America provided China with both stability and growth anchors. China enabled the US to sidestep the mounting perils of subpar saving, reckless fiscal policy, and weak household income growth.

In late 2009, within a year of their massive policy stimulus in response to the global credit crisis, the Chinese leadership, I believe, decided that 10 annual real growth had outlived its usefulness. Income inequality was rising dramatically, environmental damage was worsening rapidly, and inflation was leading to weak real income growth for poor households.

As a result, the income of the global elite is growing both rapidly and independently of what is happening in terms of overall output and employment growth. Demand for luxury goods is booming, alongside weak demand for goods and services consumed by lower income groups.

Trade liberalization was not an end in itself, but its ultimate objective should be to raise the living standards of people, especially those who were weak and most vulnerable, through accelerated growth and income opportunities.

We know that powerful technological and global market forces have reduced dramatically the number of routine professional and blue collar jobs, shifted employment options for the middle class toward the non tradable side of the economy, and channeled growth in national income toward capital and high end employment, with stagnating income elsewhere. Job creation remains weak, and employment continues to diverge from growth.

Large losses in household wealth, deleveraging from unsustainable debt, weak wage growth, and a decline in labor s share of national income to a historic low have combined to constrain consumption growth. Real median household income is still nearly 7 below its 2007 peak, real median household net worth dropped by 35 between 2005 and 2010 (and remains significantly below its pre recession peak), and about 90 of the income gains during the recovery have gone to the top 1 .

Housing prices are rising, and, while residential investment is increasing, it remains depressed as a share of GDP. Households have cut their debt and rebuilt their balance sheets, but the large loss in household wealth, weak growth in wages and income, the concentration of most income gains at the top, and a decline in labor s share of national income to record lows continue to constrain consumption.

PARIS With weak demand in advanced countries now impeding growth in emerging economies, including major players in Asia and Latin America, many are arguing that the era of income convergence has come to an end. Nothing could be further from the truth.

Between 1959 and 2005, about half of the growth of the middle class s income came from increased net government expenditures. Indeed, from 2000 to 2004, the increase in net government expenditures accounted for 150 of income growth, as other sources of income shriveled up.

For example, these two show great growth in income, absolutely flat happiness curves.

So we're saying income growing at 16 times and no growth in carbon.

These changes do not directly induce economic growth, but they increase the economy s potential or long run income. Growth itself occurs as the economy begins to converge to this higher level of long run income.

First and foremost, we need policies in low income countries that promote economic growth.

Their comprehensive study draws on high quality survey data from 118 countries and reaches a clear conclusion the bulk of poverty eradication that took place in recent decades was driven by economies overall income growth. More specifically, 77 of the cross country variation in the income growth of the poorest 40 of the population reflects differences in average income growth.

NEW YORK In a world of weak domestic demand in many advanced economies and emerging markets, policymakers have been tempted to boost economic growth and employment by going for export led growth. This requires a weak currency and conventional and unconventional monetary policies to bring about the required depreciation.

When the economic growth goes to eight percent and population growth drops to 1.5 percent, then per capita income is doubling every nine years.

Will economic growth accelerate sufficiently to boost job and income growth? Can the barriers that exclude many Americans from recovery and future prosperity be removed?

The growth of gross national income (GNI) in developing countries outpaced the growth in debt in 2004, improving the total debt to income ratio for all developing countries to an estimated 35.2 per cent, down from 38.6 per cent in 2003.

Several Chinese policies have led to a massive transfer of income from politically weak households to politically powerful companies. A weak currency reduces household purchasing power by making imports expensive, thereby protecting import competing SOEs and boosting exporters profits.

Still, the fruits of growth have seen unequal distribution.2 The current trend is towards a growing inequality between high income and middle and lower income households.

But, to get on a process of increasing income, increasing skills led to very rapid growth there.

Thus, in Europe now, as in Japan then, the pieces are in place for a lost decade weak banks make for weak government finances, which in turn make for weak growth and even weaker banks, with the absence of monetary and fiscal support leaving no escape from this vicious spiral.

