INCOME levels in most developing and emerging countries will not catch up with
advanced economies for many decades without efforts to boost productivity, according
to a new report by the OECD Development Centre.
Perspectives on Global Development 2014 shows that while China, Kazakhstan and
Panama are on track to reach OECD levels of average income by 2050, a number
of middle-income countries - including Brazil, Colombia, Hungary, Mexico and
South Africa - will take much longer at current growth rates.
Labour productivity in most developing and emerging countries is well below half
the level of OECD countries, the report shows. Diversification into higher value-added
areas in agriculture, manufacturing and services along with economic reforms
and a greater focus on innovation could help remedy this.
The slow pace of economic convergence comes despite high growth rates in developing
and emerging countries in recent years that have increased the weight of non-OECD
countries in the world economy. Non-OECD countries' share of global economic
output overtook that of the OECD countries in 2010.
The report notes that the service sector can be a key driver of value-added
growth in emerging countries. For example, developing high-end services for
a growing middle class and value-added services for both domestic and foreign
businesses, such as consulting, engineering services or medical analysis, would
create jobs with higher returns per worker.
Achieving this kind of diversification will require equipping workers with
better education and skills and encouraging innovation. The report recommends
countries work to develop new products and processes domestically that would
offer a competitive advantage but also that they import the best ideas from
other countries.
The report examines overall productivity in more than 40 countries as well
as looking more closely at up to 18 manufacturing and 16 service sectors using
industry-level data.
|
