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World Economic and Social Survey 2006   

World Economic and Social Survey 2006
Diverging Growth and Development


This work is published for and on behalf of the United Nations.

Paper  Back Book (8˝ x 11") :   Pages : 212
2006  Edition         :   ISBN - 81-7188-580-2
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The World Economic and Social Survey 2006: Diverging Growth and Development

According to the 2006 World Economic and Social Survey, world inequality is high and rising. The main reason is that in the industrialized world the income level over the last five decades has grown steadily, while it has failed to do so in many developing countries. Not more than a few developing countries have been growing at sustained rates in recent decades, but these include, most notably, the world’s two most populous countries, China and India. Considering that these two countries alone account for more than one third of world population, inequality across the globe is beginning to decline. When these countries are left out, however, international income inequality is seen as having continued to rise strongly from already high levels. Because more than 70 per cent of global inequality is explained by the income divergence between countries, its causes and implications are the focus of the 2006 Survey.

Success in development depends both on country efforts and on an appropriate international environment. Greater income divergence is partly explained by a rising number of growth collapses. Countries with weak economic structures and institutions and low infrastructural and human development have less capacity to gain from integrating global markets. Such conditions make it more difficult for developing countries to grow out of poverty and reduce their vulnerability to global shocks. Hence, the greater likelihood of growth collapses and conflict as global inequality rises. The problem of rising global inequality thus has an important bearing on the implementation of the United Nations development agenda. Failure to redress the tendency towards growing global inequality could thus have wide-ranging consequences for human development.





Explanatory Notes



Growth and development trends, 1960-2005

Patterns of economic growth divergence

The big divide: developing versus developed countries

Growth successes and collapses have been concentrated in time

Geographical concentration of growth successes and collapses

Growth divergence and human development

Perpetuation of inequality and its implications for world development



Structural change and economic growth

Economic growth requires structural change

Patterns of growth and structural change, 1970-2003

Investment patterns and structural change

Employment, productivity and structural change


Appendix: Technical note on the decomposition of labour productivity

growth and of the employment-to-population ratio



Has trade integration caused greater divergence?

The contribution of international trade to growth divergence

Global markets dynamics and changes in the structure of merchandise exports

Merchandise trade, specialization patterns and growth 

Specialization patterns in service exports and growth

Foreign direct investment and the convergence-divergence dilemma

Trends in FDI flows and stocks

FDI in manufacturing: international production networks and growth

Can FDI lead to faster growth in developing countries?

Production sector development policies, diversification and export growth

Creating dynamic comparative advantages: policies and outcomes

Outward orientation, trade liberalization and growth

Is there space for production sector development policies today?

The road towards greater convergence

Appendix: On data and methodology



Macroeconomic policies and growth divergence

Macroeconomic stability and growth divergence

Inflation and growth

Macroeconomic imbalances and growth

Financial development, growth and macroeconomic stability

External constraints on stability and growth in developing countries

The cyclicality of macroeconomic policies in developing countries

Public investment in infrastructure and human development

Physical infrastructure and growth

Gaps in human capital investment

Official development assistance, growth and development

Summary and policy implications

The importance of macroeconomic stability and policy flexibility for growth

Macroeconomic policies and national development strategies

International policies to reduce financial volatility

Investing in infrastructure and human capital

Increasing aid and its effectiveness



Governance, institutions and growth divergence

Institutions, governance and economic growth

Changes in governance structure and growth

New comparative economics

Critiques of governance measures and cross-country analysis

Varieties of governance structures

Countries with successful governance transformations

Land reforms

Trade-policy reforms

The gradualist approach: China

Sources of growth failures

Growth failures in the past 50 years: overview

Institutional aspects of the failure to grow

Governance, civil strife and conflict management



Statistical tables





Definitions of some key concepts

I.2 Does it matter which country is the engine of world economic growth?
II.1 Investment growth and collapse in the economies in transition
II.2 Productivity growth and structural change in Asia
III.1 Can markets for primary commodities and natural resource-based manufactures be dynamic?
III.2 International labour migration and economic growth
III.3 Exports of computer and information services: flying geese in South Asia?
IV.1 Challenges for exchange-rate policy
IV.2 Flexible macroeconomic policies underlying Botswana’s exceptional performance
IV.3 Aid effectiveness and economic growth: the type of aid matters
V.1 The first great divergence and the importance of the Atlantic trade



