Similarly, raising the Sub-Saharan Africa region’s fixed capital stock to OECD levels results in a dramatic increase in the region’s share of global trade. This hypothetical gain in the new globalization landscape is illustrated by Figure 2 in the Annex. Again, this last Figure contrasts actual (solid and thick line) with predicted levels of exports (solid and thin line). Under this last hypothetical scenario, the potential gains are even more significant, with the estimated levels of Sub-Saharan African exports growing by more than threefold, ceteris paribus.

# **V. Concluding Remarks**

Over the last three decades and up to the global economic and financial crisis, the process of globalization played a key role in the extraordinary and sustained rate of growth recorded in the world, and particularly in emerging market economies. Over time, sustained aggregate output growth, which was driven by rising global demands for manufactured goods, further deepened the integration of world economies. Departing from previous episodes, this last wave of deepening integration of world economies was more inclusive, and resulted in the emergence of a new globalization landscape where emerging market economies are playing an increasingly greater role.

However, in spite of the deepened integration of world economies under this new globalization landscape, the distribution of global trade has not been uniform on the spherical space. A deepened integration of emerging market economies, which saw their share of global trade increase markedly and consistently throughout the span of this new landscape, is in sharp contrast with the increasing marginalization of Sub-Saharan Africa. In fact, the contribution of Sub-Saharan African countries to global trade and exports declined consistently under this new globalization landscape, producing a modern lopsided version of globalization, characterized by growing income and welfare gaps between emerging market economies and Sub-Saharan African countries.<sup>37</sup> Indeed the deepening integration of world economies under the new globalization landscape enhanced income convergence between industrialized and emerging markets economies. This convergence is a reflection of important structural transformations undertaken by emerging market economies. These transformations are particularly illustrated by increased technological endowments in support of production of high-tech and manufactured goods in these economies. There are other factors which contributed to the globalization of these economies, however. This study uses pseudo panel models to investigate these determinants. Empirical results single out technology level variables, and particularly the stock of resident researchers, the component of high-tech and manufactured goods in aggregate output and exports as the significant determinants of global trade.

The study also undertakes a number of policy experiments, counterfactually assessing the potential growth and globalization effects of bridging technology gaps between Sub-Saharan African countries and industrialized economies. These policy experiments highlight the potential growth and welfare benefits of increased technological endowment for Sub-Saharan African countries. In particular, hypothetically raising the Sub-Saharan African stock of resident

> 37 Previous episodes of globalization were equally lopsided, with the first world producing manufactured goods in the post-industrial revolution and the second world primarily engaged in the production of land-intensive primary commodities. However, the lopsided structure placed all developing countries under the same category. For further details, see World Bank (2002).

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