The Next Convergence, by Michael Spence

Globalization is a key buzzword of the decade. The world economy has become more intertwined than at any point in history. Obviously technology is a major factor in making this happen; the world is a smaller place. But it would not have happened without the dramatic economic rise of previously poor countries like China, India and Brazil.

Michael Spence, a winner of the Nobel Prize in economics, has written The Next Convergence: The Future of Economic Growth in a Multispeed World to explain how this all happened and where it might be going in the future. The book focuses a lot of attention on how those undeveloped countries have sustained growth over the last several decades — and points out that this is unprecedented in world history. But the key issue he grapples with is how those same countries keep the pace moving forward. It’s one thing to raise the per capita income of China from $500 to $3500, but how does it go to $20,000? And what are the ramifications of that growth for the developed world?

This is an excellent book, but it’s not really what the Amazon reviews make it out to be. Spence does not spend a lot of time prognosticating the future economic trends. About as detailed as he gets is to say that betting against China has been foolish, so don’t underestimate what they might do in the next decade. But he does not get into specifics. Nor does he get too involved with the political (or geo-political) issues surrounding all of this.

Instead, he focuses on taking a complex topic — macroeconomics on a worldwide scale in an era of unprecedented world growth — and turns it all into something understandable. A fundamental grasp of basic economic principles is valuable, but you could probably understand everything in this book with just common sense. It’s that clear and simple as it tackles complex problems.

As one reviewer said, there is a lot of talk about globalization that is simplistic. Almost bumper sticker type depth. But Spence offers us more, and does so with excellence and approachability.

A good book on a complex topic. I recommend it if you are interested in the topic.