Testing Krugman's It Theory of Global Polarization
policytensor.substack.com
Krugman's paying attention to global polarization again. His It theory is a sort of zero-one law of modernization: One thing is clear: at any given time, not all countries have that mysterious “it” that lets them make effective use of the backlog of advanced technology developed since the Industrial Revolution. … Once a country acquires It, growth can be rapid, precisely because best practice is so far ahead of where the country starts. And because the frontier keeps moving out, countries that get It keep growing faster. … The It theory also, I’d argue, explains the U-shaped relationship Subramanian et al find between GDP per capita and growth, in which middle-income countries grow faster than either poor or rich countries. Countries that are still very poor are countries that haven’t got It; countries that are already rich are already at the technological frontier, limiting the space for rapid growth. In between are countries that acquired It not too long ago, which has vaulted them into middle-income status, but are able to grow very fast by moving toward the frontier.… and rising inequality within Western countries means that if you look at the global distribution of household incomes, you get Branko’s elephant chart.
Testing Krugman's It Theory of Global Polarization
Testing Krugman's It Theory of Global…
Testing Krugman's It Theory of Global Polarization
Krugman's paying attention to global polarization again. His It theory is a sort of zero-one law of modernization: One thing is clear: at any given time, not all countries have that mysterious “it” that lets them make effective use of the backlog of advanced technology developed since the Industrial Revolution. … Once a country acquires It, growth can be rapid, precisely because best practice is so far ahead of where the country starts. And because the frontier keeps moving out, countries that get It keep growing faster. … The It theory also, I’d argue, explains the U-shaped relationship Subramanian et al find between GDP per capita and growth, in which middle-income countries grow faster than either poor or rich countries. Countries that are still very poor are countries that haven’t got It; countries that are already rich are already at the technological frontier, limiting the space for rapid growth. In between are countries that acquired It not too long ago, which has vaulted them into middle-income status, but are able to grow very fast by moving toward the frontier.… and rising inequality within Western countries means that if you look at the global distribution of household incomes, you get Branko’s elephant chart.