Economist Writing Every Day

To kick off 2024, I’m just going to give you a chart to think about:

Notice that in 1990, Poland had about half the average income of Portugal, as did South Korea compared to the UK. By about 2021, those gaps had been completely closed. And while the 2021 data is a bit uncertain given the pandemic, IMF estimates for 2024 suggest that both Poland and South Korea have now pulled slightly ahead of Portugal and the UK.

You can find many other examples like this. Why have some countries grown rapidly while others have slowed or stagnated? In some sense, this is an age-old question in economics, and at least as far back as Adam Smith economists have been trying to answer that question.

But it’s actually a bit different now. In Smith’s day, the big question was why some countries had started on their path of economic growth, while others hadn’t started at all. Today, nearly all countries have started economic growth, but some of the early leaders in growth seem to have slowed down. But there isn’t some global reason for this that affects all countries: Poland and South Korea will likely keep growing for a while, and eventually there will be a big gap between them and Portugal and the UK.

The answer to this question is not, of course, just One Big Thing. But for countries like Portugal and the UK (and Japan and Spain and Italy and etc. etc.), the key to their economic future is figuring out what Many Little Things these economic miracles are doing right so that they can return to a path of high economic growth. And this isn’t just a race to see who wins: all countries can be winners! But without continued growth, solving economic, political, and social problems will be a huge challenge.

Maybe 2024 is when they will start to figure it out.