Page 154 - Global Political Economy_Understanding The International Economic Order

SIG NIFIC ANCE O F NEW T HEORI ES
Technological developments available at the turn of the century
hold great promise that all economies could eventually benefit. These
new technologies are so central to economic competitiveness and na-
tional power that the struggle to determine which nations will lead
and which will follow in development and exploitation of these revo-
lutionary technologies has been intensifying. Although recognition of
the importance of the technologies has unleashed a competitive strug-
gle among states for technological supremacy, it is highly unlikely
that any nation will be able, in the early years of the twenty-first
century, to achieve the commanding technological leads that Great
Britain and the United States enjoyed in the nineteenth and twentieth
centuries. The scope and expense of modern science and technology
are simply too great for any one nation to acquire a monopoly posi-
tion in every high-tech sector. Nevertheless, the competition will be
fierce, because control over what have been called the “nerve centers”
of the twenty-first century is at stake in this struggle.

Convergent and Divergent Economic Growth
The world economy portrayed by the new economic theories is char-
acterized by both divergent and convergent economic growth among
national economies and different regions within individual national
economies. Despite the optimistic predictions flowing from the con-
vergence theory of mainstream neoclassical economics, the growth
process within and among national economies remains highly uneven.
Although convergence has been taking place among the industrialized
countries throughout the post–World War II era, few developing
economies have converged with the developed economies despite the
considerable progress that some have experienced. An important
study by Robert Barro and Xavier Martin found that the prediction
that convergence between rich and poor would occur has not been
fulfilled; in fact, the growth rates of many countries are diverging
23
from one another. Government policies that encourage private en-
trepreneurship and national economic efficiency are important in de-
termining that convergence rather than divergence will take place.

23
Robert J. Barro and Xavier-Martin, “Convergence Across States and Regions”
(Washington: Brookings Institution, Brookings Papers on Economic Activity 1, 1991),
107–58. These negative findings regarding convergence are supported by Mauruce Ob-
stfeld and Kenneth Rogoff, Foundations of International Marcroeconomics (Cam-
bridge: MIT Press, 1996), 454.
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