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OECD’s new geography of growth

OECD’s new geography of growth
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First Published: Sun, Jun 27 2010. 08 07 PM IST
Updated: Sun, Jun 27 2010. 08 07 PM IST
Remember that simpler time when the globe was neatly divided into the First, Second and Third Worlds? Things started to get complicated after the Second World collapsed and parts of the Third World started to grow rapidly. Nowadays, with much of the developed world devastated by the financial crisis, a new classification is called for. The Organisation for Economic Co-operation and Development (OECD), aka the club of the rich, has decided to cater to that demand. In a recent publication, Shifting Wealth: Perspectives on Global Development 2010, it divides the world into four categories, which it believes reflects more accurately what it calls the “new geography of growth”. It proposes a new fourfold classification into “affluent, converging, struggling and poor countries, according to their income and rate of growth per capita relative to the industrialized world”.
The “affluent” category is straightforward—it’s a list of the rich nations. The only quibble one could have with the classification is that it includes countries such as Greece, which may soon become not so rich. More interesting are the “converging” countries, which means their economies are playing catch-up with the rich countries. This is still admittedly a distant goal for countries such as India, but OECD believes it is firmly on the right path, which is why India has been reclassified from “poor” in the 1990s to “converging” in the 2000s. Some other countries that have made the shift from “poor” to “converging” in the past decade are Indonesia, Nigeria, Bangladesh and even Rwanda. The level of income is not a criterion—while China and India are classified as “middle-income” countries, there are several “low-income” countries in this group. Russia changed from the “struggling” to the “converging” category in the past decade. China, Vietnam and, strangely, Bhutan have been labelled “converging”, both for the nineties and the noughties.
The third group consists of the “struggling” economies and includes Brazil, Argentina, Mexico and Egypt. These countries are all said to be struggling to break out of their middle-income status. And finally, there are the “poor” countries. Pakistan falls in this group, as does Nepal, and they are accompanied by the likes of the Democratic Republic of Congo, Zimbabwe, Haiti and Papua New Guinea. Interestingly, Pakistan is labelled “poor” while Bangladesh is called “converging” despite the former’s per capita income being $860 (around Rs40,000) against Bangladesh’s $480. Clearly, OECD feels Bangladesh has far greater potential to catch up with the industrial economies than Pakistan.
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First Published: Sun, Jun 27 2010. 08 07 PM IST