Some Speculation on Growth and Poverty over the Twenty-First Century

Abstract

If there is a unifying theme to the papers in this volume, it is that when it comes to globalization and poverty, it is very difficult to make broad generalizations. So it is a bit awkward in this concluding panel to be charged not only with mak ing broad generalizations, but in extrapolating these generalizations to the future. From the research presented here, it is apparent that the effects of greater trade in goods and capital on the poor are extremely complex and almost always depend on domestic institutions. Overall, it is very difficult to document rigor ously the effects of trade liberalization on poverty. The effect of globalization on health among the poor (and others) is similarly complex, trading off the faster spread of disease with faster spread of knowledge about treatment and other benefits. No matter how globalization is modeled, one still needs to rely heavily on innate productivity differences to explain why some countries and regions are rich while others are poor. There is great disagreement over what poverty is, with several plausible measures, depending on whether one regards poverty primarily as an absolute condition or a social condition. And it has also been shown that economic growth and happiness are not necessarily equivalent. In this short note, I want to balance the discussion with a reminder that if the frame of reference is some absolute notion of poverty, then over the very long term, the trajectory of global growth is going to dominate all other factors. Thus one can expect that as global income inexorably expands over the next century, issues of inequality, rather than subsistence, will increasingly take center stage in the poverty debate. And at the end of this discussion, I will ponder the risks to growth, including the question of whether financial crises will continue to hold back countries as they attempt to cross the bridge from lower to upper mid dle income.