1、Are Emerging Markets Still Emerging?,Bart van Ark,Since 2014 GDP growth in emerging markets rapidly declined both employment and productivity are causes,Contributions of Employment and Labor Productivity to GDP Growth, 2000-2016, in % (annual average),Source: The Conference Board Total Economy Datab
2、ase, May 2016,To some extent this is much about China, but not just China,Trend growth in output (GDP) per worker, 1971-2015, in %,While emerging market growth held up after 2008/09 crisis, it was increasingly investment driven with negative TFP,Growth Contributions of Labor, Capital and Productivit
3、y, in %,The BRICs dont have a lot in common except for recently weakening TFP growth,Growth Contributions of Labor, Capital and Productivity, in %,The “next” generation of emerging markets shows a similar pattern of mostly capital intensification of the growth process,Growth Contributions of Labor,
4、Capital and Productivity, in %,Possible explanations for emerging market slowdown,Short-term: A temporary dip due to lower oil and commodity prices for resource-rich emerging markets Fallout of possible monetary tightening in U.S., including depreciations and inflation Increase capital outflow to re
5、gions with higher returns Medium-term: End of catch-up growth and transition from investment- and export- driven growth to consumption and services driven growth A middle income trap because of increased global competitive challenges Innovation challenges in globalization V2 Long-term: Erosion of de
6、mographic dividends Structural policy issues (regulatory and governance),Resource-rich economies are tightening monetary and fiscal stance, while net users of resources loosen policies further to support economic growth,Source: Haver Analytics,%,Mar 16,The middle income trap results from the failure
7、 to transition to a slower but sustainable growth path,Countries trapped in the middle-income range are characterized by loss of competition in transition process,Countries that are unable to compete with low-income, low-wage economies in manufactured exports and with advanced economies in high-skil
8、l innovations such countries cannot make a timely transition from resource-driven growth, with low cost labor and capital, to productivity-driven growth. (ADB, 2011) Industries that drove the growth in the early period start to become globally uncompetitive due to rising wages. These labor-intensive
9、 sectors move to lower-wage countries and are replaced by a new set of industries that are more capital-, human capital-, and knowledge-intensive in the way they create value. (Spence 2011) A large number of countries that receive too little manufacturing FDI stay at stage zero. Even after reaching
10、the first stage, climbing up the ladders becomes increasingly difficult. Another group of countries are stuck in the second stage because they fail to upgrade human capital. (Ohno 2009),The countries that are “technically” at risk of a middle income trap are all relatively capital- or resource-inten
11、sive,Output per person employed as a % of OECD average, 19902-15,There are still many different “Chinas”,Level of GDP per capita (PPP-based) - The richest five vs the poorest five provinces,Emerging markets still enjoy demographic dividend but it will slow higher skills have to make up for it to dri
12、ve TFP growth,* “Natural“ refers to growth in population excluding migration Source: United Nations Population Division,Productivity growth could see some recovery into 2020s, but will it be enough to offset slowing labor supply?,Trend growth in output (GDP) per worker, 1970-2025, in %,No ! Growth r
13、ates of mature and emerging markets will converge dramatically,*Europe includes European Union -28 as well as Switzerland , Iceland and Norway.*Other mature economies are Australia, Canada, Iceland, Israel, Hong Kong, South Korea, New Zealand, Singapore, and Taiwan Province of China.*Southeast Europ
14、e includes Albania, Bosnia and Herzegovina, Croatia, Macedonia, Serbia and Montenegro, and Turkey.Source: The Conference Board Global Economic Outlook 2016 (November 2015),GDP Growth, average annual % change,How to avoid an “exit” for emerging markets? From “accumulation” to “assimilation”,Despite s
15、hort-term challenges, the main constraints for emerging markets to sustain growth are medium-term The slowing demographic dividend is unlikely to be made up for by faster labor productivity growth The rebalancing from (tangible) capital accumulation to skills and innovation will make ongoing catch-u
16、p with mature countries possible The current slowdown in globalization (weak trade, slow FDI) is a constraining factor The nature of current innovation does not reward low-wage economies as a virtue on its own it depends on returns on human and other intangible capital Regulatory and governance issues in an innovation-driven economy are much more challenging,
