The economic model of emerging countries - Michael Spence

Trace the shift from the industrial revolution era to post-war growth as developing countries begin to rise, reshaping the global economy and its configuration.

Explore how information asymmetries shape markets, learn how signaling combats reverse selection, illustrated by the lemons problem and the costs and benefits of signaling.

Growth in developing countries comes from technology and knowledge that boost performance. Open trade, high investment, and learning from advanced economies drive catch-up growth, as Japan and others show.

Explore how Africa's growth stems from building nationhood and investing in human capital, not natural resources, as young leadership reforms and drives six to seven percent growth.

Examine Latin America's growth arc, from Brazil's postwar boom to macro mismanagement and inflation, and the region's swing between populism and market economics.

Explore cyclical growth phases in the world economy, from postwar Europe to BRICS expansion, highlighting periods of recessions and bursts of growth in Japan, China, India, and other emerging powers.

Reforms transformed China from a poor, centrally planned economy to a market-based system, where rural producers could sell surplus above quota on the open market and fuel rapid growth.

Recognize that no growth formula lasts forever; avoid sticking with a high-growth model too long. Policy reforms must enable structural change as labor shifts and value-added activities migrate globally.

China faces a leadership transition with term limits, signaling reform and momentum under the 12th five-year plan, and its growth engine role shapes the global economy and developing countries' exports.

Manufacturing uses capital and labor to create added value. Costs of raw materials and labor drive outsourcing to developing countries; marketing, communication, and distribution stay in advanced economies.

Explore how India's gradual liberalization and reform momentum shape its growth trajectory relative to China's vast state-led investment, including the 1991 crisis and current headwinds from Europe and America.

Explores how equity shapes growth in emerging economies, showing inequality accompanies the shift from agriculture to the modern economy and the need for government intervention and inclusiveness.

Explain how developing countries may surpass half of the global economy and triple world output, urging new growth models that protect resources and the environment globally.

Examine global income distribution across income groups. The richest 20 percent own 86 percent of wealth, while the poorest 20 percent hold 1 percent, highlighting regional disparities and rising inequality.

Advanced countries face rising income inequality as labor share falls and capital gains; technology and globalization displace middle-income workers, creating a jobless recovery in the United States and Eurozone challenges.

Assess macro risks threatening the global economy, from the US fiscal cliff to European stagnation, and examine how rising inclusion and intergenerational growth in developing countries create cautious optimism.