Why poor countries stopped catching up
by j-bos on 2/4/2026, 1:22:49 AM
https://davidoks.blog/p/why-poor-countries-stopped-catching-690
Comments
by: A_D_E_P_T
The entire essay obsesses over GDP convergence while ignoring that GDP (especially in the West) increasingly measures asset shuffling, imputed rents, and healthcare billing rather than anything humans actually experience. (Healthcare, finance, real estate, and legal services combined are ~40% of US GDP!)<p>So we've got 3000 words eulogizing a metric that tells you more about financialization than flourishing. Look at life expectancy, infant mortality, or caloric intake and you'll find a more interesting story -- with some poor countries doing very well, and increasingly so, whereas others are on a fairly grim trajectory.
2/4/2026, 1:44:15 AM
by: WalterBright
A long essay, which ignored the elephant in the room.<p>Prosperity and growth come from free markets. The correlation is very strong. Poor countries are poor because they eschew free markets.
2/4/2026, 2:42:13 AM
by: econgs321
Classic example of economic theory managing to dress up a kind of ahistorical theology as respectable science.<p>Consider this: if you take 'countries' as given (questionable), and some become rich whereas others remain or become poor, by induction you'd expect those trends to continue. A country that has remained poor for decades is likely to remain poor for decades, etc. "Bad governments" and other conditions that create poverty are not some kind of mean-reverting aberration.<p>The economists will carry on though, and thanks to their connections with finance and government, their prestige will never truly wink out.
2/4/2026, 2:17:20 AM
by: tbrownaw
I assume someone somewhere has a dataset for technology diffusion broken out by country or at least region? Like so[1], but as a table and not limited to just here.<p>Perhaps that sort of thing could be useful enough to justify the extra bytes?<p>[1] <a href="https://techliberation.com/2009/05/28/on-measuring-technology-diffusion-rates/" rel="nofollow">https://techliberation.com/2009/05/28/on-measuring-technolog...</a>
2/4/2026, 2:49:45 AM
by: MinimalAction
Nice article! The upshot is that the boom of Chinese commodity prices in the mid-2010s is what stopped poor countries from catching up. That's a high level answer, but there's more nuance to it. In many places, I firmly believe the poor governance added with unnecessary bureaucracy is how half the countries lose sight on development. The prime example is India and to some extent Brazil.
2/4/2026, 2:07:51 AM
by: hn_throwaway_99
Is it against the rules to say that most of the comments here (at least right now) are drastically missing the point? "Rich countries exploit poor ones!!" - ok, fine, you could argue that's been happening since the beginning of time, doesn't change anything about the conclusions of the article. "The article obsesses over GDP convergence!!" - you can argue GDP is not the perfect metric but the fact is a lot of these poor countries have not been converging on lots of quality of life metrics that matter.<p>The fundamental thrust of the article is that poor countries only "converged" for a short while due to the Chinese-driven commodity boom, and I think this argument is very compelling. Worse, as history has shown tons of times, commodity booms often end up being <i>bad</i> for a country in the long term because they don't lead to meaningful investments in other productivity-improving endeavors (e.g. Dutch disease that the article mentions).<p>And I think a subtext of this article is that the economic profession in general has a <i>ton</i> of soul searching to do. Too often economics has depicted rosy outcomes for a host of activities where it has just been flat out wrong. This article goes into detail about how "convergence" almost <i>never</i> happened except for a short "sugar high" driven my Chinese commodity demand. Similarly, I've seen a few mea culpas over the years arguing that the once orthodox view that globalization would be great for everyone failed to take into account how it could contribute to destabilizing democracies as the "economic losers" in rich countries started to demand more political power, one aspect in the rise of populism and some of its dangerous effects.
2/4/2026, 2:23:07 AM
by: rayiner
Social sciences departments around the world should be working overtime to explain this graph: <a href="https://www.gisreportsonline.com/wp-content/uploads/2020/12/Examining-Latin-AmericaOCOes-OCspuzzleOCOe-of-low-growth1-1536x775.png" rel="nofollow">https://www.gisreportsonline.com/wp-content/uploads/2020/12/...</a><p>It’s a graph of regional GDP per capita as a percentage of the U.S. Latin America was around 40% around 1950, but has declined to around 25% by 2018. Sub-saharan africa has slowly lost ground since 1950. Southeast asia has gone from almost as poor as Africa in 1950 to almost as rich as southern europe (50% of US GDP per capita).<p>What makes some countries rich and some countries poor? In the modern era, I think political dysfunction explains a lot. Developing countries with neoliberal governments that started out authoritarian (Singapore, Korea, Taiwan) have done well. Countries that can’t maintain a stable government have suffered.<p>In my home country, they were experiencing 5-6% per capita GDP growth for about 15 years: <a href="https://www.gisreportsonline.com/wp-content/uploads/2020/12/Examining-Latin-AmericaOCOes-OCspuzzleOCOe-of-low-growth1-1536x775.png" rel="nofollow">https://www.gisreportsonline.com/wp-content/uploads/2020/12/...</a>. But then a motley coalition of idealistic students and Islamists overthrew the government. I suspect that will lead to a lengthy period of slow growth, because who wants to invest in a country where people regularly overthrow the government?
2/4/2026, 2:06:01 AM
by: ashivkum
"What if it was just China?" is a reasonable guess for many of the dazzling claims of statistical worldwide improvement made by Steven Pinker/Noah Smith and their ilk
2/4/2026, 2:10:35 AM
by: deaux
If the modern right's obsession with "ivory tower academics" was real instead of a stick with which to beat ideas they don't like, the field they'd focus on would be economics, not gender studies. Most of it is astrology for those who like to wear suits. It has been decades since the complexity and chaos factor of the real world has overtaken the ability to make meaningful correlations or predictions in all but the most straightforward cases where one institute (e.g. a central bank) controls everything.<p>It's made even worse by the great bias towards "everything about globalism and capitalism is obviously fantastic for the world!".<p>This case is such a prime example of both of the above. Firstly, the one-off China event having such a big impact on its own that general theories are entirely irrelevant. Second, <i>of course</i><p>> "Now that those were swept away—they were, he said, merely a “temporary phenomenon”—the catch-up growth that economic theory predicted had finally arrived. Globalization was working; development was succeeding; the gap between rich and poor countries was closing.
2/4/2026, 2:13:59 AM
by: seizethecheese
Catch up growth is premised on the assumption that productivity producing innovations diffuse through the world. This assumption is true, of course, but not universally. Many technologies also rely on culture, institutions, human capital.
2/4/2026, 2:30:42 AM
by: topaz0
> [...] three factors [...] Capital accumulation is one.<p>The obvious omission here is well developed in Imperialism, The Highest Stage of Capitalism: it's hard to accumulate capital when all of the productivity growth from foreign "investment" by the rich world is captured by the "investors".
2/4/2026, 2:51:14 AM
by: kazinator
> <i>Globalization was working; development was succeeding; the gap between rich and poor countries was closing. So there was tremendous reason for optimism about the future.</i><p>Even if that had turned out true, so what? The gap between rich and poor countries closing is not the same thing as the gap between the rich and poor closing!
2/4/2026, 2:56:27 AM
by: jmclnx
Our current world system is based on exploitation by the powerful on the weak. It has been this way since the dawn of time at many levels. So now, powerful countries take resources from less powerful countries. There are many ways this can be done, so here we are.
2/4/2026, 1:53:57 AM
by: EGreg
Automation, d’oh<p>Outsourcing worked while we didnt have AI to the level we needed<p>It was always gonna be a temporary stopgap. Sorry, the global community doesnt have enough empathy for humans THAT far away to actually share wealth w them. At least we graduated to having social safety nets within nations.
2/4/2026, 2:05:19 AM
by: bibimsz
[flagged]
2/4/2026, 2:24:35 AM
by: orionblastar
> In the past, he said, poor countries were failing to outgrow rich ones because of unfortunate circumstances (“the war, bad policies, and dysfunctional institutions that afflicted developing nations in the mid-20th century”)<p>Or is it the wealthy exploiting the poor through low wages?
2/4/2026, 2:04:43 AM