The Global Economy, Global Trends and Stylized Facts
On March 21, 2018, Stanisław Gomułka has published an article entitled “The Global Economy in the 21st Century: Will the Trends of the 20th Century Continue?” in the Central European Economic Journal.
A Blog Post by Pablo Markin.
In his analytical article, Gomułka argues that “the global economy rate of growth of the per capita gross domestic product (GDP) is likely to continue to be high in the first half of the current century, but decline significantly in the second half” (63). While using technology frontier area (TFA) analyses in relation to the world economy, this researcher forecasts that
“the strong divergence trend of the 19th and 20th centuries will be replaced by a strong convergence between the TFA and the other countries during the 21st century” (63).
In this context, Gomułka clarifies that “the mechanisms of technological progress in the most developed countries, forming the technology frontier area (TFA), are quite different than in non-TFA countries, including the catching-up countries, known also as emerging economies” (63). In his paper, this researcher uses “[t]he statistical data on economic growth have certain fundamental characteristics, termed “stylized facts”” (64). This paper critically examines these stylized facts that, among others, include the statement that “[i]t is not differences in capital accumulation (physical or human), but differences in the productivity growth of these two kinds of capital (total factor productivity – TFP) that explain almost completely the differences in the growth rate of GDP per capita” (64).
According to Gomułka, “[d]uring the past two to three centuries, there has been a far more rapid growth of inputs of labour and capital in the sector producing qualitative changes than the growth of inputs in the sector producing conventional goods” (66). The author has, likewise, extrapolated stylized trends based on the stylized facts proposed by previous studies, such as that “[i]n less technologically advanced economies, GDP growth per capita was not only strongly diversified between countries, but also, in many cases, unstable over time; thus, it was strongly dependent on economic policies” (69). Thus, Gomułka concludes that “by the end of the 21st century the average per capita GDP will be some nine times higher than in the year 2000, the global economic integration will be (probably) much deeper than at present and the distribution of income and (especially) wealth will be more equal” (71).
By Pablo Markin
Featured Image Credits: Fortune Global Forum 2013, Chengdu, China, June 5, 2013 | © Courtesy of Stuart Isett/ Fortune Global Forum/Fortune Live Media/Flickr.