imbalances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Growth Poles and Multipolarity in the Future World Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Policy Challenges and the Development Agenda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Annexes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

Reerences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

ChaPTER 2: Te Cngng Globl Corporte Lndscpe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

Emerging-Market Multinationals: Agents o Change in a Multipolar World . . . . . . . . . . . . . . . . . . . 75


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The Growth and Globalization o Emerging-Market Corporate Finance . . . . . . . . . . . . . . . . . . . . . . 89

Devising an Eective Framework or Cross-Border Investment . . . . . . . . . . . . . . . . . . . . . . . . . . 104

Annexes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108

Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .118

Reerences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120

ChaPTER 3: Multpolrty n interntonl Fnnce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125

International Currency Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127

Moving to a Multicurrency International Monetary System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133

The Shape o Things to Come: Some Scenarios or a Future International Monetary System . . . 142

A Path toward Improved Institutional Management o a Multipolar World . . . . . . . . . . . . . . . . . . 147

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151

Annexes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153

Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155Reerences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157

Boxes

1.1 What is a growth pole? Dening poles in theory and practice . . . . . . . . . . . . . . . . . . . . . . 16

1.2 Growth poles at the regional level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

1.3 Proximate and undamental actors related to multidimensional growth polarity . . . . . . . 22

1.4 Suggestive evidence o successul transitions to consumption-driven growth . . . . . . . . . 35

1.5 Modeling the current account and growth process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

1.6 Multipolarity and commodities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

2.1 Empirical analysis o cross-border bilateral M&A fows rom emerging economies . . . . . 872.2 The global expansion o cross-border nancial transactions . . . . . . . . . . . . . . . . . . . . . . . 90

2.3 Data on international bond issues by rms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

2.4 Econometric estimations o corporate bond spreads . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102

2.5 The long history o ailed negotiations over a multilateral investment ramework . . . . . . 105

3.1 Historically, one national currency has played a global roleor at most,a ew national currencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129

3.2 Benets rom currency internationalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135

3.3 The changing external nancial position o developing countries . . . . . . . . . . . . . . . . . . 143

Fgures1.1 Channels o growth spillovers rom a growth pole . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

1.2 Historical evolution o simple growth polarity, selected economies, 12008 . . . . . . . . . . 18

1.3 Modern evolution o multidimensional growth polarity, selected advanced andemerging economies, 19692008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

1.4 Evolution o multipolarity, alternative indexes, 19682008 . . . . . . . . . . . . . . . . . . . . . . . . 23

1.5 Global distribution o growth poles, 199498 and 200408 . . . . . . . . . . . . . . . . . . . . . . . 24

1.6 Total actor productivity contribution to growth, selected potential poles . . . . . . . . . . . . . 26

1.7 Technological innovation, selected potential emerging economy poles . . . . . . . . . . . . . . 27


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1.8 Technological adoption, selected potential emerging economy poles, 19712003 . . . . . . 28

1.9 Export and consumption contribution to growth, selected potential poles . . . . . . . . . . . . 29

1.10 Dominance o consumption to exports in growth, selected potential emerging

economy poles, 19772006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 301.11 Evolution o saving, selected potential growth poles, by sector . . . . . . . . . . . . . . . . . . . . 31

1.12 Incremental capital-output ratios, selected potential emergingeconomy poles, 19652008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

1.13 Investment shares o growth, selected potential emerging economypoles, 19722006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

1.14 Global distribution o research and development expenditure and researchershares, average over 200408 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

1.15 Global distribution and selected evolution o consumption share by per capita income . . 34

B1.4.1 Evolution o consumption and export shares, Botswana and Mauritius . . . . . . . . . . . . . . 35

1.16 Global real output shares, 2010 and 2025, baseline scenario . . . . . . . . . . . . . . . . . . . . . . 39

1.17 Output growth or emerging and advanced economies, 15-year average,19962010 (historical) and 201125 (baseline scenario) . . . . . . . . . . . . . . . . . . . . . . . . . . 40

1.18 Consumption and investment shares o output, current andpotential growth poles, 201125 baseline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

1.19 Global import and export shares o global trade, advanced andemerging economies, 200425 baseline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

1.20 Net international investment positions, advanced and emerging economies,and selected net asset countries, 200425 baseline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

1.21 Evolution o multipolarity, economic size and simple polarity index,19682025 (projected) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

1.22 Shares o total LDC bilateral trade, selected advanced andemerging economies, 19912010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

1.23 Dominant LDC merchandise exports to and imports romselected emerging economies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

1.24 Net ODA rom DAC countries to LDCs as share o LDC GDP, 19602008 . . . . . . . . . . . . 49

B1.6.1 Commodities price index, 19482010, and commodity intensity odemand, 19712010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

1a.1 Nominal GDP overtaking scenarios, selected emerging and advancedeconomy poles, 200925 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

1a.2 Real output growth in divergent productivity scenario, advanced economies andhigh- versus low-productivity emerging economies, 200525 . . . . . . . . . . . . . . . . . . . . . 60

1a.3 Marginal productivity o capital and imports under variousunbalanced growth scenarios, China, 201125 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

1a.4 Investment share o output under various external balance scenarios,selected potential emerging economy poles, 200425 . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

2.1 Total cross-border M&A deals by rms rom advanced economies andemerging-market economies, 19972010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

2.2 Total cross-border greeneld investment by rms rom advancedeconomies and emerging-market economies, 200309 . . . . . . . . . . . . . . . . . . . . . . . . . . 76

2.3 Total cross-border greeneld investment and M&A deals byemerging-market rms, 200310 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

2.4 Geographic distribution o the top 1,000 rms by R&D spending . . . . . . . . . . . . . . . . . . . 77

2.5 Cross-border patents granted worldwide to residents oemerging economies, 19952008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77


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2.6 Technology and institutional environment in developing and developed countries . . . . . . 78

2.7 Top source countries o emerging-market rms cross-borderM&A deals in emerging economies and advanced economies . . . . . . . . . . . . . . . . . . . . . 79

2.8 Top destination countries or emerging-market rms cross-borderM&A deals in emerging economies and advanced economies . . . . . . . . . . . . . . . . . . . . . 80

2.9 South-South cross-border greeneld investments and M&A deals, by value, 200310 . . 81

2.10 South-North cross-border greeneld investments and M&A deals, by value, 200310 . . 81

2.11 Cross-border M&A investment to low-income countries, 19972010 . . . . . . . . . . . . . . . . 85

B2.1.1 Selected bilateral M&A fows rom home to host economies, 2007 . . . . . . . . . . . . . . . . . 87

2.12 Projected emerging-market outbound cross-border deals through 2025 . . . . . . . . . . . . . 89

B2.2.1 Global expansion o cross-border economic transactions, 19832008 . . . . . . . . . . . . . . . 90

B2.2.2 Stronger growth in international trade o nancial assetsthan in goods trade, 19872008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

2.13 New cross-listings by oreign rms on U.S. and Europeaninternational stock exchanges, 200510 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95

2.14 Share o cross-listed rms that announced acquisitions ooreign rms, 2005Q2 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95

2.15 Equity nancing raised on the LSE, NYSE, and NASDAQ by emerging-marketacquirer rms, 1995October 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96

2.16 International bank lending to low-income countries, 19952010 . . . . . . . . . . . . . . . . . . . . 98

2.17 International bond issues emanating rom emerging economies, 19982010 . . . . . . . . . 98

2.18 International debt nancing by emerging-market rms, 200010 . . . . . . . . . . . . . . . . . . . 99

2.19 Average at-issue spreads o international privatecorporate bonds, by currency, 200307 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

2.20 Private bond spread versus GDP per capita . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

2.21 Private bond spread versus sovereign risk rating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

2.22 U.S. dollar corporate bond spread to benchmarks, 200010, average by year . . . . . . . . 103

2.23 Total number o active bilateral investment treaties, 19802007 . . . . . . . . . . . . . . . . . . 106

2.24 Number o bilateral investment treaties signed by advancedeconomy countries, as o 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106

2.25 The number o newly signed South-South BITs rose rapidly in the 1990s,ahead o the actual surge in South-South investment . . . . . . . . . . . . . . . . . . . . . . . . . . . 108

2a.1 Source o ADR issues on U.S. exchanges, 200010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .111

2a.2 Breakdown o tallies or new oreign company listings on the LSE AIM, 200010 . . . . . .112

B3.1.1 Historical Timeline o Dominant International Currencies . . . . . . . . . . . . . . . . . . . . . . . . 129

3.1 Currency denominations o banks international assets and internationalbonds outstanding, by percentage, 19992010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130

3.2 Global oreign exchange market turnover, by currency (net o local,cross-border, and double counting), 19982007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131

3.3 Composite indicator o international currency shares, 19992009 . . . . . . . . . . . . . . . . . 132

3.4 Global currency shares relative to trade share and economic size . . . . . . . . . . . . . . . . . . 133

B3.2.1 Gains rom the international status o currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135

3.5 Foreign residents U.S. asset holdings, 19802007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136

3.6 U.S. balance o payments, 19462008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137

3.7 The geographic distribution o trade concentration relative to China,the European Union, and the United States, 200509 period average . . . . . . . . . . . . . . 138

3.8 Share o global manuacturing exports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140


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B3.3.1 Evolution o net international investment positions, advanced andemerging economies, 200425 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143

3.9 Implied U.S. scal balances and global economic sizes, dollar standard and

multipolar currencies scenarios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1443.10 Membership in major international organizations, 19452010 . . . . . . . . . . . . . . . . . . . . . 146

3.11 Macroeconomic policy disparities, selected actual and potential growth polesamong advanced and emerging economies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147

3.12 Exchange rate arrangements o developing countries, 2000 and 2010 . . . . . . . . . . . . . . 149

3.13 SDRs as a percentage o the worlds oreign exchange reserves, 19702010 . . . . . . . . 150

3.14 Distribution o oreign exchange reserves, 1999 and 2008 . . . . . . . . . . . . . . . . . . . . . . . 151

Tbles

1.1 Multidimensional polarity index, top 15 economies, 200408 average . . . . . . . . . . . . . . . 20

B1.2.1 Regional simple polarity index, top three countries, 200408 average . . . . . . . . . . . . . . . 211.2 Current account balances, current and potential growth poles, 200425 . . . . . . . . . . . . . 41

