Grow­ing Pains

The Star (St. Lucia) - - LOCAL - By Michael Walker Mus­ings are thoughts, the thought­ful kind. For the pur­pose of these ar­ti­cles, a-mus­ings are thoughts that might amuse, en­ter­tain and even en­lighten.

Growth rate can be very de­cep­tive, you know. I mean if you earn 10 dol­lars a day and they give you a 10% pay rise, you'll get one dol­lar ex­tra. But of course, if you earn 1,000 dol­lars a day, your 10% pay hike will bring you an ad­di­tional 100 dol­lars each day. Sta­tis­tics, as we have re­cently learned, can mean just about any­thing.

As ev­ery­one knows, the Chi­nese econ­omy has been post­ing huge growth rates over the past sev­eral decades. The coun­try is a man­u­fac­tur­ing pow­er­house and ex­porter; many be­lieve that its econ­omy will soon sur­pass that of the US. China faces ma­jor prob­lems, how­ever, as the coun­try tran­si­tions into a con­sump­tion-based econ­omy. Ad­di­tion­ally, per capita in­come is be­low the world av­er­age. And the gap be­tween rich and poor is a se­ri­ous is­sue that I be­lieve will even­tu­ally tear the coun­try apart

China's growth rate is ex­pected to shrink from 2015 to 2017 by 0.2%, which does not seem much un­til you re­al­ize that a re­duc­tion in growth rate of 0.2% in such a large econ­omy adds up to bil­lions and bil­lions of dol­lars. And as for the poor, well they will re­main poor.

Now if you have fol­lowed me so far you'll not be sur­prised to hear that the coun­tries with the high­est pro­jected an­nual growth rates from 2014 through 2017 based on the fore­casts from the World Bank are not among the largest, most de­vel­oped ones. In fact, it comes as no sur­prise to dis­cover that most of these coun­tries suf­fer from high in­come-in­equal­ity, low lev­els of per capita gross do­mes­tic prod­uct, el­e­vated po­lit­i­cal in­sta­bil­ity, and ram­pant cor­rup­tion.

Take Rwanda for ex­am­ple. The an­tic­i­pated growth rate is ex­pected to av­er­age +7.12% be­tween 2014 and 2017. Yet 90% of the pop­u­la­tion works in sub­sis­tence agri­cul­ture or min­eral agro-pro­cess­ing, while tourism, min­er­als, cof­fee, and tea make up the other 10%. The 1994 geno­cide is still a fac­tor, and 45% of the pop­u­la­tion con­tin­ues to live be­low the poverty line. The es­ti­mated per capita in­come for 2013 was just un­der $1,600.

Tan­za­nia has re­cently seen high growth rates of around +7.15% be­cause of gold pro­duc­tion and tourism. The econ­omy also runs on telecom­mu­ni­ca­tions, bank­ing, energy, and min­ing, as well as agri­cul­ture. In terms of per capita in­come, how­ever, the coun­try is one of the poor­est in the world, but Tan­za­ni­ans are $100 a year bet­ter off than Rwan­dans.

Mozam­bique has at­tracted large in­vest­ment projects in nat­u­ral re­sources which means the coun­try's high growth rate of +7.30% should con­tinue. Some an­a­lysts be­lieve that Mozam­bique might be able to gen­er­ate rev­enues from nat­u­ral gas, coal, and hy­dro­elec­tric ca­pac­ity greater than its donor as­sis­tance within five years. Note that last sen­tence, the rev­enues MIGHT equal donor con­tri­bu­tions in the next five years. But what­ever the rev­enues, the vast ma­jor­ity of the coun­try works in sub­sis­tence agri­cul­ture, and over half the pop­u­la­tion re­mains be­low the poverty line. Mozam­bique, for all its wealth and high growth rates, left its poor peo­ple with just $1,262 to live off in 2013.

In­dia with its +7.57% growth rate un­til 2017 has re­ceived high marks from an­a­lysts, even with de­layed re­forms. The ser­vices in­dus­try is a ma­jor source of In­dia's eco­nomic growth, ac­count­ing for nearly two-thirds of its out­put with less than one-third of its labour force. Yet cor­rup­tion, poverty, and dis­crim­i­na­tion against women and girls con­tinue to hold back the coun­try. This vast coun­try had an es­ti­mated per capita in­come for 2013 of just $4.060. Strangely, tiny Saint Lu­cia, in 2011 just be­fore the last elec­tion, re­warded its cit­i­zens with an av­er­age an­nual in­come three times greater, at $13,381.42!

The Demo­cratic Re­pub­lic of Congo, 2015 GDP: +8.00%, has huge nat­u­ral-re­source wealth which it hasn't been able to ef­fi­ciently mon­e­tize be­cause of sys­temic cor­rup­tion, con­flict, and po­lit­i­cal in­sta­bil­ity. In 2013 its cit­i­zens sur­vived on $394.25 per capita, the poor­est peo­ple in the world.

Ethiopia's econ­omy is mostly agri­cul­ture­based, but the gov­ern­ment has made a push to di­ver­sify into man­u­fac­tur­ing, tex­tiles, and energy gen­er­a­tion. But while the coun­try has seen, and will con­tinue to see, high GDP growth, pro­jected to be +9.70%, per capita in­come re­mains one of the low­est in the world at around $1,250 per an­num.

World­wide, in 2013, the cit­i­zens of nine coun­tries lived off un­der $1,000 a year, all of them in Africa. Some­body is do­ing some­thing wrong some­where.

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