Divergence in growth between developing countries: has development economics failed?

• Published in: Zeitschrift für Wirtschaftspolitik 2003-01, Vol.52 (2), p.227-253
• Main Author: Nunnenkamp, Peter
• Format: Article
• Language: ger
• Subjects: Developing countries; Development economics; Divergence; Economic development; Economic growth; Economics; Income; Policy studies; Poverty alleviation
• ISSN: 0721-3808

While some developing countries caught up economically with advanced industrial countries, low or even negative growth of per capita incomes in various developing countries resulted in widening income gaps during the process of globalisation. This article explores three possible explanations for divergent growth patterns: (i) the reluctance of developing countries to implement the policy prescriptions of the so-called Washington consensus; (ii) the failure of traditional recipes of macroeconomic stabilisation and structural adjustment; and (iii) deep-rooted obstacles to growth that were ignored by many policy-advisers. According to the correlation results presented, the notion that economic policy matters for growth cannot simply be dismissed. However, there is little evidence supporting the view that lacking reform-mindedness explains the weak growth performance of most developing countries. Economic policy appears to be constrained in important ways, particularly in the poorest countries. Opennes to trade and foreign direct investment turns out to be less effective in stimulating growth in this country group than in more advanced countries. Furthermore, it is mainly for poor countries that path-dependent institutional deficiencies and geographical disadvantages have a significant impact on the quality of economic policy and the growth performance. Hence, development cooperation must go beyond the Washington consensus for more developing countries to escape the poverty trap. Reprinted by permission of Lucius and Lucius Verlagsgesellschaft