1.3 Key perturbations or alternative growth and external balance scenarios . . . . . . . . . . . . . 44

1.4 Measures o growth poles, top 15 economies, 202125 baseline average . . . . . . . . . . . . 46

1a.1 Principal components index (with and without migration subindex) orgrowth poles, top 10 economies, 200408 average . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

1a.2 Estimates or proximate determinants o growth polarity . . . . . . . . . . . . . . . . . . . . . . . . . 56

1a.3 Estimates or undamental determinants o growth polarity . . . . . . . . . . . . . . . . . . . . . . . 57

1a.4 Correlations or consumption, investment, and exports with output, andchanges in consumption, investment, and exports with change inoutput, current and potential pole . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

1a.5 Estimates or empirical current account balances model, by country group . . . . . . . . . . . 58

1a.6 Additional current account balances, potential poles, 200415 . . . . . . . . . . . . . . . . . . . . . 59

2.1 Regional distribution o cross-border mergers and acquisitions, bynumber o deals and value, 19972010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83

2.2 Top emerging-market multinationals in cross-border mergers and acquistions,by number o deals, 19972010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92

B2.4.1 Detailed econometric results or regressions on spread determinants . . . . . . . . . . . . . . 102

2a.1 Summary statistics o corporate bond issuance by emerging-marketcountries, 19952009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109

2a.2 Denitions o key variables included in the database . . . . . . . . . . . . . . . . . . . . . . . . . . . . .110

2a.3 Determinants o cross-border outbound M&A investments . . . . . . . . . . . . . . . . . . . . . . .114

3.1 Currency shares o oreign exchange reserve holdings, by percentage, 19952009 . . . 131

3.2 Importance o selected national nancial markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134

3.3 International debt securities outstanding, by currency, 19992010 139

3.4 Renminbi local currency swap arrangements, July 2010 . . . . . . . . . . . . . . . . . . . . . . . . . .141

3.5 Currency denominations o the external balance sheets o theUnited States and China, end-2009 142

3a.1 Estimates o long-run global money demand or the U.S. dollar, euro,pound sterling, and yen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154

3a.2 Principle actor analysis o international currency use . . . . . . . . . . . . . . . . . . . . . . . . . . . 155


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xii Foreword Global Development Horizons 2011

z a a ca a ap gbaza pa abak p b ak a

pa aa . B 2025, pbab gba u a b aupa au a, u,a b. T a upp b k a U sa, u aa,a ca u aj gp b a , pvg uu u ug a, a, a -g a a b ag aaa u.

t pa g p agp a a

upa ak ggp a a vp-g a vpa ug k pa a ab. i aag up aa , -aa p akg a aagg p pab a- p, u a xag a -ag a pa baa. A apaak av b baz a xag aa xb, baa pa -a aa av b -

ab a, g p a a pa v p a a a p.

F pa, aa aa -u u gz a a a px bu- u ug a a v-p u (ldc) a gua aga va a u apa a a upa . ma ldc a av- a xa a g a,, ab aag xa a- b a. F ag

xag a g, a a ub vp a uap ak, ak uu, aaa u a a u ug g xag ak. Aa a aa aa a-a u av pa uva a aap gba vv a a u-pa .

i a pgv upa g a aa , pak qup v

a apab v apaz ppu uau agua-g aga k a aubb g a gba ugg a ab g. w a a , ag aquak aua a Japa ma 2011, p-a u g ppg u m eaa n Aa, a aa aag eupa vg b a a k xa a av gbaaa ak a g. s aga

bakp a ub-pa gba g aj,g v up a avaa vpg , a g fa-a pu a gg a -, v a u b, a up aab upg bak ,a bu v qup ag a b puv, a

jb, a ga g- g. i, ug g v a g a puv jb b a

abb ag u mea a n Aa g a ,a aquak-a pa Japa b bu, a a a a U sa a eup b avab.

t aa gba pa g a vg a ag aa a . A u- juu, U.s. a a pa aa u, p a a 1990 a aba-

a a ag Bw x xag a ( a a a u-). Bu a a gg p- aa u pa. c

pa u, a gagu a a a u g a v a a v a ,

a pu p g-g a a v i g ,


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iav a ga pa p k-g xag (p://aa.bak.g). i uu, a v a a p

a a pap ba vp- u, a a a v -av ba a kg vau kak, bu aa, a p ab- g- gba ag a pa vp p- a u.

Ju yu ls V P a c e

T w Bak

Global Development Horizons 2011 Foreword xiii

Fa, w Bak bv a a pub-a ga a uag kga a pa a agg

gba aap u b ag a a g. tu, Gdh b a a p puba a a pa

b (p://.bak.g/Gdh2011)a v a a x pap pub-a. T b b a pa p ug aa, g, bg p-g, a va bakgu pap. T

a u a av au a a v xp a b Gdh. T Bak aga az vp va u op daa


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G l o b a l D e v e l o p m e n t H o r i z o n s 2 0 1 1 xv

This rePort wAs PrePAred By egg Gba t a

w Bak dvp PpGup (decPG). ma daa a aau a aag a. T p appa ha t au ga gua Ju yu l,

w Bak s V P a ce.

t ovv a b madaa bu ab. cap 1 a b Jau Jl a Ja Aa-Ka. dquva mbugg a a b puab ga qubu gug w Bak lkag . ms. Ka (P iu iaae a iaama Fu) pv pu a u au g, J Ba a av , at Jau (Uv wg) p-v a au u-pa. cap 2 a b madaa, Jaqu ivg, a rbhaua (Aa Uv) bu sg Kua, yuqg Ja,a wa sa. cap 3 a bma daa a Pau ma (Uv t) bu hug skK, sg Kua, Gaba muaa, a

yuqg Ja.T p a b

Bak exuv d, a a aa ba g Ap 21, 2011.

ma pv av, pu, a a vau ag p -puaza a ppaa. A ha

acknoledgments

a v p dvp e V P apv ubaa a av.sak Fau pa vau g ag. ma Guga,maua V. F, J d. l, a J Fau(J hpk Uv) p v- a p p pap ag. mauaV. F, J d. l, ma Guga,Kapaa Ka, a Jua Aza(Uv caa a saa cuz) ua a Bak- v. i a,

Bak, pv bAugu a t, rva rkka, iG, Aa Aa, A dgu-Ku, ivaizvk, la Va G, w va eg,saaaa dvaaja, Akk n,m tuk-Pa, Aa Fa, Aaama, hau l K, magg c, hd, Vva h, Ja-Jaqu d, Vkt, lu sv, a dav rba.

ou Bak, vauab p av a xp ug g,u, a pa pa g. t u da Jg(hava Uv), Pp tu (Bak iaa s), a Aja sa a iaPaak (naa iu Pub Fa aP, ia).

t Gba dvp hzb a pu b dav hz, Jau J l, rba og, saa c, aKa r. ta p p-u b a pv b rua

yazg a Va Ka Ka, a Augucavj pv upp ag gua ab a v p.Bakgu pap a a a a


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ca, a sa Paa ma, aag a av. Bk g,g, a pu a b

c F, d Bg, saag Pb-Bjaa, a Paa m. Kaaaa,

w Bak o Pub.

avaab b (p://.bak.g/Gdh2011).

daa Vk p. ra ma

lu sg pv pu aa egg Gba t a a m tuk-Pa, rba og, ca

xvi Acknowledgments Global Development Horizons 2011


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G l o b a l D e v e l o p m e n t H o r i z o n s 2 0 1 1 xvii

Th i s r e P o r t i n t r o d U c e sg a u w Bak puba. T ga

k a u.

Growth pole: A a gav gba g.

Growth polarity: A au x a g p v gbag, ag a, a, g, aga a.

Potential growth pole: A a a pa b a g p uu,ug a av b a u- g p.

Potential emerging economy pole: Pag p a a a gg .

Multipolarity: T x a g p , aua g a g pa- ( a, ga g upa).

Advanced economies: e a avaa b a uaza: Auaa, caaa, u aa a eU-15, ia, Japa, nZaa, na, sza, a Usa Aa. U agab vp , a

Glossry

vpg , a gban, a gba su.

Developing economies: e a -, --, a upp-- ag w Bak aaa.

Emerging economy/market: e av g v pa aaa gag, ba a aad J, Ftse, JPmga ca a msciaa: Aga, Aga, Azbaja,T Baaa, Baa, Baba, Bau, Baz,Bugaa, c, ca, cba, ca ra,caa, cz rpub, da rpub,eua, Aab rpub egp, e sava,ea, Gga, Gaa, Guaaa, huga,ia, ia, Jaaa, Ja, Kazaka,Ka, rpub Ka, Kua, lava,lba, luaa, maaa, mx, mga,m, nga, oa, Paka, Paaa, Pu,Ppp, Pa, Qaa, raa, ruaFa, sau Aaba, sgap, su

Aa, s laka, Taa, ta a tbag,tuk, Uka, U Aab ea, Uugua,rpba Bvaaa Vzua, a Va.

AFR/SSA, EAP, ECA, LAC, MNA, SAR: Ta w Bak aa g(Aa, ea Aa a Pa, eup a caAa, la Aa a cabba, mea a n Aa, a su Aa), u-g g- u a g.


