Controversial Trends in the Contemporary World Economy and Developing Countries. Part 1

Abstract

In the article, based on a series of computations and models, it is shown that despite the progress achieved in the world during the last three to four decades in technologies, innovations, and international economic links, paradoxically, there occurred a substantial slowdown in global economic growth and total factor productivity and human development index dynamics — primarily in DCs, but in EMs as well. Although some part of this phenomenon is due to underestimation of quality in growth dynamics, “new normal” of retardation in growth is real. It stems from massive distortions in the global economy and its main constituents brought about by its excessive financialization, substantial increase in indebtedness, huge rise in levels of inequality of incomes and assets. Although it is clear that some reallocation of incomes from super-rich to less well-to-do, especially in EMs, that could be undertaken by means of heavier taxation of the former, can boost development of human capital, promote acceleration in world economic growth and convergence in the global economy, the political mechanism of this Keynesian world-wide reform is very hard to enact.