The question of convergence, or under what conditions the per capita income levels of developing countries can catch up to those found in advanced economies, is critical for understanding economic growth and development. Convergence has happened in many countries and appears to be taking place now in China and India - yet in general per capita income levels in the poorer countries do not converge towards those of richer countries as uniformly as the analytical models predict. Living Standards and the Wealth of Nations, which grew out of a 2003 conference on convergence hosted by the National Bank of Poland, offers detailed theoretical and empirical examinations of what makes for successful convergence.

After general discussions of the theoretical requirements for "rapid catch up" and the possible link between democracy and growth, the book presents global case studies of both non-EU and EU countries, including a provocative comparison of growth in the transition economies of the CEE (Central and Eastern Europe) nations and the 12 non-Baltic states of the former Soviet Union. It then considers nominal as opposed to real convergence in the European Monetary Union. Taken together, the chapters present a consistent argument that reliance on market forces within an open economy in a stable macroeconomic environment, with assured property rights, is the key to rapid economic growth.

Contributors:

Anders Aslund, Leszek Balcerowicz, Manuel Balmaseda, Iain Begg, John Bradley, Vittorio Corbo L., Stanley Fischer, Leonardo Hernández T., Philip E. Keefer, Olle Krantz, Abel Moreira Mateus, Thomas O'Connell, Stephen L. Parente, Edward C. Prescott, Jacek Rostowski, Isaac Sabethai, Miguel Sebastián, Diarmaid Smyth, Athanasios Vamvakidis, José Maria Vinals, Wing Thye Woo, Nikolai Zoubanov

Leszek Balcerowicz is President of the National Bank of Poland. As Finance Minister in the first post-transition Polish government, he was largely responsible for the successful transformation of the Polish economy.

Stanley Fischer became Governor of the Bank of Israel in May of 2005. He has also served as Vice Chairman of Citigroup, Inc., First Deputy Managing Director of the International Monetary Fund, and Killian Professor and Head of the Department of Economics at MIT. Before his service in the IMF from 1994 to 2001, he was Killian Professor and Head of the Department of Economics at MIT.

Table of Contents

Contributors

I Some General Remarks on the Process of Catching Up

Introduction and Summary
Leszek Balcerowicz and Stanley Fischer

1 What a Country Must Do to Catch Up to the Industrial Leaders
Stephen L. Parente and Edward C. Prescott

2 Elections, Political Checks and Balances, and Growth
Philip Keefer

II Case Studies of Successes and Failures in Catching Up

3 The Nordic Countries in the Nineteenth and Twentieth Centuries: Economic Growth in a Comparative Perspective
Olle Krantz

4 The Experimentalist-Covergence Debate on Interpreting China's Economic Growth: A Cross-Country Perspective
Wing Thye Woo

5 Successes and Failures in Real Covergence: The Case of Chile
Vittorio Corbo L. and Leonardo Hernández T.

6 Economic Resurgence in the Commonwealth of Independent States
Anders Aslund

III Consequences of Accession to the European Union: Case Studies

7 Spain in the EU: The Key Issues
José Maria Vinals

8 The Spanish Experience in the European Union
Manuel Balmaseda and Miguel Sebastián

9 Portugal's Convergence Process: Lessons for Accession Countries
Abel Moreira Mateus

10 Greece: The Long Process of Economic and Institutional Convergence
Isaac D. Sabethai

11 The Convergence Experience of the Greek Economy in the EU: Lessons for EU Accession Countries
Athanasios Vamvakidis

12 Real Convergence within the European Union: The Case of Ireland
Thomas O'Connell and Diarmaid Smyth

13 Irish Economic Development in an International Perspective
John Bradley

IV EMU Entry and Economic Growth

14 When Should the Central Europeans Join the EMU? Reconciling Real and Nominal Convergence
Jacek Rostowski and Nikolai Zoubanov

15 Is Full Participation in the EMU Likely to Favor or Slow Real Convergence?
Iain Begg

V Conclusion

16 Concluding Comments
Leszek Balcerowicz

Hardback, 432 pp., 91 illus.