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G l o b a l D e v e l o p m e n t H o r i z o n s 2 0 1 1 xix

Adr Aa dp rp Aim Aav iv mak AsX Auaa su exagBis Bak iaa sBit baa v a

Bric Baz, rua Fa, ia, a caBriicKs Baz, rua Fa, ia, ia, ca, a rpub KacBo U.s. cga Bug oec pecB eupa ca BakeFsF eupa Faa sab FaeFsm eupa Faa sab maem gg akeoi xp- uazaeU eupa UFdi g vGAts Ga Ag ta sv

GAtt Ga Ag ta a taGdP g puGGB Ga gv bGmm gaz Gni g aa hBs ha-Baaa-sauicor a apa-upu aicrG iaa cu rk Gu (Prs Gup)idr ia pa pie iaa ep (sgap)ieA iaa eg AgiFs iaa Faa sa (imF)

iiP aa v pimF iaa ma Fuisi p ubug uazaiV ua vaabldc a vp ulse l sk exagm1 a uam2 gm&A g a aqunAsdAQ a U.s. k xag ( naa Aa su da Aua

Qua)

abbretons


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xx Abbreviations Global Development Horizons 2011

nyse n yk sk exagoecd ogaa e c-pa a dvpPmG p a gupPPP puag p par&d a a vpsdr() spa dag rg()sGX sgap sk exagswF vg a utFP a a puvUseiA U.s. eg ia Aa

wdi w dvp ia (w Bak) wiPo w iua Pp ogaza

A a au a U.s. a u a.


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Global Development Horizons 2011 1

Overview

Sweeping changes are aoot lbl my. a ddd 21 uy uld d

ld x m 200809 l , lu m mk v y ld my lymull . T dbu lbl ll bm m du, luy dm lbl m .

T d ld mm . ov dd, ld d m m bm ul l du,d, d . em d dvlu l d dly, m 26 1995 -md 42 2010. Mu

b du x d bdvld u d dvl u,bu m dvl u. smlly, m -d d vm dvl u uly dvl u. em mv l d l ld d

l. em d dvl u ld -qu ll fl xv ( vl vudd, dvd m ld -d ll v), d v l ud

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a v d mull m xu - m- m, l dmd

m-my u ll , mky lbl my ym m dm uy. T m m l ly v-m, m luv lbl -m ly mk uu.

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ld dm l. Tidul rvlu bu w eu

m . i wldw ii , Ud s dm- lbl my, gmyd J l ly ld l.

i m y, lbl my bu y mj , m u lly bm m d-d y m l 1960. Ju m, dvl u v vb mully m. Du d GlobalDevelopment Horizons (GDH) 2011m 2011

2025 m m llvbly v mj ml lblm d ll y, ju m-l m v d .

id du lbl d -m mv llvmm m vbl mm dd l l mull ldmy. T ky d m-m mull lbl my ll


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2 Overview Global Development Horizons 2011

lk b m dbly, n-su x l ,d ly U.s. dll lbl

my ym. su l mu dv db uu u l dvlm ly d du.

i uulbl my, d GlobalDevelopment Horizons m m u m ly d d ll ly mull ld my dvl u.

Emerging Growth Poles Will

Alter the Balance oGlobal Growth

t m dd ll lbl m ly b d m- m. By 2025, lbl m

ll dmly b d mm. alu my -m u- ly dully v m -l , m dvl u v lyud d.c m m

m , d ud qukly ud10 . id xd , bu l d m 10 - 2010, d vm u- l mbu v Y pl( mvd l d y v-m m) k lvl.L am ly budd 2010, ly 2009. ev sub-s

a xd u qukly lm6 ul , ml -m y b . ev

b u xlly dvl ld, bl lbl xd dmlly.

T l dvl u llm mj m -m, , d l ym.T lkly u d v-y . T bl dd GDH 2011 dvd m l-m l d d m d-lk

lv U.s.-dlbl m d l dbu d bl ym m-

d mm -l vl d b d b lbl l. i , lblm d bul mlmy m d uy mb Ud s d ,

dvl u ly ll mul mm l- d bl m lk yd b m dymm dvld u. i x Uds um bl ym

m, v mk l, d u m dly ud -l v uy, ky , weu u d J, qud l vl jyd by Ud s , dm mm l-y umy, d bl ym xbly.

Bdly, m ll ld, u bm vd m m. xml, d ldx dd 1971 ldd u (mlzd by Jm

am 1976), d blmd dvld u. pully e a l 199798, dvl- u v ly ld u. c uy u v lud. a eu lld jy v- m , u m l d xv ld. a m m, dvlm d d d dul m l v

bd dvl m dmly,b l d y m d l k u- lbl lbl d. i uldlbl m vm, um-b dym m m vlv k l lm lbl -my, mm mully dmd l ll vl lbl m v


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Global Development Horizons 2011 Overview 3

m u d dmy, lb , v ,d dul lvl l -

bl m m. T v- v v x 15 y

ll b ublly l 2010.hv, m m ll ll, ll-vly, xd by v 4.7 y (m dvld ld 2.3 ) b 2011 d 2025. (gv dbl uy udly l-m j, bl lud bd mz d -bl um). By 2025, x mj mmBzl, c, id, id,

rubl K, d ru dll llvly u m l lllbl . svl m ll l-lvly u m l lbl . T lbl my, dbud bdvld d m m, GDH

2011 v mull ld.

Altering this balance calls or productivitygrowth in emerging economies andrealignment o demand away rom

external sourcesev md dvlu, uul lz bl d GDH 2011 dd vl m m m. i ul, uu m mmk dd lly mbly u mvm lldymm d l -duvy (tp)d uully d l u dmd.

hlly, m m- m lld .t , z m u c, id, d ru, tp mj bu m. t d , lyb mm m m L

am d su a, ld by d mblz du. Y v m , tp

b lly du d d- x l, myd ll, d mvm ul

v, u v-v y. T l-u vbly -d m m ll u dd, , bly m m du v uvm um l d u ul mm mul xdu d dvl-m (r&D).

iv d vv y ldy m m. s2000, c d id v vd vly

r&D; xdu r&D ud 1.4 dm du (gDp) c d 0.8 id, bu d mud by m v m u.T mj l cby M, v n m- by id m t, d ud ul bku ru u m-my -l u lldvm.

rd mj m -m ll l d b md by lm y m xlu d d l dmd - ud y my . i c, xml, um jd m u 41 l m 55 by 2025, mu l lvl dvld u. sml l lkly u m m e eu. L am m,

um m ldy

65 d xd m lvl,ll b x d. T dl v lkly e ad e eu m, u-l ll b m dvd .i e eu, lvl um lkly u mly lvdl vm , dl lb vl u. a ul, u u d uld


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2010 (xmly m $2.1 l-l v ld by dvd m), d -bd m d qu

(M&a) by m bd m m 2010 29 ($470 bll) lbll.

t d d m m l uuly vll vll dd k b - d l-m u. i m llyl tp bu ubl duvy lvl u ul md ll v, x -k lbl my my u v u lly dv b

dvd m, l-duvy dvl- m, d -duvy dvlm. smlly, ud-d m- m k l dmd uul um, l m my vullyb ld d ly uduv,l-yld vm. t u-u m-mdy 2003 my l bm -, uld lly dl dvl u lly m-mdy v. o ud, m

m uully v m, vd y uulmvm, d l m, bl my udmm m uu l.lly, uxd m d lldvlm my du udml u-y u mbl dvl .

Emerging-Market Multinationals

Becoming a Potent Force inReshaping the Process oIndustrial Globalization

L ld d- u, m-mk m bm ul d lbl duld l ld. td dvm (Di) l d u. B 1997 d 2003,

u. cvly, u ulu vl a u uld b dud dl v . t -

dm v Ud s l , m m l m m d lbl mbl, dd bl .

su um u-u m m ll b ky -ld m xlly dv lly dv d ll qu x mddl l, , u,

ll ll m-mk ly mk u bd l dvlm d

mv dm l y . t mdmd m dv um d, umb mll d mdum - qud, dl.

As the international trade shares o theemerging and developed world converge,

global wealth and asset holdings will shittoward emerging economies

a u, m m lkly x -

l d l by 2025, m bm d x. t vlu idx, xml, lkly dubl b2010 d 2025, l vlu m xd b m -d--lm by 2025. glbl d xd lbl uu v mm d, m 49.9 uu 53.6.

T u u m mjm m lkly llvlyk l d l

(lb dm ) ld vm dvld m(, u, xd buld qullyl lbly ). glbl l d ld ll u u dm m ulu, u c d mj l x Mddle. T djum ldy d u l ld: il vld by m m d $7.4 ll


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m-mk m m dubl by 2025, l ul umb -bd M&a dl xd m

l (m 2,500 2011 lm8,000 2025). T d u udly- gDp m-mk mm u.

t dvlm m-mk m lblz ll v m ml -bd l m, ly - d du, d mmlv. a umb vv d dymm-mk m d dm- dul lbllymu

m y m bd dvdm v d v l uy.My m-mk m v ldy buvk dvd-uy m m y dd dvlvv l d du l ,

114 m m m m km 1,000 m ldd by r&Dd 2009, my v yl. T ully y m-lm v v d-lly b m r&D

dvl u. i 2025, luxuy d lkly b hyud t Md Lxu, lkly b d ul mLukl pm m exxMbl Bp,d lkly b d by c icBc(idul d cmml Bk c Ld.) Bzl i by c Bnp pb.

Tere are strong signs o mutually reinorcinglinks between commercial and fnancial

globalizationT m d l d

dvl ld l -bd , m m-mkm ll mk. T umb dvl u mv ud- d y dm u dl bld m d l bd d quy mk,d b m, xdlblly. nly -d m-mk

m bd m m d -bd vm u M&adl $189 bll, 4 vlu

ll lbl M&a vm v d.B 2004 d 2010, mu d $1.1 ll17 lbl l.s 2003, xmly 5,000 m bd m mk v bld lbl u 12,516 ld vm $1.72 ll. M -d Di dvl u dvl u: o 11,113 -bd M&a dl ud ldd 2010, 5,623m lvlvd m--mk m, buy k-

v by dvd-uy m. a yvu v, m bd mmk d k ll l mml m vl l: dv- , l lbl mk, xl u vlbl dm m, dmm uvbl dm m lm.

a y uu u bd, bd m mk ly ly m l lbl bu-, m m bd dvd

u ul u, ly, d l mk. My m--mk m v dv vdvd-uy m v dully vm dvl u-, bu y v xd ml -d m u. T d, vll su-su d lk, l l u su-suvm u xd. u, M&avy by m-mk m dvl- u d bm

m u Di. Bu u - ylly u l lxmy, y ll ly d lm , bu l l l-m u lbl my.em-mk m v l b v su-n qu, lly dvdm d quy mk dvbl . T ul vlu -bd M&a udk by


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m ly v, ld u m-mk m lblvm d my mk m -

bld dd, l mv d mulll mk -ul -bd vm bdld vl m 1920. i l d d my l, mulll m x m d v-bd vm. id, u bll vm (Bit)m 2,275 Bit l 2007, u m ju250 md-1980 vdd m

dly ud mm - v -bd vm m, lud-

l b du.Tu Bit v v b ubml m m v, blv l d -d x mul, ,d mlm m l umb dvld d dvl u v mulll m-

k. T lm vm u Bit, xml, my b uv m l mulll lblz .Mv, Bit v l m-

lmy ul dvm lbl lvl. idd, il c slm ivm Du (icsiD) xd dmd -bdvm du lm vd icsiD vd 25 yb 2001 d 2010, u m v bu y b 1981 d 1990.T dmd lld muul uu

ll d v m ud-, lly ll , mulll

mk uu.

Multipolar InternationalEconomy to Lead to a LargerRole or the Euro and, in theLong Term, or the Renminbi

rd m-mk m ld mu l d ubl

m v b v qu l 1990 m v udk 10 m quv d l

mk m m u ydd l, bd u, d quyl. a vd muully lk b mml d l lblz-, umb m-mk mudk l -bd qu

y l -l mk. il bd u, -ul, by b bd m mk dm lly md-1990 d m u l u. s 1995, l umb

m v m v d -l lbl bd mk , 80 m u bd v $1 bll ,

10 u v $2 bll. smm u lud pb il cmy Bzl, am Mvl Mx, nvl i id, d VtB bk ru. ov x dd d byd, lkly b m-mkm u xd -l l mk d m vblm.

i m-mk m u Bzl,cl, d Mx, ll l mkv dbl d muy y, m v y ud u m bld mx ll d l l mk u.um, m m l,ully a, ldy x ll l mk vlv l ub. Du x ddd byd, ll um dmd u - m mk

d ll l mk ubm d d b uld, muu- d um d m bd dvldu b xd l k l mk m mk. c-l u by dvld-uy m,lu lly mvd by d m bd , ll b lld byu l l vlbl v m mk.


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umul lm ld, l m m-k l l ym

ul. Dvl d m u ld-d ld $9 ll fl - x v l 2010, md ly 37 v ld d 2000. sv l ud d l l dvl u v bm mj u l vm.B 2010 d 2025, llv -l vm mj mmk jd ulu m $15.2 ll ( 2009 dll) ud bl d GDH 2011,

by d d dy dvdm.

ev u l m mk l , dy b m z d l l my ym. a, m my uy ud lly , l v ld, d d v vd, l lm dm-d, d x d y x. Vully ll dvl u

xd uy mm k l d d vm d - . add d l my ym d u, m b mm ym (, il Myud [iM] u ly ld l) d udd l-m uu k ym.

il uy u xb d-bl d ubj k xl-, d u ldy dd

u m v. , U.s. dllm l uy, d l dl lbl vld dll l 1990. Bu dl-l vl l vl l l uy. a , u m dbl lv. i u d xd, vdd u uully vm v db uly d by vl mmb u

d vd ml zd blm -d blu u eu U.

Lk u d, m -m u v- lbl my d m vly -bd d d , uully mb

ll vbly ly m m l l l ym. a l l mb uld l lv dyb c m lbl d vy l u-. o d, c ld lx uy d ld l k

x v by ($2.9 ll ld d 2010). o d, c mv uy mm bu by vm, , d - ld lm lydmd u, mlyU.s. dll. w v c bl dly dd uy mm, k ll vm. i mv dd u u, c u vudk lz -mb : (1) dvl

mb mk d (2) u u mb d v d lm.su v b v ly ud mb k m m lbl l.

Buld uld ly, GDH 2011 l uu l my ym: uqu d U.s. dll, muluyym, d ym sl Dr (sDr) m l uy.T m lkly mul-

uy ym. Ud , u- dm U.s. dll uld dmm b 2025 d uld b ld by my ym dll, u,d mb uld v ull-ddl u. t xd - vl m qu. ,

ll dvl u, mjy ll u u u d d d , b d by mv


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i mull lbl my, lkly d l uybdym ll d. Bu m my ly

v, ym lbl uy d md uly mul-ll lvl , xl m l umb u lkly; u, ym uld qu u d l vy v myly. t dl ul my ym bd lu l , x m du dbu lbl m lkly d y m ly bd m dful.

i y ld u l , l l m ly mk- d m ymm mbl mm l, u x mlm d ymmbl. a l mk v b lb-lzd d x md m lxbl,bl ym lm v b dbly d, ly d d m lllyv dm my d lly. Ul uy b d d

d ky u-, bly x b ky u ll ld uu m-v d vlu d lbl,md uy m ly mkd lly jdz l -d. Tu, u u ld u

ll d u d x vlly. T ll b dvl u, ul.

sm ll lmy ym uld bly b md

u d u sDr. ebld by iM 1960 l v d u u, sDr ulyvlud m bk u mj -l u u, J y,ud l, d U.s. dll. e l sDr l myym uld l dd b mmdk lbl l bly d uy vlly. m l

muluy ym? sd, mullm ym d bl-yb md x ul

m, m udml m ym y? Td, b d m mully, udml m l m-y ym?

A more multipolar international monetarysystem will still involve currency risks ormost developing countriesT dll-bd l my ym d lkly muluy ym uu umb d

ym bd l u. T u-dml blm ymm dbu d b bl ymdjum d . cu u- ky l my y-m b m dm mm lyumy, vu, lvly lb , mv d lmk, d ll u dju x-l u. Ml, u u kyu d bl ym d b mu xl

djum lbl l dm d. T ymm dbu- djum b mjbu d lbl uu mbl y. i ldud lly dblz u

() ld ld my, Uds, l l db, d (b)

ld l d, c, um mvuy mm k - U.s. db. a m uym lbl lqudy d m-

ly ul my ly d b u uy u dml uy, Ud s, ully mmdlbl dmd lqudy. T m u dll dvl-d k Lm B ll 2008, ully d -U.s.bk, my dll 1950.


29/180


d mk u l by gu 20 (g-20) d v md l bk llb d -

mz l ul du 200809 l . imly, d- uld u um uld bmuully bl l umb u- , l ubl d, u vmlly dly l z-um vbl, uy ml l . oly byz mulll d

l- b ll ll uvluly k u u.

Multipolarity to Bring Beneftsand New Challenges to theDeveloping World

a m mull lbl my ll, bl-, b v dvl u

lu ly mdvdully. g llvl md, , m, d ly -lll du ll , u

dmd x, d mv m d dvl u ll blm dvl dm ululd muu du. xml, 1990, bll d l b l dvld u (LDc) d mjm m v d ld;d m m u LDc bll d d mj dvd m.Mv, m du dbu lbl ll l xl dv-

, m dy k dvd-ul l m ll v l m vlly xl dmd u . T vd m 200809 -l , -bd M&a m m ud m qu vlu ll dl 2009 d 2010.g mully uld l v bl d, d d

v, m y u sDr. t uld b u- l b dmd sDr.

a d vu uld b mlz lbk uy l u sDr,

uld b uul du l , dju m sDrbk lud mb mjm-mk u. ov m, sDruld v ul d, lly l-m u lk dvld lmk.

Nevertheless, a multilateral approachwill remain the best way to manage global

economic policy makingi ld vly m mull -m d l , d-dy ll b m v m , b ll -m dlmy, l m ly mk-, d mm l lld l bd. T l m m m mull ldmk lly m mv d ly d m

b dvl d dvld. M lly, lbl m , , ,d llv my d l l u. tu, ly d dd ly mv v m lbl my, bu l v -d k. cu uld mv qukly b d lbl mbl-, mv l ul, d xd muul uvll mml. t x vulbly m dd b md

u by lu d mulll mu v my l - d mmm -d l u l mkd-d ld d lbly.

ev b udml m l ly d, umb uld b k u


30/180


um, -bd vm uld lb m mulll mk ml wld td oz. Ml,

iM ll d k ld ud- m l my y-m, lud vd u d d mm muluym uld lm uy vlly d,, l LDc m xl x k.

Mj u ulyudy lbl my ly ll, bu y vlv l u- d mlx ly . T d ju m lv

bd ld m dm. r, bu bl md d ly d ul dvl u, dvld u, dmulll u l - , m m, b dvlmum. Dvl u v md -dbl mlv ,d xd l , d-l l d u ld d . Bu mu k m u dvl m d

ud y lbl my m l l m bud ym m mmu d k l ym.i l l mj dvld mmululy l mdul ddy d dvl m lbl d lv u d-dy dv l l d y ldd.

dbum by m m u f-l dvlm v l m LDc.

T ly mull lblmy lkly d u, -v, d LDcmy vly l- xl dmd k b bl d kd by m. LDc m mmd d ml umy lbl bu dlbl dmd ml. ev

LDc mmdy ux, x-bd LDc -m u k mmz .

LDc x m, -l lm m mulllbl my ll b dvlm u-l ly mk, mk muu,d l u u m u x mk.

Mulll u ly l u mull ld by vd- l d m ly-l um udd mull ldm d. e d

qu ly mk dvl u y ly l d l y

uld l ly mk b u xd uull d k, l lz u d u. ad dl m l lu LDc l v l u m k d l vll-y LDc m y k d lbl vlvd .


31/180


32/180


33/180

Global Development Horizons 2011 13

Chngng Gwth Pes nd

Fnnc Pstns

The global economy o 2025 isk t k t d rt rtt 2011. d r -

w, r tr, ut r 45 pr-t utput, prd wt ut 37prt 2011 d 30 prt 2004. Tutr w ut r ut rt v-u trt trd d vtt w t dvpd wrd, d t drvr rwt w t dvpd t, ut jr dvp utr u cd id, w r k t xpr rpdrwt tw 2011 d 2025. er - w d rtr prprt

wt, urd t trt vt-t pt (iiP).

st pwr r t w.

