On the leading G20 countries in economic growth (The Problem of the Catch-Up Effect)

According to the World Bank statistical data, a leading G20 country in economic growth during the last decades, is China.  Appearing next after China in economic growth in the post-crises period are Indonesia and India.  The direct comparisons of economic growth by country are not constructive due to the catch-up effect according to which countries with relatively low levels of economic development find it easier to achieve higher growth rates than countries with more advanced economies due to diminishing capital returns.  For resolving the problem, certain preconditions must be taken into account.  For measuring the economic development of different countries, the indicators of appropriate gross domestic product per capita are used.  The paper proposes adjusting the levels of economic growth based upon the hypothesis of proportional overlap for the catch-up effect after which they can be used to compare economic growth across regions.  Following this hypothesis, if the level of economic development of one country is α times higher than the level of the economic development of another country, achieving the same economic growth in the former will be α times more difficult than in the latter.  The paper also contains proof of an invariance theorem according to which the ratio of hypothetical economic growth rates adjusted to remove the influence of the catch-up effect does not depend upon the choice of the basic indicators of economic growth and the countries’ levels of development that are used to calculate the coefficients of the proportional overlap of the catch-up effect.  After the adjustment for the catch-up effect of the economic growth ratios, the leading G20 countries in economic growth are Australia, the USA, Canada and Saudi Arabia.