GOING GLOBAL

Even if the increase in industry concentration is partly responsible for the slowdown of growth in the United States, it would be unreasonable to conclude that breaking up monopolies will single-handedly restore fast growth.

But if growth in rich countries is not about to explode, what will these countries (and, soon enough, middle-income countries like China or Chile) do with their increasingly abundant capital? The business community, which is sometimes smart enough not to buy into the ideological messaging it offers the rest of us, has been for some years focused on another way out for the abundant capital in its hands. We noticed this about twenty years ago, when, all of a sudden, businesspeople, perhaps sensing they could not count on reliable economic growth in the West, started to quiz us about the countries we knew best, which are all in the developing world. We had become inured to the slightly uncomfortable expression that appeared on the faces of most businesspeople as soon they found out what we do, which is study poor countries—they clearly wanted to find someone else who knew something more useful to them, and were trying to figure out how quickly they could dump us without causing offence. But, suddenly, a couple of decades ago, poor countries became interesting.

They were interesting because some of them were growing fast, and any place growing fast needs investment, and that investment was a potential antidote to the specter of diminishing returns haunting the rich countries’ financiers. One way to prevent growth from slowing down is to send capital to the countries where productivity is high. That won’t help workers in rich countries, since the production won’t take place in their country, but at least national income will keep growing because capital owners will be paid well for their investment abroad.