Slowing down of the engine of growth. [Effect on LDCs of developed countries slowing growth rate]

For the past hundred years the rate of growth of output in the developing world has depended on the rate of growth of output in the developed world. When the developed grow fast, the developing grow fast, and when the developed slow down, the developing slow down. Is this linkage inevitable. More specifically, the world has just gone through two decades of unprecedented growth, with world trade growing twice as fast as ever before, at about 8 percent per annum in real terms, compared with 0.9 percent between 1913 and 1939, and less than 4 percent per annum between 1873 and 1913. During these prosperous decades, the less-developed countries (LDCs) have demonstrated their capacity to increase their total output at 6 percent per annum, and have indeed adopted 6 percent as the minimum average target for LDCs as a whole. But what is to happen if the more-developed countries (MDCs) return to their former growth rates, and raise their trade at only 4 percent per annum: is it inevitable that the growth of the LDCs will also fall significantly below their target. The author does not predict what is going to happen, but explores existing relationships and how they maymore » change.« less