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<DIV><B>From:</B> <A title=ruglucia@PAHO.ORG
href="mailto:ruglucia@PAHO.ORG">Ruggiero, Mrs. Ana Lucia (WDC)</A> </DIV>
<DIV style="FONT: 10pt arial"> </DIV>
<DIV class=Section1>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><B><FONT face=Arial color=maroon
size=2><SPAN
style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: maroon; FONT-FAMILY: Arial">Why
Did The Poorest Countries Fail to Catch Up?<o:p></o:p></SPAN></FONT></B></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><FONT face=AGaramondPro-Regular
color=#333399 size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: AGaramondPro-Regular"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><FONT face=Arial color=#333399
size=2><SPAN style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">Branko
Milanovic is lead economist in the World Bank Research Department
<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><B><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">Carnegie
Endowment for International Peace, November
2005<o:p></o:p></SPAN></FONT></B></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">Available online as
PDF file [38p.] at: <A
href="http://www.carnegieendowment.org/files/CP62.Milanovic.FINAL.pdf"><FONT
color=#333399><SPAN
style="COLOR: #333399">http://www.carnegieendowment.org/files/CP62.Milanovic.FINAL.pdf</SPAN></FONT></A>
<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">“…….DURING THE PAST
TWENTY YEARS, THE POOREST COUNTRIES of the world have fallen further behind the
middle-income and rich countries. The median per capita growth of the poorest
countries was zero. This is an unexpected outcome because, from the perspective
of economic theory, both globalization and economic-policy convergence imply
that poor countries should grow faster than the rich.
<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><FONT face=Arial color=#333399
size=2><SPAN style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">The
main reasons why this has not happened lie in poor countries’ much greater
likelihood of being involved in wars and civil conflicts. This factor alone
accounts for an income loss of about 40 percent over twenty years. Slower
reforms in poor countries compared with faster reforms in middle income
countries played some, albeit a minimal, role. Increased flows from multilateral
lenders did not help either because the net effect of the flows on growth rates
is estimated to have been zero.<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial"><o:p> </o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><FONT face=Arial color=#333399
size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: Arial">Finally, neither
democratization nor better educational attainment of the population can be shown
to have had any notable positive impact on poor countries’ growth. Reducing the
prevalence of conflict seems to be the first and most important step toward
restoring growth.<o:p></o:p></SPAN></FONT></P>
<P class=MsoNormal style="MARGIN-LEFT: 0.5in"><FONT face=AGaramondPro-Regular
color=#333399 size=2><SPAN
style="FONT-SIZE: 10pt; COLOR: #333399; FONT-FAMILY: AGaramondPro-Regular"><o:p> </o:p></SPAN></FONT></P>
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