A Fragile Alliance
New Horizons in Institutional and Evolutionary Economics series
Chapter 7: The world economy at large
In the preceding chapter, we discussed the differences between the capitalist systems in Western countries. It is necessary to take a look at the world as a whole, in order to obtain a picture of future developments with respect to capitalism. The level of welfare highly differs across countries. A large inequality exists in terms of per capita GDP. The other side of the coin is the availability of a large potential for growth at the global level. For developing countries may grow at a high pace by imitation of technologies of the rich countries and by adjustment to these technologies. If such a catching-up process takes place, radical changes will occur on the world stage as the balance of power shifts, with major consequences for the cooperation at the global level. We will elaborate on these issues in the next chapter. If the catching-up of developing countries turns out to be disappointing, the question arises of how this can be explained. For some economists, a disappointing catching-up process is incomprehensible, as Steve Dowrick and J. Bradford DeLong (2003, p. 194) observe: ‘That the pattern of economic growth over the twentieth century is one of striking divergence is surprising to economists, for economists expect convergence’.
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