Question

What are the reasons for increasing convergence between emerging economies (defined as countries with lower GDP per capita but growing rapidly) and advanced economies (countries with high GDP per capita but lower growth)? Explain.??

Answer 1

Answer: Reasons for increasing convergence between emerging economies (defined as countries with lower GDP per capita but growing rapidly) and advanced economies (countries with high GDP per capita but lower growth):

1.Demographic dividend: Emerging economies like India currently rich in working age population and most of business in developed economies are tending towards old age pyramids like Japan.Hence their is greater economic cooperation among these.

2.Cheap labour availability: Business of developed world countries outsourcing there work to emerging economies due to presence of cheap yet skilled labour in such countries which led to low input cost.

3.Larger scope of investment: such emerging economies need capital for development in these countries and developed countries has capital and technological knowledge in various fields hence they are cooprating so that there can be win win condition for both of them.

4.Emerging technology -5G, Artificial intelligence, Internet of things etc such new areas have revolutionised the IT sector and Public level services have got new dimensions.Such technological advancements are more in developed countries hence cooperation with emerging economies will helpd in rising living standards and profits to developed economies as well.

there are diverging areas as well like Subsidy issue in WTO , Controversy between impoeting and exporting countries etc but more or less there is greater convergence as one has expertise and capital where as other needs its application.

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