How can a country grow its economy and lift its citizens out of poverty? That was the question tackled by NYU Stern School of Business economics professor, and Nobel Laureate Michael Spence.
At the request of the World Bank, Spence managed a commission that looked at all of the contemporary research on poverty. Spence looked for countries that had grown for 7% annually for 25 years. There were only 13 countries (China, Brazil, Korea, Japan, Taiwan, Botswana, etc.) and all 13 nations had consistently embraced effectively the same (Asian Model) growth model: High levels of investment funded domestically, openness to foreign direct investment, and leveraging the big global marketplace. This is later issued in a report The Growth Report Strategies for Sustained Growth and Inclusive Development.
Spence won his Nobel Prize for his work on the dynamics of information signaling and market structures. He is also an advisor to General Atlantic, a $35 billion private equity firm around since 1980.
In his book is The Next Convergence: The Future of Economic Growth in a Multispeed World, he describes the impact of the industrial revolution: “From 1750 to 1950 the average incomes of people living in countries with the industrial revolution sure their incomes rise 20-40X versus non-industrialized countries.” The Next Convergence as Spence describes it, is about the next 100 years – 1945- 2045 – where he expects another 60% of the world’s population will join the affluent.
His favorite books are here; A transcript of our conversation is available here.
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Next week, we speak with Wall Street Journal reporter Greg Zuckerman, whose most recent book is The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution.