A preview of the unpublished book A CIVILIZATION WITHOUT A VISION WILL PERISH: AN INDEPENDENT SEARCH FOR THE TRUTH by David Willis. CHAPTER 1: INDIFFERENCE TO POVERTY (Part 47). This blog is a continuation of the review of The End of Poverty: How We Can Make it Happen in Our Life Time, by Jeffrey Sachs, published in 2005
Chapter 3: Why Some Countries Fail to Thrive
We can realistically envision a world without extreme poverty as soon as 2025
Of the world’s population of 6.3 billion, roughly 5 billion people have reached at least the first rung of economic development. Five sixths of the world’s population is at least one step above extreme poverty. Moreover, approximately 4.9 billion people live in countries where average income – measured by GDP per person – increased between 1980 and 2000. An even larger number, roughly 5.7 billion people, live in countries where life expectancy increased. Economic development is real and widespread. The extent of extreme poverty is shrinking, both in absolute numbers and as a proportion of the world’s population. That fact is why we can realistically envision a world without extreme poverty as soon as 2025.
Why countries fail to achieve economic growth
The most common explanation for why countries fail to achieve economic growth often focuses on the faults of the poor: poverty is a result of corrupt leadership and retrograde cultures that impede modern development. However, something as complex as a society’s economic system has too many moving parts to presume that only one thing can go wrong. Problems can occur in different parts of the economic machine and can sometimes cascade, bringing the machine to a near halt.
Eight major categories of problems
In economic growth, eight major categories of problems can cause an economy to stagnate or decline. I have witnessed these kinds of disasters in many parts of the world. Each has its own different appropriate course of treatment; therefore, a good diagnosis is crucial.
The poverty trap: Poverty itself as a cause of economic stagnation
Physical geography
Fiscal trap
Governance failures
Cultural barriers
Geopolitics
Lack of innovation
The demographic trap
Where growth has failed
Map 5 shows all of the countries in the world where per capita GDP declined during the twenty-year period between 1980 and 2000. Notice that not one single rich country in North America, Western Europe, or East Asia failed to achieve economic growth! All of the problems lie in the developing world. Forty-five countries had negative growth in GDP per capita. (Only countries with a population of at least two million people in 1980 were examined in order to avoid the idiosyncrasies of some very small countries.)
It is very illuminating to divide the world’s economies into the following six categories, depending on their per capita income in 1980:
All low-income countries
Middle-income oil exporters
Middle-income postcommunist countries
Other middle-income countries
High-income oil exporters
All other high-income countries
The accompanying table 2
The accompanying table 2 lists the countries in each category divided into two columns: those that experienced positive economic growth and those that experienced outright economic decline. The number of countries in each category are shown in the two columns at the right of the table.
Twelve out of fourteen countries enjoyed positive economic growth
There are several key points. First, the biggest problem with economic decline is indeed in the poorest countries, especially but not only in sub-Sahara Africa. The second observation is that except for oil-exporting and ex-Soviet countries, all high-income countries achieved economic growth, as did most middle-income countries. The only growth failure among high-income countries occurred in Saudi Arabia, an oil-exporting country. Among the middle-income countries, the vast proportion of growth failures were in the oil-exporting and postcommunist countries. In the rest of the middle-income countries, twelve out of fourteen countries enjoyed positive economic growth.