The
poorest countries are
beginning to move upwards
By
Jonathan
Power
TFF Associate
since 1991
Comments to JonatPower@aol.com
July 26, 2006
LONDON - It is fair to say that the
world economy in the round has never done as well as it's
doing now, even as oil prices continue to rise. As it
chugs upward a lot of old shibboleths have to be thrown
out of the window.
Serious recessions that used to
plague the industrialized economies with the regularity
of the business cycle seem to be a thing of the past, as
is the rapid inflation and sometimes stagflation that
accompanied them. America's Clinton boom did run out of
steam just as he left office but the Bush
Administration's tax cuts appear to have made the U.S.
slowdown extraordinarily short, although that is still no
excuse for weighing them so heavily towards the
rich.
Countries as diverse as Sweden,
Denmark, Britain, Spain and Ireland have backed up
America's argument that freeing up markets and burdensome
controls and regulations produces good rates of economic
growth. Yet they have also countered America's more naked
capitalism with successful programmes of social justice,
universal health services and poverty eradication.
Indeed, the most socialist of them all, Sweden, is
currently the fastest growing economy on a per capita
basis in the Western world.
India has shrugged off the "Hindu
growth rate" and is soaring towards Chinese rates of
growth, with a better chance of all round success than
China because its institutional, legal and political
institutions are more developed and sophisticated. Japan
is back in the growth game after a decade of "bubble
repair". Russia and Brazil, not that long ago written off
after horrific setbacks, are probably set to become major
economic powers within a couple of decades.
Many middle-income developing
countries from Peru to Indonesia to Nigeria are purring
along at a good speed thanks to a combination of fiscal
reform, macro economic stability and a healthy export
market. Able to leap frog the development process with
computer technology, cell phones, airplanes and all the
paraphernalia of modern industrial technology, they are
growing at two to three times the rate that the present
industrialized economies did when they were first
developing in the nineteenth century.
All this suggests that the idea
that only the Protestant ethic could work the development
wonder is a lot of old nonsense. Since the death of
Franco many of the southern Catholics have done well. The
Muslims have shown their spurs in countries as varied as
Indonesia, Malaysia, Pakistan and Bangladesh.
I have not mentioned Africa- the
world's backwater for as long as anyone can remember. But
it is no longer. Nearly twenty countries have achieved
rates of growth of 5% or more in recent years. Indeed the
best news of this gloomy month is the one published last
week by the UN Conference on Trade and Development
(Unctad) which shows that a good number of the 50
countries known as "the least developed countries" are
beginning to show reasonable rates of growth. Most of the
50 are in Africa but 13 of them are in Asia, including
Afghanistan, Nepal and Laos.
During the 1980s and 90s this group
grew at under 1% a year, well under their rates of
population growth. Growth these days is now around 6% in
15 of these countries. For the least developed countries
as a group the average rate of growth is over 5%, a
healthy figure. And, for the first time, the African
countries are doing rather better than the Asian ones.
(Nevertheless, 15 countries such as Haiti and Guinea
continue to stagnate or decline).
The countries which are making it
are those that are attracting unprecedented levels of
foreign investment and foreign aid. This is very
different from the 1990s when the rich world seemed to
have given up on the very poorest, despite successfully
persuading them to reform their economies with trade and
financial liberalization and privatisation. Aid inflows
have doubled since 1999. Important progress has been made
in debt relief and there has been an effort to expand
duty-free and quota-free access for their
exports.
Unctad is talking bullishly in a
way it hasn't before that "the least developed countries
have the potential to achieve very high rates of growth
and to reduce poverty rapidly."
If the West continues to increase
its aid and private investment, limits its recruitment of
the poorest countries' best and brightest (one in five of
their highly skilled are working in the West) and
delivers on the trade opportunities it has so long talked
about, many of these countries would surge forward.
It would be a wonderful thing to be
able to throw the shibboleth of the "no-good, helpless
poor" out of the window once and for all.
Copyright © 2006 By
JONATHAN POWER
I can be reached by
phone +44 7785 351172 and e-mail: JonatPower@aol.com
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