TheGreatConvergence

Between 1820 and 1990, the share of world income obtained by wealthy nations today skyrocketed from 20% to almost 70%. However, since then, this share has significantly dropped to the same level as the year 1900. This new shift in fortune reflects a new era of globalization that drastically differs from the old, as explained by Richard Baldwin. In the 1800s, globalization experienced a significant leap, triggered by steam power and international peace that reduced the cost of moving goods across borders. This, in turn, led to a self-sustaining cycle of industrial agglomeration and growth that propelled the rich nations of today to dominance, known as the Great Divergence.

However, the new globalization is driven by information technology, which has radically reduced the cost of moving ideas across borders. This has made it practical for multinational firms to move labor-intensive work to developing nations. But to keep the entire manufacturing process in sync, these firms also shipped their marketing, managerial, and technical know-how abroad alongside the offshored jobs. This new possibility propelled the rapid industrialization of a handful of developing nations, the simultaneous deindustrialization of developed nations, and a commodity supercycle that is only now petering out, resulting in the Great Convergence.

The current globalization is now driven by fast-paced technological change and the fragmentation of production, leading to a more sudden, selective, unpredictable, and uncontrollable impact. The Great Convergence shows that the new globalization presents rich and developing nations with unprecedented policy challenges in their efforts to maintain reliable growth and social cohesion.

作者简介

RichardBaldwinisProfessorofInternationalEconomicsattheGraduateInstitute,Geneva,andPresidentoftheCentreforEconomicPolicyResearch(CEPR),London.