Farewell to Development’s Old Divides

NEW YORK -- The notion of a divide between the rich north and the poor and developing south has long been a central concept among economists and policymakers. From 1950 to 1980, the north accounted for almost 80% of global GDP but only 22% of its population, and the south accounted for the remainder of global population and 20% global income.

But the north-south divide is now obsolete. The dynamic process of globalization has resulted in unprecedented levels of growth and interdependence. However, while this has blurred the old division, new ones have emerged, splintering today’s world into four inter-connected tiers.

The first tier comprises the affluent countries, notably the United States, European nations, Australia, and Japan – with a combined population of around one billion and per capita incomes ranging from $79,000 (Luxembourg) to $16,000 (Republic of Korea). For the past 50 years, these affluent countries have dominated the global economy, producing four-fifths of its economic output. However, in recent years, a new set of economies has emerged that is contesting the affluent countries’ economic dominance.

These emerging economies – call them the Globalizers – constitute a second tier of about 30 poor and middle-income countries (including China and India), with per capita GDP growth rates of 3.5% or more, and a total population of 3.2 billion, or roughly 50% of the world’s population. These countries have experienced unprecedented levels of sustained economic growth that may well enable them to replace the “Affluents” as engines of the world economy.