Truut t trjtr tr, p rwt drv t utr. r t trt c dt t t m dt (6001600),c w dt r t -, ut r qurtr t utput d u trd t rwt. T Rw t t r Wtr eurp wt it,Prtu, d sp d t, wt t dvt t idutr Rvut, bu, r, dgrt brtpd trrt

, prdut, d trd. i t ddw Wrd Wr ii, t utu rr ar vt d tr -ur dd prpd t Utd stt t tpt t wrd rt pwr,

wt gr, Jp, d t rr svtU p d r.

a t wrd xt t 200809 r-, t ppr pd t t r-t t w t rwt pdd

t k tt t drv rwtwt trt r prt t. atu

rwt t dvd r u- p tt drd

w r (e-er 2009)dvp v rvrd r t r d r

xt rut rwt. g rwt trt qurtr t 21t tur tu k t drv t utd r c, id,d tr r pwru.

T ptr xpr t d pt t t rtr dt. ptr 1 r w:

Under the most likely baseline global eco-nomic scenario presented here, emerging

economies will become increasingly impor-tant engines o global growth between 2011and 2025. d r utput

x jr r brz,t Ru drt, id, id,c, d t Rpu Kr (tbRiicK)w t tt t urr 2025. grwt r r-

kt w, t r, vr 4.7prt vr 201125, prd wt tdvpd wrd rwt 2.3 prt,d w pd t

rt upt, vtt,d trd r. r trd w utd r r ddvd w vr rpd,

wt rup ut r ru trd 2025, trr tt urrt tut w t dvd rprt t jrt t

xprt d prt. i jr

1


34/180

14 Changing Growth Poles and Financial Positions Global Development Horizons 2011

w. Jut prtt, vrt r-t dd rut ut t urt t wrd rwt

p v t pt t prpt t dvpd utr(lDc), w r t rt xtrdd r tr rwt.

As a group, potential emerging economy growth poles are having an ever-greaterimpact on global investment, trade lows,and external imbalances. Tr v rd t t trd dvtt pttr, t t trtr vu sut-sut w. ytt ud d -

w dpd u t pdptd vrt t d prvt trd d pt w rpdt u p. ert t prt - rkt dvpt, r xp, p rdu vrv vr d -tt djutt utr ru vrr urrt ut urpu; r, t u vrt rxprt p dt utr r tr urrt ut.

Gwth Pes nd the GbMcecnmy n thePstcss E

The emegence new pes

i t r d up t t r 200809, dvp

wr t dp tr vt-t d d. er dvp-wrdpwru u brz, Ru, id, dct -d bRic (on

2001) t t pwr t g-7, ut r vr-rr trd, , d r w.

T r rtd t trd.Wt ptr prr dv-p utr ud trr t dvpd utr (dvp

w rw 1.5 prt 2009, prd t d 3.4 prt dvpd utr)d r-tr rwt rt ut tt

r , t trutur r rd udr w.

Te changing landscape o growth drivers in

the world economy points toward a distribu-tion o economic size and growth that is morediuse: a multipolar world. i t 200408prd, t Utd stt, t ur r, dc rvd t wrd rwtp. b 2025, r , ud- brz, id, id, d Kr wt dvd u

Jp d t Utd Kdr kt j t tr p ut ru t wrd rwt tvt. but tut tr rwt tu d rv

tru rwt p, r w d t udrtk trutur tt w rt -ut, trdrv rwt tru t utd prdutvt dv d rutdt dd. T udrtk r v rt tt wt vttpprtut, pt tt ft -td d utzd, d t t t t dpt w t ut t drvvt.

he potential emerging economy growth

poles are ar rom a monolithic group, withtheir rapid rise to power characterized by thediversity o their development pathways. et

a rwt p, u c dKr, tr v v r-t xprt t drv rwt, wr lt ar rwt p, u brz d mx, dt up-t r prtt. Wt tr utt dd dvp utr d drptrt udrw vr jr et

a , trr upttrd r k t prv, w tur rv ur utd rwt. str vtt trd vt ptt t drv rwt rwrd, d t r prdutvt r . i r r- , t trutur tt

w drv tr uptd vtt trd r rd udr


35/180

Global Development Horizons 2011 Changing Growth Poles and Financial Positions 15

dvp d r w -tu t xpd dr tr t tr- utrprt, t rwt

p r t xpd d dvpd.

c d id r k t t rr r-rkt rwt p t r d. T p r c,

w vrtk Jp t wrd d-rt 2010 d gr t

wrd rt xprtr 2009. i t dutr, t prprt rwtrprtd tr r utr u brz, id, Kr, d Ru k wr drt. tr wt c d

id, t utrptzd t bRic ut t td t tw r- t wrd jr ur, v-tr, d xprtr, t t t dvpd

wrd d t lDc wt w t trt.

Fm pes t the pephey:Chnnes by whch pes dvegb gwth

atu wd ud t p u-t, t tr rwt p r wt

uu dd (x 1.1). T k -v rwt p wrwt p vr td tu p drvtrwt pr tr . tt d,t k pp qutttv d dttt dpd t trut t t rwt, djutd t trt k r dt t rwt.1 i t, rwt p t v - tvt, ut t tut - tvt t utr wt w t tr k.

bu t u t ptr ttr r rwt (d -td pt t rwt r p), t dt rwt p pdr dprt r dt prt ddtrut pwr tt r r ud d tud u pt - d trt rt (t dmvr 1998; md 1993).2 dtr-ut u, t,

prt pt r u trtp rdt, p , d tr-t tr rt, w r

ddrd ptr 3.a ur tr

r upprtd t tr d pr v-d. s t prr k drvr ut, -ru rwt (Rr 1990;sw 1956), t du- r tr t rwt pvr. T - ud w kwd tru trd,, d rt, w r drttrr t ddd ppt d t kwd dd u pt (ur 1.1). r xp, r-

drt vtt (Di) r t Utdstt t c d t drt ttrr v t ud U.s.-dd u-tur pt d qupt, tu rdrt trr kw-w ur t u pt-tv t; tru tr- prt wrkr, k-f t,d t; d tru r uppr.

i ddt t t du, rwtpvr prtd tru t trr ttut dv tt p tv t

dvp r dpt w t, r trut r trt tt prt t dp-t t (au, J, dR 2005; Rdrk, sur, dr 2004). atu u trr t-tut prt udutd prtt, ttrr td t ut w d t dfut t ur urt.

xtt, t trr ttutprt pturd drt dt ptt rwt p rwt rt d z. it pu tt w rr

ttut prt rwt, pp trutr tk t d dd r rr tr vrt. mrvr, t rr t w t rr d rwt tkp, d t r rpd t rwt, t ru pp tr utr k w t vt, u d tt.rd, pt w (prtur Di), d tr-t rt tt tr-r ttut dv, rr t r


36/180


trdt kwd d t trrr t .

rd jr w rwt prptd r rwt p t prpr -. T r r x dtr v wt r r, t r dutrd t kwd t dt r

In this book, a growth pole is dened as an economy

whose domestic growth helps drive the growth pro-

cess in other economies. This denition is motivated

in part by a desire to ocus on the importance o eco-

nomic dynamism and progressthe growth part o

the expressionwhile capturing the important role o

spillover externalities, knowledge transer, and gains

rom exchange (the pole part o the term). However,

given the lack o consensus on the deinition o a

growth pole, it is useul to examine alternative con-

ceptualizations o the term.

The term growth pole was rst introduced in the

context o economic growth by Franois Perroux in

1949. Initially, the expression was used in reerence to

agglomerations o rms or industries in which growth

is concentrated and that had linkages to each other

and to peripheral rms. Since then, the term has been

applied to an increasingly varied set o related con-

cepts, with growth pole quickly taking on a spatial or

geographic dimension. These concepts dier mainly in

terms o the space in which poles are identied. In dis-

cussions o regional development policy, or example,

cities where economic growth is concentrated came to

be known as growth poles, with the aspects o verti-

cal linkages and external economies o scale remaining

central to the concept. In act, the study o tensions

between orces supporting greater agglomeration ver-

sus specialization spawned the eld o economic geog-

raphy (Fujita, Krugman, and Venables 1999; World Bank

2009b).

The idea o growth polarity then became extended

to the global scale, while simultaneously becoming

somewhat enmeshed with the concept o polarity

sites o concentration o geopolitical power and infu-

encebeing developed in the international relations

literature. This connection is due in part to the intuitive

idea that geopolitical infuence stems ultimately rom

economic size; still, to clearly dene a growth pole,

the concept must be unlinked rom that o geopolitical

infuence per se. The concept o global growth poles

also diers somewhat rom the idea o growth poles

conceptualized in regional, national, or geographic

space, to the extent that the nature o international eco-

nomic linkages diers rom linkages within national or

regional economies, and not merely in terms o scale.

Even when a global scale is specied, the expres-

sion growth pole is not always used consistently.

Some generalizations, however, can be made as to

the terms qualitative meaning. In this book, a global

growth pole is broadly deined as an economy in

which global growth is signicantly concentrated and

that drives growth in other economies suciently to

have an impact on the growth o the world economy

as a whole. Thus, a quantitatively based denition o a

global growth pole depends on the growth rate o the

economy relative to the growth rate o the world econ-

omy, and on the strength o linkages between domes-

tic and global growth (see annex 1.1).

In establishing this denition or identiying global

growth poles, countries are the natural units to con-

sider, mainly due to aggregation o relevant data at the

country level. However, in some special cases in which

a group o countries is highly integratedas is the case

or an economic and monetary union, or example

it is probably justiiable to consider the entire group

as a potential pole. I this approach is taken, clearly

dened criteria are required to group countries consis-

tently. This book aggregates the economies o the euro

area, the two CFA ranc zones (independently), the

Eastern Caribbean dollar zone, and the South Arican

Multilateral Monetary Area as single economic units. In

addition, China and its special administrative regions o

Hong Kong and Macao are classied as a single eco-

nomic unit.

