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2011-01-06

Convergence in income and divergence in growth

Comments on Martin Wolf “In the grip of a great convergence”, 5/01/2011, http://www.businessspectator.com.au/bs.nsf/Article/China-US-economy-inflation-interest-rates-pd20110105-CT3VY?OpenDocument&src=sph

I think the divergence and convergence story should bring benefits to all nations, just like voluntary and free trade is beneficial to all trade partners involved.

So, while the currently advanced economies may be in a relative decline, they will also benefit from the relative and absolute rise of the large and rapidly industrialising economies.

This should strike a key note on all nations.

And it is in this win-win outcome that all should embrace and celebrate the convergence of income.

PS: I share Wolf's view that the current information and communication technologies mean that China and India can acquire the knowledge base that has underpinned the industrialised economies; and there are unlikely events that will stop the current convergence trend for the foreseeable future.

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