World income inequality, 1960, 1980 and 2001


Per capita GDP growth, developing countries and OECD member countries, 1950-2001


Episodes of sustained expansion or contraction in GDP per capita, by number of countries per region or country group, 1951-2000


Growth in GDP per capita of 106 developing countries, 1951-2003


Terms of trade for non-fuel commodities and for developing-country manufactures, 1900-2005


Geographical distribution of GDP per capita, 164 countries, 1960, 1980 and 2000


The relation between level of income and life expectancy, 2002


The relation between income convergence and the decrease in the infant mortality rate, 1960-2003


Growth rates of output of the global economy, China, the United States of America and the group of developing countries (excluding China), 1963-2001


Diversification of merchandise exports by region, 1980, 1990 and 2004


Share of regional inflows of FDI in world total FDI, 1970 and 2003


Economic growth and structural changes in the industrial sector, the public utilities and services sector, and agriculture, selected regions and country groups, 1970-2003


Annual growth rates of output per capita in agriculture, mining and manufacturing, and the public utilities and services sectors, selected regions and country groups, 1970-2003


Average investment rate for selected periods and regions, 1960-2003


Volatility in growth rate of investment per capita and growth rate of GDP per capita: the impact of investment volatility on economic performance, 1970-2004


Annual growth rate in investment per capita versus change in the shares of agriculture and industry in total output, selected regions and country groups, 1970-2003


Sector investment as a percentage share of gross fixed capital formation, Republic of Korea, 1970 and 2003


Contribution of the agriculture, industry and service sectors to job creation, selected regions and country groups, from 1991 to 2003-2004


Annual growth rate in labour productivity for selected country groups and regions, from 1991 to 2003-2004


Contribution of the industrial sector, the public utilities, construction and services sectors, and the agricultural sector to economy-wide labour productivity growth, selected regions and country groups, from 1991 to 2003-2004


Annual rate of growth of labour productivity, and annual percentage change in the employment-to-population ratio, selected regions and country groups, from 1991 to 2003-2004


Value of exports of developing countries as a percentage of the value of exports of developed countries, by category of goods, 1962-2000


Share of selected categories of non-oil exports of developing countries in total regional exports, by developing-country region or country group, 1962-2000


Per capita GDP growth relative to dominant pattern of trade specialization, 105 developing countries, 1962-2000


World exports of services by sectors, 1980-2003


Inward FDI inflows, developed and developing countries, 1980-2004


Median inflation, selected regions, 1961-2003


Inflation and growth performance by regions and periods, 1961-2003


Macroeconomic balances: first-tier newly industrialized economies in Asia, 1979-2002; South-East Asia, 1979-2002; semi-industrialized countries, 1976-2002; and sub-Saharan Africa, 1980-2002


Financial market capitalization and savings rate, selected countries and regions, 2003


Domestic bond market growth in developing economies (amount outstanding), 1989-2005


Cyclicality of fiscal policy and economic growth in developing countries, 1960-2003


Latin America: primary deficit and public investment in infrastructure, 1980-2001


Years of schooling, 2000, and changes in education attainment between 1960 and 2000, Latin America and East Asia




The big divergence: developing versus developed countries, 1820-2001


Theil decomposition of international inequality, 1960-2001


Theil decomposition of developing-world inequality, 1960-2001


Levels of per capita investment, selected regions and country groups, 1960-2003


Share of products by category in world merchandise trade, 1965-1970, 1980-1985 and 1995-2000


Level of growth of GDP per capita of developing countries by dominant export specialization pattern, 1962-2000


Output and inflation volatility by regions, 1960-2003


Cyclicality of fiscal policy and economic growth, selected countries and regions, 1960-2003


Telephone mainlines availability and road and railroad density: ratio of the values of two key infrastructure indicators in developing regions to values in developed countries, 1960-1995


Countries with at least seven consecutive years of decline in real per capita income, 1950-2001

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