The Age of Sustainable Development" gives students an understanding of the key challenges and pathways to sustainable development - that is, economic development that is also socially inclusive and environmentally sustainable.
Convergence or Divergence?
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A Era do Desenvolvimento Sustentável
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Inequality Around the World
Professor Sachs delves into the reasons for and the measurements of inequality between and within countries.
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Jeffrey Sachs
Director, Earth Institute; Quetelet Professor of Sustainable Development; Professor of Health Policy and Management
[MUSIC]
We've been looking at the level of economic development across countries
in the world and
we've been using the short hand of the gross domestic product per capita.
One of the most important questions we want to know is whether
today's poor countries have the chance and
are indeed on a path to close the gap with the higher income countries.
We know that if they make that transition successfully,
it will raise their well-being.
But it will also improve other aspects of life, the health,
the life expectancy of the population, educational attainment,
opportunities of the population more generally.
We're interested, therefore, both in understanding whether poor
countries tend to narrow the development gap with richer countries.
And from that normative or
goal-directed perspective, we're interested in how that can be achieved.
Economists use a couple of terms that are very important for this concept.
The term convergence is the term that is used to
convey a narrowing of the proportionate gap of
a poor country and a richer comparison country.
Is the proportion of income per person in the poor
country relative to the rich country rising?
Is the poor country closing that gap?
If so, the poor country is said to be converging with the higher income country.
The opposite is divergence.
Divergence means that the poorer country in relative terms is
becoming even poorer when compared to the rich country.
Maybe the poorer country is making progress.
Maybe it's income per person is rising 1% per year.
But if the richer country is making even faster economic growth say,
2% per year, then the poorer country will have
a declining relative size in gross domestic product
per person relative to the higher income country.
So, we want to study whether countries are converging or diverging.
That will tell us a lot about whether overall differences of material life.
Life expectancy, health, education levels,
degree of urbanization are tending to narrow between the rich and
the poor countries or tending to widen.
I would say in this very complicated question with a very
diverse record of now 193 countries around the world,
so no one storyline that fits all.
We could say in broad terms that one part of the period of modern economic growth
has tended to be characterized by a kind of divergence.
And more recently, by a pattern of broad convergence.
What do I mean by that?
We're going to be studying how modern economic growth took of in
the Industrial Revolution.
And we know that until the Industrial Revolution began,
most of the world was poor.
Most of the world was rural.
The gaps of rich and poor countries were quite narrow not like the huge gaps today,
and then a take off started with the Industrial Revolution.
And with that take off, certain part of the world, relatively small part of
the world starting in England spreading to Great Britain more generally.
Spreading to Western Europe, the United State, Australia.
A very few other places initially experienced that
industrialization in the first part of the 19th century.
Most of the rest of the world remained poor and rural,
and the overall process was one of divergence.
The rich were becoming richer, because they were industrializing,
the poor were like they always were.
Eking out a survival in peasant farming in most of the world,
relatively untouched by the new inventions of the steam engine or
the railroad or the telegraph or the other technological advances
that help to set off the process of long-term economic growth.
One could say that the rich were getting richer and
the poorer were kind of stuck at the bottom and
the relative gap between the two was tending to widen,
then came a huge political phenomenon and that is the phenomenon of imperialism.
Because as Western Europe became industrial and quite powerful,
it took political control over more and more of the world.
We'll see that the British Empire spanned the world.
We'll see that other European powers took on more and
more imperial possessions, notably in Africa and in Asia.
This I think was a big setback to the potential of convergence.
Because when countries are dominated by other countries,
it's very hard for those who are in that subservient
position politically to undertake the kinds of
steps improving the infrastructure of the country.
Raising education levels that are crucial for achieving economic development.
And often, the imperial masters are not so
interested in the economic development of their possessions.
Rather, they're interested in taking out as many of the resources of those
countries as they can for the development of their own home industries.
I think it's fair to say that from the period of around 1850 to 1950,
the world was broadly characterized by economic divergence where a few
parts of the world were becoming richer and richer, more and more industrialized.
