ABSTRACT
Growth offers the hope of rising standards of living. Faster growth in developing countries may allow them to close the gap between the higher levels of income per capita in industrial countries and their own level. Although international organizations such as the World Bank and the United Nations seek to promote growth in the developing world, many countries are not sanguine about all aspects of that outcome. Europeans and Americans worry that the impressive growth of China and India over the past decade poses a threat to them, anticipating ever greater competition internationally. That concern might be alternatively phrased: as countries become more similar, does that reduce the gains from trading for some? On the other hand, some developing countries do not see themselves competing with the E.U. or the U.S. Instead, they worry that expansion of their export sectors may result in little benefit to them because of the adverse effect on prices in international markets. Whether either of these concerns is relevant depends upon the sources of growth, not just the fact that GDP per capita has risen. One goal of this chapter is to demonstrate when circumstances warrant these worries and when a more optimistic outlook is appropriate.
