NIPFP Working Paper No. 187
In his book Catch Up, Deepak Nayyar has identified a total of twenty five developing countries (excluding Taiwan) as having the most potential for catching up with the developed countries. This paper speculates about the likely status of these countries, Nayyar’s ‘Next Twenty Five’, around the middle of the 21st century. Drawing on his own earlier work on the subject as well as the recent contributions of Acemoglu and Robinson, among others, the author first presents the elements of a theory of economic history as the dynamics of interactions between resource endowments, technology and institutions, mediated by the cumulative impact of incremental change as well as transformative shocks at critical junctures. The prospects of the ‘Next Twenty Five’ are then assessed through the lens of this theoretical framework, recognising that outcomes are probabilistic in a Bayesian sense and not deterministic. Size matters because very large and very small countries have their own specific dynamic. Hence, two very large countries, China and India, and two very small countries, Tunisia and Honduras, are separately analysed. In assessing the prospects of the other twenty one countries in the group, the paper addresses the question of why there is a distinct geographic pattern of the catch up process working more powerfully in Asia as compared to Latin America or Africa.