Box 1.1 Wht s gwth pe? Defnng pes n they nd pctce

qur; , t vut tprr d prtv dvt r tr-kd d jt dtrd (gr dhp 1991). rd trdt d ut t dud pvr d, wkr w: trd-t d d t, prtt


37/180


GROWTH

BENEFICIARY

GROWTH

BENEFICIARY

DIRECT

CHANNEL

TRADE

CHANNEL

FINANCIAL

CHANNEL

MIGRATIONCHANNEL

Emigration &

knowledge transfer

Migrant

network

Import

absorptionTechnology

transfer

Technology

transfer

Portfolio capital

and FDI

Institutional

innovation

GROWTH

POLE

GROWTH

BENEFICIARY

GROWTH

BENEFICIARY

Factor

technology

FiGurE 1.1 Chnnes gwth spves m gwth pe

Source: World Bank sta calculations.

Note: Arrows point to direction o fow, whereby growth rom a pole can infuence growth elsewhere, while annotations indicate the specic

growth stimuli transerred to the beneciary o the pole.

trdt d rdu t prd-ut dvpt d prdut w prd-ut (et d Krtu 2002; gr dhp 1991; Rvr-btz d Rr 1991).

T rd pt tt trd pr-tt t du upprtd

d pr rr. r x-p, et a , r p td wt uqut dvt r-v prdutvt (hwrd-Drr, ir,d sk 2002). atu pr upprt rtr r prtt t r xprtt t t dut t utr qut, rwt p v-rt drv rwt prpr - p r t xprt d drvxp xprt dutr. exprtt

td wt trdutr rt prdut r w-prdutvt r t-prdutvt r d, dutr,

wt rkt z t t r r- rtur t (Kru 1979; mtz2003). Tu, t p tt rwt drv

drt trdtt , prt r rwt p d xprt t p.

cpt w, prtur Di, v tptt t prtt t- du. Di w r uttprt p t udr (r rdvtt) v t ptt t drt tr-r t kwd, r t t rut drt kwd trr r udrt tr r t t utr tru rturvr r t ddd trdt


38/180


(grft, Rdd, d sp 2004; hk,Prr, d sutr 2007). i ,tr vd vrt pvr. i

ltu, r xp, t pvrr Di ur tru kwrd k rprt r-wd r t tr dt up-pr, ut t r u r-wd r(Jvrk 2004).

gv tt t kwd d-ut r p t d u, tt t kwd trrrd r pr t pr, t t r p r prt kwd pvr.epr vd upprt t pt ttt rt d rt-tr u trv

tt du tt t kw-d. itrt r t prt t kwd w t t r tt r -rt, ut kwd pvr t trr t (hv d Kr2010; K, l, d mrk 2009; ott d

arw 2008). T tk rt dutwrk t r rd trd d kw-d trr (Krr 2008; Krr d l 2010;Ru 2001) d rv ur rwt rt rpt t, rt td t -td dutru d k pprtut

(mcrw 2010). htr, rt td wt t t dr rwt eurp p ttrd t t trt (htt 2010).

Evvng gwth pes n thegb ecnmy

ovr t ur tw , r w rwt drp v urrd. Ut trt t d u, c did wr t wrd prdt rwt p.3

strt t 1500, Wtr eurp turt r, ut r r r tt utput (mdd 2007) d p rw r p rwt d.T vdt r x t utrsimple polarity index, w ur utrtrut t rwt (ur 1.2).4

atu Wtr eurp rtd t pt t prdt rwt p tru u t rt t 20t tur r prt

d d rv (Du, hrr, d Jr2011; etr 1986; ur, mtt, d Rd2001; mrku 2004; Rdruz-cr 1996).

Di prt rwt tru tr t t du, u r-t prdut t t t prdutvtr wt r t t t prdu-tv r wt tr. mr rd, p prt rwt, p wu rzt d wt p-tr ttut rr, w pur dt rkt dvpt d tr rwt(bk d lv 2005; Qu d d2008). Tu, pt w, dd, trprtt tru w rwt p

drv rwt.T pr vd tt Di pr-

tt t du -wt xd. lr trdutr pvr rud prr tud -tDi prjt, t rp-krit ct R (lrr, lpz-cv, dRdruz-cr 2001) d tr t -tr (Kr d yp 2009). r-v tudu rdr dutr p tp dvd trdutr pvr

Western Europe

former

USSRUnited

States

ChinaIndia

Japan

0

20

40

60

80

100

199

9

1000

1499

1500

181

9

1820

186

9

1870

191

2

1913

194

9

1950

197

9

1980

200

8

simplepolarityindex

FiGurE 1.2 Hstc evtn smpe gwth

pty, seected ecnmes, 12008

Source: World Bank sta calculations, rom Maddison 2003.

Note: The simple polarity index was calculated rom size-weighted (compound) GDP growth

rates measured in 1990 international Geary-Khamis doll ars normalized to the maximum and

minimum o the ull 12008 period.


39/180


du t rut rwt r d grutr u Jp, t Utd stt, d trr svt U rwt p

dur tt t. a vdt ur 1.2 tr upwrd trd t p rwt prtdx, rt t -ru rt rwt tt t d-ud prtd ut t 1970.

u t r dutr td wr ud t drvr rwt dur t 20t tur, t trdppr t . U ur prt tt ptur rwt pvr v trd,, d t dd utr multidimensional polarity indext

dwwrd trd t dx r dvd vdt (ur 1.3, p ). Jputd prt dx rp trt urt t t u t r 1990d vr pprd t prvu v.i r , t prt dx tUtd stt d t ur r drtd dur- t t 1990 d 2000.

i trt, t utd prtdx k r utr ppr t

ru r (ur 1.3, p ). Wtt xpt c, wvr, t pr-t dx r t t tw rdr -

tud r t t dvd utr.nvrt, c prt xdd, -ut tr, tt t ur r d t Utdstt t 200408 prd, d t dvu t r utd prtdx r t v t-rkd rutr (c, Kr, Ru, id, dspr) w ut t tt t vt-rkd dvd (t 1.1,u 1).

Wt t trk ut ptt rwtp t r t

dtt c: t r - tt ud d ur-rt rwt p. T t rrd

wtr rwt urd rd t tr-tv tr; c, r t, twr rtv prt rrt r t utr r x rt vr t (t1.1, u 2),5 ut u rtr rtvprt w rwt djutd t pturtu pur pwr (t 1.1, u 3).

0.090 0.083 0.093 0.061 0.102 0.072 0.063

0

1

2

3

4

5

6

7

1969

73

1974

78

1979

83

1984

88

1989

93

1994

98

1999

200

3

2004

08

multidim

ensionalpolarityindex

multidim


0

5

10

15

20

25

300.090 0.083 0.093 0.061 0.102 0.072 0.063

0

10

20

30

40

50

60

70

80

90

1969

73

1964

78

1979

83

1984

88

1989

93

1998

98

1999

200

3

2004

08

multidim


a. Selected advanced economies b. Emerging economies

euro area

Japan

Korea, Rep.

India

Brazil

China (right axis) Russian Federation

United States

FiGurE 1.3 Mden evtn mtdmensn gwth pty, seected dvnced nd emegng

ecnmes, 19692008

Sources: World Bank sta calculations, rom IE Singapore, IMF Direction o Trade Statistics (DOT), IMF International Financial Statistics (IFS), World Bank World

Development Indicators (WDI), and World Intellectual Property Organization (WIPO) Patentscopedatabases.

Note: The multidimensional polarity index was generated rom the rst principal component o trade, nance, and technology-weighted growth shares, measured in con -

stant U.S. dollars. The numbers correspond to concentration indexes or the top 15 countries, computed rom the multidimensional polarity measure or each correspond-

ing ve-year period (the rst period was omitted because o insu cient observations).


40/180


t pvr t r tr rwt r -td. , r v-

wt, u t ar Rpu ept dsut ar, d t ppr t 1.1, ut r rtv t t v, d tr rwt pvr td t -td wt tr rptv r. T dt, wvr, ru ut t pt tt u rv regionalrwt p(x 1.2).

a vdt t uv dtrut rwt prt w urd t t vt tp tr utr (c, t urr, d t Utd stt) ut r t80 prt tt prt, urd t r dx r 200408. T tr trt pr rp, wr rt p p t utr dprprtt r r tvt. ad k r rwt p, rwtprt r ppr t w pwr w r-tp ( rtp tt trdZp w).

c trdu rwt pvr t v dutd tud p- tr ppr (arr d Vvkd2010).

otr r tt r pttrwt p ud id d Rutw t bRic wt vr trt-rw r rkt, u Kr,m , spr, d urk, wr udd t rup nxt-11 rutr (on t . 2005). atu d-tt t utr ptt p t urpr v tr z, t t tt vr r dvp d t tur ptt p t 200408 prdid, r xpd ttutr u Pd d Ru tr vrt r t tr z

wud ut. urtrr, lt aru brz d mxtdt ppr wr pt t wud xptd tr z, tr pt-tr trt t tt

TaBlE 1.1 Mtdmensn pty nde, tp 15 ecnmes, 200408 vege

Economy Real index Economy HBS index EconomyPPP

index

China 26.20 Euro area 47.34 China 63.70

United States 20.33 China 41.54 United States 51.26

Euro area 10.86 United States 30.51 Euro area 40.15

Japan 5.59 Russian Federation 25.60 Japan 28.15

United Kingdom 5.51 Canada 22.61 Russian Federation 26.02

Korea, Rep. 5.41 United Kingdom 22.49 Korea, Rep. 24.57

Russian Federation 4.79 Korea, Rep. 20.49 United Kingdom 24.01

India 4.62 Australia 20.26 India 23.38

Singapore 4.30 Brazil 19.48 Singapore 22.95

Canada 4.08 Norway 19.25 Canada 22.92

Australia 3.27 Saudi Arabia 19.18 Saudi Arabia 21.33

Malaysia 3.12 Turkey 19.17 Turkey 21.33

Turkey 3.07 India 19.14 Mexico 21.27Mexico 2.94 Singapore 19.11 Malaysia 21.19

Saudi Arabia 2.94 Poland 18.76 Australia 21.14

Sources: World Bank sta calculations based on data rom IE Singapore, IMF DOT, IMF IFS, World Bank WDI, and WIPO Patentscope databases.

