Dear Readers and Friends: August edition out , Aug 17 2018

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Developing World Rising as India and China Industrialize

Jonathan Power
Jonathan Power, writer on International Affairs

 

 

 

Never in the history of mankind have the living conditions and prospects of so many people changed so dramatically and in so short a period.

Great Britain the birthplace of the Industrial Revolution, took 150 years to double its output. Following later the United States took 50 years. Both countries had a population of less than 10 million each at the point at which they industrialized.

Today China and India, each with a population of over a billion, have doubled their output in less than 20 years; as have many other developing countries.

According to the most recent UN Human Development Report, by 2050 Brazil, China and India will account for 40% of the world's output. Today the combined income of eight developing countries: Brazil, Argentina, China, India, Indonesia, Mexico, South Africa and Turkey already equal that of the United States.

This success story is boosting the fortunes of many of the poorer countries, not least in Africa, because of increasing level of trade, investment and capital inflows. Take the example of India's sale of affordable medicines and medical equipment.

The most important engine of growth for the developing South is its own domestic markets. The middle class is growing at an accelerated pace. Within a dozen years the South will account for three fifths of the 1 billion households earning more than $20,000 a year. Between 1990 and today the South's share of the world's middle class population expanded from 28% to 58%. Even in the poorer parts of India or Africa mobile phones, motorbikes and contraceptives are common. Phone sales are up to a cumulative 600 million in Africa- and climbing fast.

International trade has rocketed. Not just China with its massive amount of cheap exports but also the likes of Thailand with its exports of parts and components in the auto and electronics industries, Kenya which has cornered much of the fresh flower market in Europe and Brazil with its aircraft industry. Between 1980 and 2010 the South increased its share of world merchandise trade from 25% to 47% and its share of world output from 33% to around a half. South-South trade has also increased fast, from less than 8% of world merchandise trade to over 26% today.

This is improving the lot of the world's poor not just in incomes but more importantly in health matters as well such as lower infant mortality rates.

Even by the conventional measure of poverty, national income per head, the number of people in extreme poverty has fallen from 43% twenty years ago to 20% today. In China alone 500 million people have been lifted out of poverty. The Millennium Development goal of halving the proportion of people living on less than $1.25 a day relative to 1990 has been met five years before the target date. The Economist in a recent cover story estimates that extreme poverty will fall by 2030 to a mere 3% of the total developing world population.

Over the last decade Africa, once the backwater of development has started steadily to move ahead. The region has grown at 5% a year in recent years- and that's an average. The two most populous countries, Nigeria and Ethiopia, have averaged over 7%. Africa has six out of the world's top ten fastest growing countries today. A lot of it is due to the boom in commodity sales, everything from bananas and sisal to iron ore and oil, particular to China. But growth is also strong in those countries which rely on a more diversified economy and agriculture. Even net importing countries, such as Ethiopia, Rwanda and Uganda, continue to grow fast. During the present Great Recession, thanks to a recent past of sound fiscal and monetary management, growth has been only been marginally affected.

The UN's Human Development Index is the best way to measure poverty because it factors in not just income levels but infant mortality, education and suchlike. By this standard only two countries have not increased their well-being, Zimbabwe and Lesotho. Out of 132 developing countries a good 40 have shot up fast in the index. A sample: Ghana, Rwanda, Mozambique and Gabon in Africa; Bangladesh, Sri Lanka and India in South Asia; Tunisia and Qatar in the Arab states; China, Laos and Vietnam in East Asia; and Brazil, Mexico and Chile in South America.

One thing rarely noted is that many developing countries, despite their hectic growth, have crime rates a good deal lower that the US and not too far behind Europe's. Indeed, the Muslim Arab countries have a better record than most of Europe.