Asian success has obscured a bleaker picture in the rest of the world.

Sunday, May 21st, 2023

The prognosis for the poor world is much worse than the standard picture, David Oks and Henry Williams argue:

The crux of the problem is this: despite attempts to find alternative models of economic development, there is no widely replicable strategy to develop a country — simply put, to turn it from poor to rich — that does not involve an economy becoming highly industrialized. But in recent decades, the growth of manufacturing sectors, and thus of economic development more broadly, has been overwhelmingly concen­trated in East Asia, particularly in China. Across the bulk of the poor world— here we have in mind Latin America, South Asia, the Middle East, and sub-Saharan Africa — economies have been experiencing a more disturbing trajectory: simultaneous deagrarianization and deindus­trialization, especially in the years after 1980.

The result is that industrialization, development, and massive income growth in East Asia has statistically “compensated” for stagnation almost everywhere else — with East Asian industrialization partly re­spon­sible for the loss of other countries’ manufacturing bases. This has been the case even as incomes have risen in most of the poor world, mainly on account of the 2000–15 commodity supercycle driven in part by the explosive growth in demand from the Chinese market — which, ironically, helped lock emerging markets into low-tech, undiversified export profiles. Asian success, in short, has obscured a bleaker picture in the rest of the world.

Most emerging markets have not found an engine of durable growth comparable to manufacturing— most have indeed grown over the last few decades, but dependence on services and commodities exports has not made them rich. Thus most “developing” countries — we are skepti­cal of that euphemistic label — are in a worse structural position than they were a few decades ago: less economically complex and more socially unstable, with their developmental coalitions, if they ever exist­ed, badly frayed. For all the intermittent hype around “rising India” or “rising Africa,” systemic dynamics — deindustrialization, ecological dis­ruption, demographic headwinds — will pose severe challenges to eco­nomic development over the coming decades. New waves of industrialization and meaningful development are unlikely in these parts of the world. From the perspective of poverty statistics, Africa will assume particular importance: by far the continent with the worst economic performance over the last several decades, it is there that the most sig­nificant population growth will occur over the next century. The result, pending dramatic change, is a world in which the progress made against poverty over the last forty years will slow, stagnate, or even reverse.


  1. Wang Wei Lin says:

    My Chinese friend who lives in Chongqinq thinks of China as a 3rd world nation. It got me to thinking. Westerners think in terms of modernity to define 1st world, developing or 3rd world. To me the level of civilization is not about ‘stuff’, but instead about a culture that has a heritage of valuing the individual. So China, where life is only valuable to the interest of the state, is a third world country. Tribes are the same. If there is little value placed on individual lives, then full development is almost impossible. Centuries ago Europe was a 1st world nation compared to the rest of the globe. Generally, humanity is reverting to the mean of history where life is nasty, brutish and short.

  2. Bob Sykes says:

    David Goldman at Asia Times pointed out some time ago that while the West regards AI and 5G primarily as consumer toys China is using them to optimize their already highly automated factories. This is going to greatly increase its advantages in manufacturing over the rest of the world.

    And today we read that China, already the world’s largest car manufacturer and car market (by a factor of 2), is now the world’s largest car exporter, replacing Japan.

    Some Chinese manufacturer recently offered an EV for under $12,000, one-third the price of the cheapest Tesla.

    Assuming the US doesn’t start a nuclear war with China, China will become the next world hegemon, and much sooner than is believed.

  3. Pseudo-Chrysostom says:

    Someone who takes the word of neoliberal economists credulously would be confused as to how europeans could have possibly industrialized themselves without any Developed Economy Angel Investors to copy from and kickstart things first.

    It’s almost like the realest secret sauce isn’t some magic procedure, or IV drips of gibsmedat, but the people themselves.

    Naturam expellas furca, tamen usque recurret.

  4. Bomag says:

    I thought we solved world poverty by letting all poor people move to the USA. What can go wrong?

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