Note: HBS = Harrod-Balassa-S amuelson; PPP = purchasing power parity. The shaded region indicates potential, as opposed to current, poles, with

the cuto determined by the rst signicant break on the index (rom below). The multidimensional index was generated rom the rst principal

component o trade-, nance-, and technology- weighted growth shares, normalized to the maximum and minimum o the 1969 2008 period. Real,

HBS, and PPP-adjusted indexes indicate growth rates calculated rom, respectively, GDP data in real 20 00 U.S. dollars, nominal local currency con-

verted to U.S. dollars at current exchange rates and defated by U.S. prices, and 2005 international PPP-adjusted dollars.


41/180


The deinition o growth pole used in this book

ocuses on the spillover eects that an economys

growth induces on the global level. One implication o

such a denition is that smaller or less globally inte-

grated economies that may well be signicant driv-

ers at a regional levelbut exert a relatively marginal

impact at the global levelwill not generally be iden-

tied as growth poles. While this exclusion is entirely

appropriate or examining the phenomenon o global

multipolarity, it is nevertheless interesting to explore

growth polarity within geographical regions, espe-

cially since regional poles can have a strong infuence

on the economic prospects o LDCs.

Table B.1.2.1 summarizes these regional indexes.

As might be expected, economies that drive growth at

the global level tend to appear as growth poles or their

regions as well. However, since the relative importance

o an economy in driving regional growth may dier

rom its global impact, the relative positions o econo-

miesas measured by regional growth polaritymay

not correspond to their global ones. For example, Brazil

appears to be more important in Latin America than

Mexico, even though Mexico places higher globally, as

reported in table 1.1.

The most notable aspect o the inormation pre-

sented in the table below is that economies that are

otherwise crowded out in terms o their role as global

growth poles can nevertheless play an important role

at the regionallevel in driving growth. South Arica, or

example, is ar and away the most important regional

growth pole in the Sub-Saharan Arica region, a nd-

ing that has been echoed in the literature (Arora and

Vamvakidis 2010b). Indeed, or the 2004 08 period,

South Aricas simple polarity index is one-and-a-hal

times more than that o the next-largest regional growth

pole in Sub-Saharan Arica, Nigeria. Another actor that

is important when taking into account regional consid-

erations is how regional economic blocs may, i su-

ciently integrated, serve as growth poles in their own

right. While this topic is not explored in detail in this

book, it is entirely conceivable that an integrated eco-

nomic grouping, such as the Gul Cooperation Council,

may be a regional (or even global) growth pole.

These ndings underscore the importance o under-

standing the distinction between a global growth pole

and a regional one. Since the channels o growth spill-

overs may dier rom one region to another, and rom a

regional to a global level, economies that are important

at one level may be less so at another. Also important is

that these dierences suggest that spillovers in growth

are complex and dynamic, and hence any given rank-

ing o growth poles, including the ones reported here,

should be treated as suggestive in the context that they

are dened.

Box 1.2 Gwth pes t the egn eve

TaBlE B1.2.1 regn smpe pty nde, tp thee cntes, 200408 vege

Country Simple index Country Simple index Country Simple index

Sub-Saharan Arica East Asia and Pacifc Eastern Europe and Central Asia

South Arica 63.90 China 98.87 Russian Federation 69.44

Nigeria 41.42 Korea, Rep. 12.68 Turkey 64.18

Angola 27.57 Indonesia 5.70 Czech Republic 48.95

Latin America and the Caribbean Middle East and North Arica South Asia

Brazil 45.60 Saudi Arabia 28.26 India 100.00

Argentina 33.84 Iran, Islamic Rep. 26.12 Bangladesh 10.96

Mexico 24.42 Egypt, Arab Rep. 25.71 Pakistan 8.52

Source: World Bank sta calculations based on data rom World Bank WDI database.

Note: The regional multidimensional index was generated rom the size-weighted growth rate calculated rom GDP data in real 2000 U.S. dollars, by

region, normalized to the maximum and minimum o the 19692008 period. To minimize distortion o the index, the normalization or ECA excludes

Russian data or 199496 . The values reported or South Asia should be interpreted with caution, since data limitations mean that the indexes are cal-

culated only or our economies. Indexes are not comparable across regions.


42/180


The most natural candidates or explanatory variables

to include in any regression o growth polarity are

those that have been identied in the cross-country

growth literature. However, there are dozens o such

potential regressors, with little consensus on which

variables are the most important. Such actors can be

classied into two broad categories: proximate and

undamental.

As many as a quarter o all proximate actors

examined in the literature have been identied as sig-

nicantly and robustly related to growth, per se. The

strongest evidence, as suggested by an augmented

Solow growth model, comes rom population growth,

physical capital investment, and level o schooling

(Mankiw, Romer, and Weil 1992). Other proximate ac-

tors that have been ound to be relatively more impor-

tant include the quality o a countrys inrastructure, the

health o its population, the dependency ratio, and the

size o its government (Sala-i-Martin, Doppelhoer, and

Miller 2004).

The set o undamental actors, while smaller and

possibly more eclectic, oten are regarded as more cen-

tral to explaining long-run income patterns. The case

has variously (and convincingly) been made that ac-

tors such as institutional quality, economic integration,

geography, ethnolinguistic ractionalization, human cap-

ital, and social capital matter (Acemoglu, Johnson, and

Robinson 2005; Alesina et al. 2003; Frankel and Romer

1999; Gallup, Sachs, and Mellinger 1999; Glaeser et al.

2004; Knack and Keeer 1997; Rodrik, Subramanian,

and Trebbi 2004).

By and large, econometric analysis (described in

detail in annex 1.3) nds that the most reliable corre-

late o multidimensional growth polarity at the proxi-

mate level is educational attainment. This result is

consistent with the theoretical literature that stresses

the centrality o human capital or the growth process

(Bils and Klenow 2000; Mankiw, Romer, and Weil

1992). Physical capital investment also appears to

contribute positively to a country being a growth pole,

Box 1.3 Pmte nd ndment cts eted t mtdmensn

gwth pty

lk rwt t, rwt pr-t ud t prxt d u-dt tr. i dtr wt trr upprtv rwt prt, trr, t uu t dt t dtt u. Prxt tr ud ttdrd rdt tt t xpt t td wt tr rwt,u rd pt uut dpput rwt. Udr t trr dpr trutur tr, u ttrt t utr ttut d txtt t w utr rp vrrwt. r tr (rprtd x 1.3) ut tt t prxt tr prt ud p pt, du-t ttt, t dpd rt, d tpput t, w ttut qutd trt r k udttr.

Chngng mtpty n thewd ecnmy

Wt d t prt r tdtrut u t w? t xtt tt rwtprt urt ur u u-, t p t put trtdx tt urz t dr utpr-t t .6 su multipolarityindexutd r r rwt pr-

t d d tw 0 (tt dud rwtprt) d 1 (u trtd rwtprt)ut tt utprt rdtd tru t d t cd Wr, dur t dd t 20t tur,r r t rt dd t 21t tur. idd, vr t pt dd,t wrd ttd t t dvrdtrut 1968 (ur 1.4).7,8


43/180


s t tur t 21t tur, t wrd tu r utpr. T r-

utprt urrd rt wt txp zt. htr t u ttuv wv zt tp- v wrut prd rtr utprt, wt tt rtdu t t urt -pt pwr (d d oRurk 2007).

currt wt t r utprt t w r t g-7 rwt drvr, d twrd t - t dvp wrd (ur 1.5). t prt xp w t pt r-

vrt rkd rw trt t, wttd prttt tt d tk trd p d urr wr.

yt dpr xt t rwt pr-t dx udr ur 1.4 ut tt td wt pturd t ur r dut u t d dvpd (tu ut d, p t r 1970, dd urrd), ut rtr t

0.212

0.108

0.069

0

0.05

0.10

0.15

0.20

0.25

1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008

multipolarityindex

Herfindahl-Hirschmann (real index)

Herfindahl-Hirschmann

(PPP index)

Herfindahl-Hirschmann

(HBS index)

FiGurE 1.4 Evtn mtpty, tentve

ndees, 19682008


Note: Multipolarity index calculated as the normalized Herndahl- Hirschman index o the

respective multidimensional polarity index shares o the top 15 economies, computed over

rolling 5-year averages.

while population growth has little eect. Variables that

appear to be negatively correlated with growth polar-

ity are poor health outcomeswhich can be seen as

another aspect o human capitaland the need to sup-

port a nonworking population (measured by the old-age

dependency ratio).

Two undamental determinants appear to be cen-

tral in inluencing multidimensional growth polarity.

High-quality institutions appear to be signicant, both

statistically and economically. Again, this result is

broadly consistent with the academic literature, which

nds that institutions tend to trump other undamental

actors in determining levels and growth o per capita

income (Decker and Lim 2008; Rodrik, Subramaniam,

and Trebbi 2004). Interestingly, economic integration

appears to exert a negativedrag on growth polarity.

This is likely or two reasons. First, the polarity measure

is (by construction) a unction o economic size. The

negative infuence o integration simply may refect the

act that small countrieswhich are much more likely

to exhibit greater degrees o trade opennessare less

likely to be growth poles. Second, a successul growth

pole is likely to rely on internal, rather than external,

demand as an engine o growth.

Overall, the analysis paints a picture in which a suc-

cessul growth pole is a country that possesses a rela-

tively young, educated population and that generates

internally driven growth through investment in physical

and human capital. Moreover, a successul growth pole

also tends to have a strong institutional ramework that

is supportive o economic activity. Just as important,

a growth pole can consolidate its position by ensuring

that key elements o its institutional environment are

strong: ensuring that there is adequate respect or the

rule o law, that corruption is under control, and that the

government osters social and political stability.

Box 1.3 (continued)

r t rwt prt dvp -. mrvr, w trutur tt dvd d r wrd tr td, t vr trd twrd r utp-r rdr uk t .


