Flatness - The Global Disaggregation of Value Creation Paper

Author: 
Dr. Ram Mudambi, Temple University
Published Date: 
23 Aug 2012

Dr. Ram Mudambi, Temple UniversityAt the most general level, the idea of “flatness” in the context of economic development has to do with parity. This is the property whereby different individuals or areas of the world are roughly similar in terms of their levels of economic outcomes. Thus, the comparing one individual or area to another, the observer perceives similarity in terms of measurable outcomes like standards of living and incomes.

Academics see the approach to flatness as a part of the process of convergence. Theoretically convergence is occurring if the relationship between a measure of the level of economic outcome and the rate of growth of economic outcome is downward sloping. Thus, if we use gross domestic product (GDP) as the measure of economic outcome, a situation where high GDP countries witness relatively slower rates of growth than low GDP countries is associated with convergence. The greater the difference in growth rates, the more rapid the convergence.

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