Globalization is narrowing the wealth gap, one nation at a time

Up through the 1980s, the blessings of the Industrial Revolution seemed largely confined to a handful of countries in Western Europe, East Asia, the United States, Australia and Canada.

But in the past three decades, there has been a sea change, and developing countries have made great strides in catching up. Although inequality has risen within some nations, at the global level it is going down.

Much of this catch-up is happening in countries that are still largely poor, such as India or Indonesia.

To an economist, this still represents a miracle. But a skeptic of globalization might wonder whether it can really be called a success if broad middle-class living standards still remain the exclusive privilege of a handful of nations, many of them former colonial powers.

Recently, a number of nations outside the old developed core are proving the doubters wrong.

These newly industrialized countries haven't yet achieved developed-country living standards, but they are getting there.

An income of $20,000 may not sound like much compared with the more than $45,000 enjoyed in the U.K., the first country to industrialize.

Furthermore, growth in these countries doesn't appear to be leveling off. Although some economists have warned of a so-called middle-income trap, most of the newly industrialized countries seem to have been gaining on the rich world even faster in the years since the Great Recession.

So far there are only a handful of newly industrialized countries, though since China is one of them, they account for a hefty fraction of the world's population.

Plus, the success stories of Turkey, Malaysia, Mexico and others yield lessons that can help other countries follow in their footsteps. It is obvious, for example, that proximity to a big developed market matters a lot.

Another lesson is that manufactured exports matter. None of these countries is primarily a resource exporter; all concentrate on making vehicles, computers or electronics, or all of them.

What these success stories show is that industrialization isn't confined to any one region or countries that once had big colonial empires. With focus and persistence, almost any nation can do it.