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Thursday, August 03, 2006

Developing World

I currently consider the world broken down into three groups economically: the developed world, which consists of countries like the Anglosphere and Europe; the poor but rapidly developing countries such as China, India, and the other Asian Tigers; and the basket case countries such as South America and Africa. This last group has not made much progress, well, ever.

As a result, much is being made of the fact the world economy is booming. And, better yet, the poorest countries such as those in my basket case group, have had very strong increases in GDP per capita. The claim is that the poor are finally getting richer faster than the rich!

Unfortunately, I'm afraid the claim is probably too strong. Because the rich are still getting richer, demand for commodities such as energy and metals has been increasing, driving up prices, really for the first time in decades. Those poorest countries have no other source of income and wealth except exporting commodities. So, by sheer luck, their GDP per capita is increasing nicely at the moment, especially since they have very little other income.

But I wouldn't bet on sustained increases in commodity prices in the long term. As a result, I predict the basket case nations will find that their GDP per capita levels off and stagnates once again within the next few years.


Oroborous said...

All of South America in the "basket-case" column ?

Argentina, Brazil, Chile ?
They have many problems, to be sure, but I'd say that they were "developing"...
(And always will be, as the old joke goes).

Bret said...

I didn't mean all of South America or Africa. Just a significant fraction thereof.