The argument of this paper proceeds from four observations.
First, the growth performance of the developing countries,
viewed as a group, has been stronger since World WarⅡ than
ever before. Second, it has been erratic in the sense that some
countries have enjoyed extremely rapid growth, others, very little
at all, while many advanced at varying rates that lie between
the two extremes. The result is that only a minority of
developing countries succeeded in reducing the income gaps that
separate them from the group of industrialized leaders.
Third, the growth performance of the developing countries
was erratic in a second sense: it did not conform to the
predictions of a simple theory of catch-up and convergence.
Considering all the developing countries together, there was no
simple relation between national levels of per capita income and
their growth rates. Indeed, such relation as can be found is
contrary to the predictions of the theory. It was the poorest
countries on average that grew most slowly. Others with higher
levels of income and a substantial fraction of industrial
employment grew much more rapidly-- again on average.
Fourth, this erratic record stands in contrast with the long-term
performance of the presently industrialized leaders, which have
displayed a significant degree of convergence for more than a
century and in which the convergence as well as the catch-up
process was especially strong during the quarter-century growth
boom following World War Ⅱ.
The paper then goes on to suggest that an explanation of
the erratic and deviant record of the developing countries should
be sought in two directions. The first has to do with the degree
of "congruence" between the technologies prevailing in recent
years in the industrial leaders and the factor proportions and
other economic characteristics of the laggard countries. The
second has to do with what the paper calls social capability.
Congruence and social capability are connected because
congruence is, in part, governed by social capability. But the
latter also has its effects through other channels.
I describe social capability in terms of a set of attitudinal
and institutional characteristics. I derive the need for such
characteristics, first, by reference to the outlook and goals of
individuals, the system of incentives needed for the pursuit of
material wealth, and the roles of government in the elaboration
of rules, the provision of infrastructure and the resolution of
conflict. I derive the necessary characteristics, secondly, by
reference to the economic characteristics of the technology that
has emerged in the advanced countries. These are seen as
organization in large-scale establishments and firms; elevated
capital intensity; and an extensive system of ancillary activities
and occupations. Forma these characteristics, there flows a need
for the spread and extension of education; for a cadre of
businessmen and administrators experienced in business
organization on a large scale; and for a system of capital market
institutions capable of providing financial intermediation.
The paper then argues that social capability develops in an
interactive and cumulative process in which social capability
supports economic development and development supports the
further advance of social capability. The interactive and
cumulative character of the process raises the possibility that
initially inadequate capability may frustrate growth and so limit
its own enlargement. But if a country's social capability is
adequate to make a start, then it may grow from strength to
strength. Then, in contrast with the predictions of a simple
theory of convergence, a country may long maintain a high and
even accelerating pace of convergence towards the technological