This was the title of Nobel Prize winner Edward Prescott’s keynote address today at the World Bank, at the opening of the PREM (Poverty Reduction and Economic Management) Conference 2006.
From his presentation, economic integration would be the main driver for growth and development.
For example, according to Prescott, the original European Community countries were able to catch-up with the US in the second half of the 20th century because they became a free trade club, as the US had done before. The reason why Latin America is not catching up would be that it has not adopted this US/EU type free trade club.
In his optimistic conclusion, Prescott forecasts that in the long term the whole world will catch up with rich countries, which will continue to double their living standards every generation. This forecast is conditional on all countries becoming economically integrated, and on all of them maintaining economic sovereignty. He sees the European Union expanding (including Turkey), and a functioning NAFTA, with India and China being big enough to constituting a trading club in themselves and the rest of Asia maybe becoming a trading club.
He did not mention Africa in this cheerful forecast. Would African economic integration help the continent catch up with the rest of the world?
The PREM conference and PREM learning week are taking place this and next week at the World Bank. Some of the world’s leading experts in Poverty Reduction get together to share knowledge and experiences. We will keep you updated.