During the past three decades, there has been a momentous change in the global economy. One of the most troubling and puzzling features -- the failure of poor countries to catch up to developed countries -- has seemingly been overturned.
Basic growth theory says that developing countries should grow faster than rich ones. One reason is that capital has diminishing returns -- as you build more offices, more houses, more cars and machine tools and computers -- the economic benefit of building yet more of those things goes down, even as the cost of maintaining them goes up. Second, poor countries can grow fast by copying technology and business practices from rich countries, which is almost always cheaper and easier than inventing new technologies and business practices from scratch.