In Japan, with an economy of about half the size of the US, growth forces remain weak. In the second quarter of 2008, the Japanese economy shrank at an annualized rate of 2.4 , primarily due to weak exports.

Looking to the future, growing income inequality and stagnant incomes for the majority of Americans mean weaker aggregate demand and slower growth. Even more important, income inequality constrains economic growth on the supply side through its adverse effects on educational opportunity and human capital development.

The average well being of our societies is not dependent any longer on national income and economic growth.

Similarly, without dynamic, growth oriented economic policies supporting a healthy private sector capable of generating jobs, income and tax revenues over time, sustainable economic growth will not be achieved.

At first glance, Brazil s weak growth appears ephemeral, and President Dilma Rousseff should be well positioned to win a second term. Over the last 12 years, her Worker s Party (PT) has delivered the country s strongest per capita GDP growth in more than three decades reduced income inequality with an extensive system of social transfers that reaches one third of Brazilian households and reduced formal unemployment to a record low 4.5 .

The best known feature of China s macroeconomic imbalances is heavy dependence on exports for growth, which is typically attributed to weak domestic demand as a middle income country, China lacks the purchasing power to consume the goods that it produces. With nearly unlimited access to advanced country markets, China can tap into global external demand and raise its GDP growth potential, as it has done for the past two decades.

The additional recovery income offsets the growth in support budget expenditures, thus maximizing the funds available for programme assistance.

To go from middle income to high income status, countries have to redeploy resources to high productivity, knowledge and skill intensive sectors. That is a transition that Greece and Argentina, with their financial instability, poor infrastructure, and weak education systems, have never made.

Even in a situation with relatively slow demand growth and weak prices, new capacity may still be added successfully if production costs are low enough.

Prevailing challenges include low growth, persistent poverty and weak governance, the social and economic disruption resulting from conflict and shortfalls in health and educational services.

But when one looks at the 1.3 annual growth rate of after tax real income that the CBO calculates for the bottom quintile, 0.9 percentage points comes from the growth of the health care financing programs Medicare, Medicaid, and the State Children s Health Insurance Program. The CBO counts all of that growth as an increase in poor US households after tax real income.

It makes the weak force very weak by giving the weak particles a large mass.

However, it will be difficult for Yemen to sustain the present growth of domestic demand because of its decreasing oil production and weak non oil exports.

It is necessary because persistently weak global growth is unlikely to provide the solid external demand for Chinese exports that it once did. But it is also essential, because China s new leadership seems determined to come to grips with a vast array of internal imbalances that threaten the environment, promote destabilizing income inequality, and exacerbate regional disparities.

One might question why GDP in China, where per capita income recently surpassed 7,000, is set to grow so much more slowly than Japan s did from 1956 to 1970, when the Japanese economy, with per capita income starting from about 7,000, averaged 9.7 annual growth. The answer lies in potential growth.

Accordingly, the impact of increased competition brought about by opening up on growth, income distribution and poverty has been crucially different.

The success of the MTSP depends in large part on the regular and predictable growth of total income, especially regular resources.

The increase in cash balances in 2004 resulted largely from the growth in income and the late year receipt of funds.

Growth with equity had always been the thrust of Malaysia's development planning, with emphasis on efforts to enhance income generating opportunities.

In some cases enclaves of faster export growth emerged in the extractive sectors, usually tied to FDI, but with weak linkages to the rest of the economy.

If so, generalized income growth might well raise such assessments at a much slower pace than one might expect from looking at how a rise in an individual s income relative to others affects her welfare. And, on a related note, benchmarking behavior may well imply a different calculus of the tradeoffs between growth and other economic challenges, such as environmental degradation, than conventional growth models suggest.

The US needs a plan for faster growth, not more deficit reduction. Evsey Domar, a legendary growth economist (and one of my MIT professors) counseled that the problem of alleviating the debt burden is essentially a problem of achieving growth in national income.

Over the last 18 quarters, annualized growth in real consumer demand has averaged a mere 0.7 , compared to a 3.6 growth trend in the decade before the crisis erupted. Never before has the American consumer been this weak for this long.