Andrew M. Warner

Economic Reform and the Process of Global Integration

WHEN T H E BROOKINGS Panel on Economic Activity began in 1970, the world economy roughly accorded with the idea of three distinct economic systems: a capitalist first world, a socialist second world, and a developing third world which aimed for a middle way between the first two. The third world was characterized not only by its low levels of per capita GDP, but also by a distinctive economic system that assigned the state sector the predominant role in industrialization, although not the monopoly on industrial ownership as in the socialist economies. The years between 1970 and 1995, and especially the last decade, have witnessed the most remarkable institutional harmonization and economic integration among nations in world history. While economic integration was increasing throughout the 1970s and 1980s, the extent of integration has come sharply into focus only since the collapse of communism in 1989. In 1995 one dominant global economic system is emerging. The common set of institutions is exemplified by the new World Trade Organization (WTO), which was established by agreement of more than 120 economies, with almost all the rest eager to join as rapidly as possible. Part of the new trade agreement involves a codification of basic principles governing trade in goods and services. Similarly, the International Monetary Fund (IMF) now boasts nearly universal membership, with member countries pledged to basic principles of currency convertibility. Most programs of economic reform now underway in the developing world and in the post-communist world have as their strategic aim the

The curse of natural resources

Abstract This paper summarizes and extends previous research that has shown evidence of a “curse of natural resources” – countries with great natural resource wealth tend nevertheless to grow more slowly than resource-poor countries. This result is not easily explained by other variables, or by alternative ways to measure resource abundance. This paper shows that there is little direct evidence that omitted geographical or climate variables explain the curse, or that there is a bias resulting from some other unobserved growth deterrent. Resource-abundant countries tended to be high-price economies and, perhaps as a consequence, these countries tended to miss-out on export-led growth.

Trends in regional inequality in China

In this paper, we examine the tendency towards convergence in real per-capita income among the provinces of China during the period 1952–1993. Real incomes in Chinese provinces did not display strong convergence or divergence during the initial phase of central planning, 1952–1965. During the cultural revolution, 1965–1978, regional inequality widened, as Socialist planning favored the already richer industrial regions at the expense of the poorer agricultural regions. It was only after market-oriented reforms began in 1978 that regional incomes began to equalize sharply. This convergence was strongly associated with the rise in rural productivity, and was particularly strong within the group of provinces that were allowed to integrate with the outside world. Starting in 1990, although convergence continued within these coastal provinces, they have started to grow markedly faster than the interior, and thus regional incomes have started to diverge once again.

Achieving Rapid Growth in the Transition Economies of Central Europe

This paper describes ways that the CEEs can speed their convergence with the EU by emulating the growth strategies of the very fast growing economies. In Section II, we introduce the VFGEs, and discuss some of the sources of their superior growth performance. In Section III, we demonstrate the role of key policy variables in the context of cross-country growth equations. In Section IV, we examine how the CEEs can emulate key aspects of the economic policies of the VFGEs, in order to raise their growth in the coming years.

How to Catch Up with the Industrial World—Achieving Rapid Growth in Europe's Transition Economies

The preeminent economic challenge for the Central European Economies in transition (CEEs) is to grow rapidly over a sustained period in order to narrow the economic gap with Western Europe. If the CEEs grow only slightly faster than the EU, convergence will take several decades (see Transition, vol.7, no.1, January-February 1996, p. 6). Polands income level today is 36 percent of average income in the EU. Assuming that per capita income grows an average of 1 percent a year in the EU and 3 percent a year in Poland, it would take forty-six years for Poland to reach 90 percent of the average per capita income of the EU. But if Poland manages to boost growth to 5 percent per capita a year, the time it takes Poland to reach 90 percent of EU per capita income would be cut in half, to twenty-three years. The key issue for Poland and the other CEEs, therefore, is how to achieve high rates of economic growth in the next decades.