More and more militarily powerful.
Other parts of the world were stuck in poverty and many parts of
the world were stuck as the imperial possessions of European imperial powers.
Of course, there was much history during that century and
two devastating world wars.
And at the end of the Second World War, a quite different political dynamic.
One very important for global economic development occurred and
that was the so-called the end of the colonial era and
the decolonization of countries around the world who gained political independence.
One of the bright spots of political sovereignty,
of freedom from imperial domination was the ability of more and
more countries to undertake economic development on their own.
And many countries when they got independence said, hey, we're far behind.
Now, it's our turn to industrialize.
We need to take crucial steps.
Build roads, build rail.
Electrify the country, so
that electrification provides a basis for industrial development.
Attract industry both the domestic and foreign investors,
so that we too can experience the process of economic development.
And with that massive global political change and
with further technological developments, better transport,
better communications, the new information age.
That enabled the poor countries of the world to pick up
the pace of their economic development and convergence.
That is faster economic growth in the poor countries became
more of the usual condition than it had been in the years up to 1950.
Since the middle of the last century, therefore,
the end of World War II, the end of the imperial age.
The beginning of economic development in many former colonies,
we've seen a tendency towards convergence.
And that is enabling more and more low-income countries to join
the ranks of the middle income countries, and
middle-income countries to join the rank of the high-income countries.
One of the crucial goals of sustainable development is that all of
today's low-income countries and especially the least developed countries.
Remember, the 50 or so poorest and
most vulnerable among the low- income countries should make that
transition successfully through convergence to middle income status and
most of them or perhaps all have the goal of achieving
high-income status through their own economic development.
One of our key goals is to understand how that process can work and
what is it that impedes convergence among some countries?
When we look around the world today, we see ample evidence of
countries that were once poor achieving very rapid convergence.
China is our most exemplary case and
astounding economic performance over roughly 35
years since 1978 when China began many important
economic reforms that put it on a path of convergent growth.
We also see parts of the world,
today's least developed countries stuck in poverty.
We'll call that a poverty trap that is so
tight that they are not yet achieving economic convergence.
Niger is an example of such a country.
It is a landlocked country in the Sahel region of Africa.
You can see on the map that it is a country just South of the Sahara Desert.
It's far from the coasts.
It's one of the world's poorest countries.
It's a country that's just at the bottom of the world's human development index.
Meaning that not only is it income poor, but
also its conditions of education and health are very dire indeed.
But not only has Niger had to suffer this kind of poverty,
it's been stuck in a poverty trap for a long period.
So unlike China, it has not been achieving economic convergence.
Let's look at the numbers just as an example.
We'll measure the gross domestic product
per person in purchasing power, parity adjusted terms.
Remember, taking into account difference of price levels across countries.
If we look back in 1980, the per capita income in the prices of those days
in the United States was about $12,000 per person.
In China about $250 per person, very poor.
In Niger, maybe even higher than China
on the official data at about $450 per person.
Now let's fast forward to the year 2010, what's happened?
A China experienced a decade after decade of double digit economic
growth with the economy doubling every few years, every seven years on average.
And that meant that by the time 2010 came around,
China was no longer at $250 per person.
It was now at nearly $10,000 per person.
The United States by then at about $50,000 per person.
Niger, unfortunately, still stuck at below $1,000
per person and still among the least developed countries.
If you ask the question about divergence and convergence,
China went from being around 2% of the US gross
domestic product per person to being around 20%
of the US gross domestic product per person.
Still far below the US income level, even adjusting for price level.
But narrowing the gap very quickly.
Niger sadly started out at around 4% of the US per capita level.
But by 2010, less than 2%.
In other words, experience divergence rather than convergence.
One of our most important objectives in the coming talks will be
to examine this process of convergence versus divergence,
to try to understand the underlying factor.
And really to unlock the keys that can help today's poorest
countries get on a trajectory of convergence, so
that they too can have the improvements of material life.
Improvements of health, education, income per person that we know
can be an important component of improved well-being.
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