Wednesday, 18 December 2013

LatinTrade: By 2030 half of the world's capital stock will be in developing countries

By the year 2030, half of the world’s capital stock will be in developing countries. This is suggested in Capital for the Future: Saving and Investment in an Interdependent World, from the World Bank, which studies different investment and savings scenarios for the next 20 years. Global capital stock will move to the developing world and, along with South Asia, Latin America and the Caribbean, will be the region that will get the lion’s share in this transition. However, a fairer distribution of welfare and capital on a global scale does not necessarily mean that the same redistributive changes will occur within countries. In developing economies, welfare and capital savings are still very much limited to high-income households. Moreover, the less educated groups of population tend to have lower incomes throughout their lives, and thus to make very little or no savings at all. This is why they cannot escape the poverty trap, an undeniable situation in Latin America. For this reason, the book states that to avoid the perpetuation of unduly differences in income, savings and welfare, it is necessary to have a thorough “redistribution” of education amongst workers.
Developing countries will represent more than half of global capital stocks by 2030. (a. 2030 Panel projections assume a gradual convergence scenario of annual world economic growth of 2.6 percent over the next two decades, of which developing (high-income) growth will average 5.0 (1.0) percent annually.)

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