44/180


drv rwt ttr u r. Tet a r d tr rpd tr uut prd xprt-d rwt trt, wt dtv tt tr prdutvt (P) rwt(yu 1995). mrvr, t t 1990, rwt v dpdt U.s. prdutvt dv d r -ur dd. gv t r d

The Chcte Gwth n thePtent Emegng EcnmyPes

The gnty gwth n theptent emegng ecnmygwth pes

hw ptt rwt p t rwrd w rt -ut, tr

> 6.2

4.76.2

3.34.7

1.83.3

< 1.8

No data

200408

FiGurE 1.5 Gb dstbtn gwth pes, 199498 nd 200408


Note: Multipolarity index calculated as the normalized Herndahl- Hirschman index o shares o the top 15 economies using the real multidimen-

sional polarity index. The choice o brackets was arbitrary, but refects the overall trend o increased distribution o growth polarity.

> 6.2

199498

4.76.2

3.34.7

1.83.3

< 1.8

No data


45/180


The evtn tt ctpdctvty n the ptentemegng ecnmy pes

T dtt trd t d rurutzt, f, d vt tptt r p t rddv tt v d tr rwt t rup w. c (d, t rxtt, id) utt trutr P t t rwt t d-1960, d,dur tr rt tr, v Pd dRu. sr trut v t prvd lt ar , wvr, d v rtv dt r - u id, m, d sut

ar (ur 1.6). i art d brz, -trut P t rwt v rut tppdt tv trrtr (wt trut vrt tr prd vr 8 prt d 37prt, rptv). i id d m,t growth rate P w rtv w vrt t prd.10 T rd trut P t t-rw rrkt rptd ptd ut ttrtur (c t . 2005; yu 1995).11

ttr udrtd t dprt P pr-r r , t uu tdrw dtt tw t v-t d t dpt. i t txt rwt, vt pr t udr-td dv d t tt prdutvt d rwt v tprdut pt rtr utwrd. T rt vt tp prdud tt dr t rt pvr t t trr d, u, w pturd ur rr tvt. i trt, dp-t vt vv t u xtt tt du prvt t- f. adpt r wt td trprur d u, d uu- rt rwt t w t uft wdprd r t (wdu ).12 dpt ddu r k ttr urd t d-t tw t wd dpt v t t t rr rtr, wtr

uqut r t Utd stt, w-vr, U.s. ur r uk t utt pttr tr dd t r

utur.i t ru, w tu

t rwt p t t urturt vtv d prdutv ptwdrv t rwt prw ut-u dvp t ur tr dd, tt t rwt w upprt rwt -

wr. cqut, ut rwt tptt r rwt p wrqur t tt P k t tr-ut t rwt d tt dt up-t r vtt td t tr ut

ut v. o w rwt tur t d rwt p rt t k d tu t drvt rwrd dur tu rutt.

tk d t ptt r p rd. btw 2005 d2009, t P trut t rwt t w dutrzd et a dt t t (d tv ). Dd c, id, d Kr ppr t r, rtr t , rt

xtr ur vr t; r xp, t txprt r gDP c vrd 7 prttw 2005 d 2009, prd wt 2.4 pr-t tw 2000 d 2004.

yt t tr dt ut tt t- rwt twrd r dt rtdur p. i id, r xd p-t rt w 24 prt gDP 1989; 2009, tt r d rd t 35 pr-t (rvr, t trut vttrwt t gDP rwt vr 200009 wut -). i brz, t upt

trut t utput rut 60prt vr t prd (r r-t tru t r). ev c, rpdrwt dd t prud utt tr-ut upt t rwt vr rtprd: tw 1990 d 1999, r xp,upt rprtd ut 42 prt rwt, w xprt rprtd ut 46prt.9


46/180

Argentina, 19662009

15

10

5

0

5

10

15

19661971 1976 1981 1986 1991 1996 2001 2006

%g

row

th

250

200

150

100

50

0

50

100

150

200

250

contribution,

%

contribution,

%

%g

rowth

South Africa, 19662009

8

6

4

2

0

2

4

6

8

19661971 197619811986 1991 1996 2001 2006

50

40

30

20

10

0

10

20

30

40

50

196619711976 198119861991 199620012006

Indonesia, 19662009

20

15

10

5

0

5

10

15

%g

rowth

120

70

20

30

80

contribution,

%

China, 19662009

12

7

2

3

8

13

18

23

1966 1971 1976 1981 1986 1991 1996 2001 2006

%g

rowth

25

15

5

5

15

25

35

45

55

contrib

ution,

%

contribution,

%

Russian Federation, 19902009

19

14

9

4

1

6

11

16

21

1990 1995 2000 2005

%g

rowth

100

50

0

50

100

%g

rowth

contrib

ution,

%

India, 19662009

8

3

2

7

12

17

1966 1971 1976 1981 1986 1991 1996 2001 2006

25

15

5

5

15

25

35

45

55

15

10

5

0

5

10

15

1966 1971 1976 198119861991199620012006

%g

rowth

Malaysia, 19662009

50

40

30

20

10

0

10

20

30

40

50

contribution,

%

15

10

5

0

5

10

15

19661971 1976 1981 1986 1991 1996 2001 2006

%g

row

th

250

200

150

100

50

050

100

150

200

250

contribution,

%

Brazil, 19652009

TFP contribution (right axis) growth TFP growth

FiGurE 1.6 Tt ct pdctvty cntbtn t gwth, seected ptent pes

Sources: World Bank sta calculations, rom IMF IFS and World Bank WD I databases.

Note: The total actor productivity contribution is dened as the share o growth not attributable to either physical capital or human capital adjusted labor inputs, assuming

a Cobb- Douglas production unction with constant returns, or 10-year periods. Depreciation, returns to education, and the i ncome share o capital are assumed to be 0.06,

0.1, and 0.33, respectively, or all countries. Growth indicates growth rates calculated rom GDP data measured in constant 2000 U.S. dollars. Because o data limitations,

Indonesian TFP calculations begin only in the second period. The negative contributions or Argentina (1995200 4) and South Arica (19859 4) were 2,932 percent and

479 percent, respectively, but were not ully plotted because o the severe distortion to the presentation o the axes.


47/180


c, id, d Ru ppr t rrpd t r quvt lt ar - (ur 1.8). T t dpt

id rtv t t Utd stt, r x-p, vrd 14.1 r tw 1971 d 2001,prd t 16.2 r r brz d 20.7r r art. T rtv dpt t-t t wt t utr v rtr. atr 1981, r t, cw rp pk t z-djutdu t rtv t t utr t td d t t rtr. mrr, t u d rt du r k t ut r u trvd dr r-utr P d,

, rwt prr (c dhj 2010; c, hj, d Rvt 2008;et d Krtu 1999).

hwvr, drt rt dpt ddu r uft t xp t rtvw P rwt rt sutt a -. udrtd t, d t k t trt tr d rur tr trutur trrt c (t prd rr tt 1970) d id (w t rr t r 1990), w xp t

dtt tr P prr t twptt r p. Dpt tr

urd tr t t t uptk r tr dpt.

k t ut t dtt u-

t tt c d id rtv trP trut13 pr r du tpur vtv pt t t t rpd dpt d du tr t dr, wtt r tr rt wt t. htr, ur t- vt t tw ptt p vtt d t lt ar (urd pr pt tr),14tu t ur v w tuptk t t 1990 (ur 1.7). T trd

urtr rrrtd vd tt v-tv tvt c d id, t t xtttt t ur, td t rt tur(Pu d rr 2010). i t rtv uprrP prr c d id r t xpd, t xpt uk t ud t vt .

a u r k r r t rtvuprr P prr c d id t-up rwt tru t dpt,p w pd t vt rur r prdutv t r prdutv

tr t . r t,t rt t dpt d du

intens

ity

b. Scientific articles, 19812009

0

1

2

3

45

6

7

8

9

1981 1986 1991 1996 2001 2006

a. Patent approvals, 19672004

0

0.02

0.04

0.06

0.08

0.10

0.12

0.14

1967 1972 1977 1982 1987 1992 1997 2002

intens

ity

Venezuela, RB

Brazil

Argentina

China India

Argentina

Venezuela,

RB

Brazil

China

India

FiGurE 1.7 Techngc nnvtn, seected ptent emegng ecnmy pes

Sources: World Bank sta calculations, rom World Bank WDI and WIP O Patentscope databases.

Note: Intensity o patent approvals and scientic articles published were measured as a share o 100,000 o population. Missing observations were dropped,

and the series then were smoothed by taking the 5 -year moving average o available annual data.


48/180


The chngng chcte ntendemnd n the ptent emegngecnmy pes

pttr upt, rpt, dxprt vdt t ptt r - p ppr t puu rtd tt utr dutrzt trt- t pt. brz d mx, t wrd prt uttut dutrzt(isi) trt t rt t 20t -tur, dp tt tr trutr upt rwt, wr utru Kr (d tr c), v purudxprt-rtd dutrzt (eoi) r td-1960 v tr upt tr-ut rt wt tr r xprttrut (ur 1.9).15 idd, rrd u id d Ru vpd t rd trd d xprt rtt,tr rwt pttr v w rtr -pr t prd tw upt dxprt trut (ur 1.10). c, pr-tur, rp t upt-xprt drt t rwt prr.16

-td pr, t v t u xutd; tud t utur- tr ut tt P u

50 prt (c) d 60 prt (id) ud ttd t utr tr r-t t utur (Du, hrr, d Jr2011; h d Kw 2009). su -t, r rd, ut r u t dr P trut t lt

ar d ar rwt rtv t tt a (mm d Rdrk 2011).

a prtt tr d P prv-t ttut rr tt rx -trt t dpt, vt, rrur rt (Prt d Prtt 2000).

s t ptt r rwtp wd ttt t prv-t vrt tv tw 1998d 2008, d tr ptv, tudt, trd vr dtr rr r r (Ku,Kr, d mtruzz 2010). t xtt tttrd twrd ttut rr trtvr t r, u trd w trtt r P rwt t utur.

a. Adop

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