Changes in the Economic Structure of the World Economy

In a neglected work of 1964, Kuznets summarized some of the emerging results of his monumental work on Modern Economic Growth (MEG) and used them to speculate on diversity, interdependence, war, conflict, and cooperation among nations. It was an unusual Kuznets study speculative rather than precise and quantitative. The tone and the approach clearly reflect the deep impact that must have left on Kuznets the horrors of the Second World War and the palpable threats of oppression and aggression of communist totalitarianism. No one was more appreciative than Kuznets of the benefits brought about by MEG but he was also keenly aware of its potential for destruction. In these essays he appears cautiously pessimistic reflecting on communism threat to world peace and stability and on the limited spread of the process of Modern Economic Growth with the resulting increased divide among rich and poor nations. In this paper I summarize some of Kuznets’ arguments in his 1964 lectures highlighting the political and economic environment at the time he was writing and how it had evolved. I then try to update the analysis taking into account the changes in the geopolitical environment over the last 50 years, primarily the end of the Cold War, the spread of globalization, and the rise of China and other Asian economies. In a final section I review various projections of expected changes in the global economy to 2050 and the main challenges such changes pose for conflict and cooperation.