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 agriculture-based, 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.