The (Anti-) Convergence Club

Economists widely agree with the theory of “convergence,” which is the (mostly true) idea that poor nations should grow faster than rich nations.

This means that we can learn important lessons by looking at examples of “divergence,” and I provide 20 examples in this presentation.

The above video is an excerpt from a presentation I made earlier this week to a seminar organized by the New Economic School in the country of Georgia.

While it seems like I was making the same point, over and over again (and I was), I wanted the students to understand that the real-world evidence clearly shows that good policy is critical if less-developed nations want convergence.

And I also wanted them to realize that there are many examples of free market-oriented nations growing much faster than anti-market countries.

But, by contrast, there are not examples that go the other way.

I’ve challenged my leftist friends to cite one case study of a poor nation that became a rich nation with big government.

Or to cite a single example of an anti-market nation that has grown faster than a market-oriented country.

Especially when using decades of data, which means there’s no ability to cherry-pick the data and create a misleading impression.

Needless to say, I’m still waiting for them to give me an answer.

Here are the background stories from the examples of divergence in my presentation.

• Example #1:   Singapore vs. Jamaica
• Example #2:   Hong Kong vs. Cuba
• Example #3:   Botswana vs. other African nations
• Example #4:   The United States vs. Hong Kong and Singapore
• Example #5:   Hong Kong vs. Argentina 
• Example #6:   Ukraine vs. Poland
• Example #7:   Chile vs. Argentina vs. Venezuela
• Example #8:   North Korea vs. South Korea
• Example #9:   Cuba vs. Chile
• Example #10: Estonia vs. the world average
• Example #11: Ireland vs. the world average
• Example #12: Botswana vs the Africa average
• Example #13: Chile vs the world average
• Example #14: Taiwan and South Korea vs the world average
• Example #15: China vs. Taiwan
• Example #16: Hong Kong vs. France
• Example #17: West Germany vs East Germany
• Example #18: Czechoslovakia vs. Finland, Austria, and West Germany
• Example #19: Western Europe vs. the United States

My last example showed important examples of convergence.

• Example #20: United States vs. Hong Kong, Singapore, and Switzerland

And here are a few other examples of divergence that I didn’t include in my presentation.

• Estonia vs. Croatia
• Singapore vs. the United States
• Botswana vs. South Africa and Zimbabwe
• Hong Kong vs. the United States
• Hong Kong vs. the United Kingdom and the United States
• China vs. Taiwan vs. the world
• South Korea vs. Brazil
• China vs. South Korea, Taiwan, and Japan
• Singapore vs Botswana, United States, China, France, and Japan
• The United States vs France, Italy, and the United Kingdom
• Chile vs. South America
• Baltic nations vs. other countries

Shifting back to convergence, my column on breaking out of the “middle income trap” also has very interesting data on how Hong Kong, Singapore, Ireland, and Taiwan have closed the gap with (or even exceeded) the United States.

I also recommend this column which looks at a wide range of nations that are converging with, diverging from, or staying flat compared with the United States, as well as this column showing how Ireland has caught up and surpassed other European nations.

The moral of the story is that there’s a very simple recipe showing how poor nations can become rich nations.